INDUSTRY INSIGHTS

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 TABLE OF CONTENTS

Quarterly Aviation Briefing 2018 Edition 1

A320neo JetTrader...... 3

Taking a Big Picture View of Aviation Sector Rates, Charges and Taxes…...... 5

Making the Case for a Middle of the Market Aircraft...... 9

Calendar Controlled Maintenance Items for ALTA...... 15 A320neo JetTrader by Kara Levine | Manager, ICF [email protected] Angus Mackay | Principal, ICF [email protected]

Background and have largely operated a duopoly in the over 100-seat aircraft market since the purchase of McDonnell Douglas by Boeing in the late 1990s. In the late , induced by sustained high fuel prices and potential challenges to the then existing industry dynamic from Bombardier with its CSeries and from ’s Comac C919, the major airframers brought forward plans to update their narrowbody product lines. Rather than waiting until the 2020s to launch new designs, Airbus (later followed by Boeing) opted to take advantage of the engine advancements from Pratt and Whitney with its geared (GTF) PW1000G and CFM International with its Leap-X engine and offer re-engined narrowbody aircraft. The advancements from the engine manufacturers, coupled with aerodynamic and improvements, were expected to deliver fuel savings of up to 15 percent.

The Airbus A320neo (New Engine Option) program, comprising A319, A320 and A321 family variants, was officially launched in December 2010 and orders from Virgin America (30 A320neos) and IndiGo followed shortly thereafter. The A320neo became one of the fastest-selling aircraft ever with more than 2,000 orders placed in the two years following the program’s launch.

The primary change in the A320neo over the A320ceo (Current Engine Option) relates to the engines. Like its predecessor, the A320neo is offered with two engine options, the CFM International (CFMI) Leap-1A and the Pratt & Whitney (PW) PW1100G-JM. The Leap-1A is a significant improvement over CFM’s venerable CFM56 line that powers the A320ceo family, Boeing 737NG, and Airbus A340-200/300 aircraft. The Leap-1A incorporates scaled- down technologies from GE’s GEnx Low Pressure Turbine - such as flexible blades - as well as utilizing advanced composites materials. The of the engine is 11:1, an improvement over the 5-6:1 of the CFM56-5B. The Pratt & Whitney PW1100G-JM, colloquially known as the GTF, is considered a more radical technology shift, using a reduction gearbox to permit the fan of the engine to rotate at a different speed than the rest of the engine modules in order to maximize engine efficiency and reduce the number of engine stages. According to Pratt, the engine offers improved fuel efficiency of 16 percent and reduces the noise pollution by more than 50 percent. To date, both engines have experienced reliability problems.

The A320neo retains the same cabin shape and length as the earlier A320ceo, but can seat up to nine more passengers due to the “Space-Flex” cabin which introduces a new galley and lavatory configuration. Other changes to the airframe are wingtip devices known as sharklets providing a 3.5 percent increase in fuel efficiency. Sharklets were first available for retro- and line–fit on A320s starting in 2012 and are standard on the A320neo. Improved cabin air purifying systems, lighting, and storage were also introduced with the A320neo.

As of November 2017, 169 A320neo aircraft were in service with more than 28 operators worldwide.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 3 Market Outlook The A320neo competes in the larger narrowbody aircraft space against its predecessor, the A320, as well as the -800 and Boeing’s re-engined offering, the 737 MAX 8. To date the Airbus A320neo has recorded more than 3,500 orders and its backlog continues to outpace that of the latter aircraft. The orderbook for the aircraft is particularly strong in the Asia Pacific region, in part due to the growth of Low Cost Carriers (LCCs) such as IndiGo and AirAsia. Much of the backlog for the A320neo seems to be dedicated to traffic growth rather than replacement as the majority of the current in service fleet of the A320 is less than 10 years in age (2,612 out of over 4,000).

A320neo Fleet Status

Number of Active In Service + Region Firm Backlog Options Operators Fleet Backlog Africa 0 0 23 23 0

Asia/Pacific 14 84 1,215 1,299 254

Europe 6 43 442 485 329

Middle East 0 0 178 178 70

North America 2 12 172 187 0

South America 6 27 371 398 40

Unknown 0 0 1,141 1,141 10

Grand Total 28 169 3,542 3,711 693

The first A320neo entered into service with in January 2016 and nearly 170 aircraft have been delivered. The A320ceo is also being delivered, and is likely to do so through the end of the decade due to both teething problems with the new aircraft and engines, as well as the low fuel cost environment, which has diminished the cost advantage of the A320neo with regards to fuel savings.

With respect to engine choice, the CFM Leap engine seems to be the preferred option with 38 percent of the combined backlog and in-service fleet. Nevertheless, a large number of orders are currently listed as undecided as to engine choice (almost 40 percent); however, many of the orders placed in the last year have opted for the Leap engine likely influenced by the continued PW1100G-JM issues.

The overall market for the A320neo is still developing and the aircraft has ENGINE CHOICE FOR IN-SERVICE AIRCRAFT AND ORDERS certainly faced short-term challenges with respect to engine program development. However, with the strong orderbook from a diverse set of airline operators and leasing companies, the aircraft seems destined to gain a significant market share of the large narrowbody segment. If 38% 38% Airbus’s bid for Bombardier passes regulatory muster, the aircraft likely will not face a significant competition outside of that offered by Boeing. As a result, it is likely that the duopoly position of the two manufacturers will continue over the next decade. 24%

CFM PW Undecided

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 4 It is widely understood that the growth of air travel and Taking a Big Picture expansion of air service has brought significant benefits for local economies as well as for , airports and View of Aviation hotels, which is the big picture. Curiously, many industry Sector Rates, Charges beneficiaries lose sight of this and devote energy to opposing the very fees and taxes that fund aviation and and Taxes tourism infrastructure. This often creates unfortunate tensions among stakeholders in the aviation and tourism by Jared Harckham | Vice President, ICF sectors, when they should be working as one for the [email protected] common good. Fees and taxes imposed on the industry Eric Toler | Manager, ICF arise primarily from the stakeholders’ need to fund their [email protected] operations, which is understandable. These organizations include national civil aviation departments, immigration Recent years have seen countries in Latin America and and customs services, airports, tourism departments, and the Caribbean experience a broad range of passenger airlines, but can also include a country’s general budget. growth rates. Some countries have experienced Fees and taxes that are levied include: consistent, annual double-digit growth as a result of supply and demand factors, including the expansion §§Taxes on air tickets and hotel stays, paid by of the low-cost carrier model, robust economic growth, passengers/visitors and the growing middle class. §§Airport fees paid by passengers in their tickets PASSENGER TRAFFIC GROWTH IN SAMPLE COUNTRIES, §§Airport fees paid by airlines as landing fees, rent, 2011-2016 CAGR parking and more The requirement for a visa along with complex issuing Dominican Republic §§ Mexico procedures and often a hefty fee for the visa, paid by +8% +10% travelers and airline crew Panama Colombia +20% +10% §§Restrictive air service bilateral agreements which can Ecuador limit aviation competition and protect inefficient airlines -2% Brazil +5% This short article will not address each issue in detail but Peru will focus on a few examples that illustrate the need for +15% Uruguay stakeholders to understand each other’s requirements and Chile +1% to work together for the good of multiple stakeholders as +9 fees and taxes are established. Argentina +7% Airports need revenue to operate and to fund capital investments, while airlines need to keep costs at reasonable levels to permit profits and expansion. Hotels need revenue Source: Airports Council International to operate, maintain, and promote their businesses, while governments need revenue to operate, create infrastructure, and to promote their destinations.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 5 Some stakeholders argue that in many countries in the Latin Another example of controversial costs are the landing America and Caribbean region, taxes increase the cost of fees and other charges at airports. It is understandable airfares, making those destinations less competitive. In that airlines want these costs to be as low as possible, but addition, high airport fees can raise costs for airlines, making there are cases when airport charges must be understood by carriers because they fund airport facilities that it difficult to justify entry or expansion in a market due to enable massive economic impact and connectivity for lower levels of profitability. These arguments are intuitive, the community and support improved airline safety and but a case can be made that each situation is different and operational efficiency. For example, the new Quito airport that market performance does not always support opened in 2013 at a significant cost. Importantly, it replaced the arguments. a dangerous old, in-town airport where the runway length limited air service and where numerous fatal accidents had The chart below illustrates airport and government taxes taken place. The new airport provides the infrastructure for on a one-way, international ticket (assuming USD 800 cost), most aircraft to take off in safe and modern conditions with along with the growth rate of tourist arrivals. Although BOG room for growth. The high cost of the new airport along with has relatively high taxes, tourist arrivals have still grown by political risk issues led to relatively high fees for airlines, 10 percent per year on average since 2011 according to the but this was balanced by a newer and safer place to do UN World Tourism Organization. Cancun tourist arrivals have business, allowing aviation to grow for all stakeholders. grown at the same rate as Lima, but Cancun’s taxes and Even with the relatively high taxes and fees and economic fees are a fraction of those in Lima. Thus, it is not a clear-cut problems, tourist arrivals at Quito grew by seven percent per case that high airport and government taxes and fees curb year on average since 2011. tourism – clearly there are myriad other factors at play. COMPARISON OF TICKET TAXES ON ONE-WAY INTERNATIONAL AIRPORT INTERNATIONAL LANDING FEE (USD) AIRFARE (BASE FARE OF USD 800) 1400

$250 1200 $218 Airport Departure Fee Government Imposed Tax $209 1000 $195 $200 $175 800

600 $150 $149 $125 $180 400 $144 $104 $100 $144 200 $76 $76 $60 0 $52 $41 SJO PUJ CUN SCL BOG LIM EZE GRU MVD UIO $50 $36 $30 $32 Source: Airportcharges.com, ICF Analysis $60 $51 $49 $44 Note: Landing fees in the table above are for international landings on A320-sized aircraft. $38 $31 $35 $36 $30 Peak-hour charges are not added, where applicable. The landing fees only include direct landing $20 fees and no other surcharges such as parking, follow-me, etc. $0 BOG UIO PUJ LIM EZE MVD SJO CUN GRU SCL 10% 6% 7% 8% 1% 1% 6% 8% 4% 12% Growth of Tourist Arrivals CAGR 2011-16

Note: Assumed a base one-way fare of USD 800 (international) to compute VAT, where applicable Source: ITA Matrix Airfare Search by Google, UNWTO

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 6 There are also charges and processes that are not beneficial ECONOMIC IMPACT to the industry. Many countries still require visitors to Visa/Immigration Policy Passenger Traffic have a visa. Visas may be needed for reasons of national (National Security) security but a bigger problem is the high cost of visas that Airport/Government Taxes Tourist Arrivals discourage tourism and long processing times. Eliminating (Need for $$$) Home Country Airline Interest or streamlining requirements for routine tourist visas is a Infrastructure (Political Pressure) critical initiative for a market serious about tourism. Economists and airport consultants around the world One way to assist stakeholders in understanding the big have calculated the economic contribution (direct, indirect, picture of the economic impact of air service is through air and induced) of airports to the regional economies they service development committees. Airports, jointly with other support. While this contribution may be obvious to airport stakeholders, can help grow air service and visitors via a management which sees passengers and cargo flowing coordinated effort to achieve sustainable connectivity. through their airports daily, it is often less well known to The airport is often in the lead role but other stakeholders other aviation stakeholders sitting in government offices can be: away from the airport. §§Chambers of Commerce Some examples of the economic impact of aviation include: §§Regional or Local Tourism Entities §§Copa Airlines’ new Panama City – Denver route is §§Hotel Associations expected to create 244 new jobs and $26 million in economic impact for the state of Colorado¹ §§Specific Industry Associations §§Aeromexico’s new services from Guadalajara, Merida §§Economic Growth Agencies and Queretaro to Atlanta are expected to generate $10 §§Local Governments million in economic impact for the state of Georgia² §§’s launch of service to San Juan, Puerto Rico from Madrid is estimated to have generated an economic impact of $21.2 million for the island³ The need for revenue creates tensions and parties work at cross-purposes to achieve the greater goal, which is sustained economic impact. Among the barriers to the sustainable development of traffic are restrictive visa and immigration policies, airport and government taxes, and home country airline interest. In the case of the latter, some governments maintain restrictive bilateral agreements as a way of protecting their home country airline from competition, which at the same time stifles growth by preventing airlines from serving the market. All of this stands in the way of promoting passenger traffic and tourist arrivals.

¹“Copa Airlines added to international lineup at Denver International Airport.” The Denver Post, April 19, 2017. ²ICF Analysis ³“Gobernador anuncia nueva conexión aérea hacia Europa.” Governor’s Office Press Release, November 16, 2015.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 7 Stakeholders in a Successful Air Service Development Program

Chambers of Regional or Local Hotel Specific Industry Economic Growth Local Airport & Commerce Tourism Entity Association Associations Agencies Governments Advisor

Air service development committees can offer airlines Costa Rica is a best-practice example of a country that market data and recent economic developments, specific takes a proactive, coordinated approach to air connectivity route proposals, incentive programs, and marketing and and building tourism. The country’s key airports, the DGAC, branding support, among other initiatives. They can also various government ministries, and the National Tourism explain the costs, fees and taxes in the destination. Board all understand the critical importance of tourism to the economy and the role that aviation plays in supporting This group of air service and tourism stakeholders can offer the tourism industry. The Costa Rica Tourism Institute incentives and discounts to airlines to encourage growth in is funded by a $15 tax on all tickets issued outside that strategic markets, which may help offset some of the fees country. With this, the organization promotes the country and taxes. These can be a broad range of agreements from in joint campaigns with airlines and operators, finances simple to high-risk: tourism infrastructure and more. Air service receives the §§Discounted landing, parking, and rental fees at benefit of tax-exempt , joint promotion and relatively the airport low charges to airlines. §§Funds for advertising or other uses §§The pre-purchase of seats on the route by the community §§A revenue/profit guarantee §§Discounts on fuel §§Tax exemption/rebate

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 8 Making the Case for a Middle of the Market Aircraft? by Haitham Mellouli | Associate, ICF [email protected]

Aircraft and engine design and technology have been pushing the edge of what has been possible in the world of commercial aviation. The Boeing 787 and , along with the re-engined Boeing 737 and Airbus A320, have opened up new markets that were not economically feasible in the past. Routes such as Boston-Tokyo, the recently announced revival of Singapore-Newark, and Norwegian’s Europe-North America network are possible today in large part due to the innovative design, material advancement, and operating capability of new technology aircraft. As new markets are opened at the edges of aircraft capacity and flight ranges, ICF believes there is a market in the middle ripe for a new aircraft that would provide operators with similar opportunities that the 787/A350/737MAX/A320neo provided but in a seat class category that bridges the gap between current production single aisle aircraft and smaller widebodies. Developments in the midsize space promise similarly exciting opportunities. CAPACITY AND RANGE OF NEW TECHNOLOGY AIRCRAFT 600 550 A380-800 500 747-8 450 400 777-9 350 A350-1000 787-10 A350-900 300 777-8 A330-9neo 787-9 A330-8neo 250 MoM Opportunity 787-8 Capacitiy - Seats - Capacitiy 200 737-MAX10 A321neo 737-MAX9 A320neo 150 737-MAX8 A319neo 737-MAX7 100 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 Range - miles

Source: ICF analysis.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 9 Defining the Middle of the Market Aircraft The two prime manufacturers differ on the need for new aircraft in this market segment. Airbus contends that The definition for the Middle of the Market (MoM) aircraft is it already has a dominant position at both ends of the somewhat fluid, given the diversity of opinion expressed market with its A320neo and A330neo offerings. Boeing is by airline executives, aircraft lessors, manufacturers, and constrained in terms of developing a new derivative aircraft other stakeholders. One simple way to define the future from existing products by the range, payload, and operating MoM aircraft is as an aircraft targeted to replace the current limitations inherent in a stretched 737 product, while capability with some growth up to 270 seats and facing challenges in terms of high unit price and operating range capability up to 5,500 miles. Another way to define economics should it choose to shrink its 787 aircraft. the MoM aircraft is an aircraft that fills the gap between the maximum range and capacity capabilities of the 737 Airlines are currently utilizing a variety of 737, A320, 757, 767, MAX 10/A321neo and the larger 787-8/A330-8neo types. and A330 aircraft on MoM mission profiles, as depicted in Further research indicates that U.S. and European carriers the table on the previous page. Larger aircraft, such as the desire 4,500-5,500 miles of range at a capacity of around 767 and A330, are able to accomplish the mission profile, 240 seats, while Asian operators are seeking a lower range but with a significant cost disadvantage. Narrowbodies, option in a higher density configuration of up to 300 seats. such as the 737, 757, and A320, are able to accomplish a similar mission with a number of limitations, primarily on After significant analysis across its diverse practice areas, capacity and range. For example, uses a low density ICF believes that a good MoM aircraft, sometimes referred Airbus A320 aircraft to fly from its hub in Bahrain to Paris- to as the New Midsize Aircraft (NMA), should be capable of Charles De Gaulle Airport. Meanwhile, COPA uses a 737-800 transporting 175-270 passengers with a range of up to 5,500 to complete a 7-hour flight from its hub at Panama City miles, and powered with two engines providing 40,000- to Montevideo in Uruguay. Both of these routes push the 45,000 pounds of thrust. ICF believes the list price of such edge of the performance of their respective , thus an aircraft will be in the range of $130-160 million. (Airlines requiring special considerations and operating parameters will generally pay much less than list price.) in order to complete their intended mission. Making the Case for the MoM Aircraft Current Aircraft Design Limitations The business case for or against the MoM aircraft is While the current offerings can complete most of the often debated with vigor. Opponents state that Airbus’ proposed missions of the MoM aircraft, the greatest drivers and Boeing’s current offering can sufficiently cover most behind the demand for this MoM aircraft are operating markets that a future MoM aircraft would serve. efficiency and economic effectiveness. The 737 and A320 are already at their design limits. Long-Haul Statistics of the Airbus A320 and Boeing 737 Families A320 737 Longest route BAH-CDG PTY-MVD Distance 3,000 miles 3,384 miles Seats 136 155 Operator Gulf Air COPA Frequency (annually) 364 flights 637 flights Number of routes 77 166 above 2,500 miles1

1 Includes only scheduled commercial airline operation with more than 100 frequencies annually. Source: ICF analysis based on IATA PaxIS July 2017 data.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 10 1. Current Age and Fleet Size than that of current widebodies. In fact, uncompetitive operating and capital costs were the reason that aircraft One driver behind the demand for a MoM aircraft is the such as the 787-3 and A330 Regional types (two recent current age and fleet size of the 757, the aircraft closest in manufacturer attempts to address the MoM segment) were terms of capability to the MoM. As the table below shows, largely unsuccessful. the average age of serviceable 757 aircraft is nearly 23 years. As a result, many of the current in service aircraft A clean sheet design would be one that can meet both are likely to be replaced in the near future. the technical and financial challenges of the MoM mission profile. Incorporating a common flight deck design with Quick Facts: Boeing 757 another aircraft (such as the 787 for Boeing, or either the Active + Parked 816 aircraft A350, A330, or A320 family for Airbus) allows pilots, flight Average Age 22.6 years attendants, maintenance, and other personnel to be trained Longest Route RDU-CDG – 4,052 miles on a common platform and introduces unprecedented flexibility for operational management. This commonality Delta – 136 aircraft Largest Passenger Operators United – 85 aircraft is a significant advantage and is likely to be a factor in the American – 61 aircraft success for any aircraft in this category.

Source: ICF analysis based on CAPA Fleets and IATA PaxIS July 2017 data. MoM Aircraft Offers Efficiency and 2. Take-Off Performance New Market Growth Take-off capability is an important differentiator in what The chart below represents the seat capacity and will make a truly successful MoM aircraft. The 757 Series distance of routes currently flown (in dark teal) and current is generally able to take off at full maximum takeoff weight new technology aircraft capability (in light teal). A large (MTOW) under Conditions with considerably subsection of routes is served by aircraft that are much shorter runway requirements than the 737 and more capable than the route requires. This is generally an A320 families. inefficient use of aircraft as manufacturers design aircraft to perform best in the upper range of their capabilities. The 757 owes its high-performance take-off capability to a relatively lightly loaded area and powerful engines. 12,000 Wing loading and engine thrust capability limit any further 10,000 miles stretches to the 737/A320. Both would require carefully - 8,000 integrated new and engines, as well as major 6,000 MoM Opportunity modifications to the airframe and to meet 4,000 capability requirements of a future MoM aircraft. The extent 2,000 of these modifications will narrow the cost gap between a Route Distance 0 new clean sheet design and a stretch design, thus making 0 50 100 150 200 250 300 350 400 450 500 550 a new MoM aircraft design a more likely option. Route Capacity - Seats

3. Costs Source: ICF analysis based on IATA PaxIS July 2017 data. As aircraft manufactures explore options to fulfill the MoM category demands, significant consideration must be given to both acquisition costs and operating costs. For commercial success, operating costs—primarily fuel, crew, and maintenance costs—must be significantly less

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 11 A new MoM aircraft would not only replace aircraft operating Looking Forward inefficiently at well below their design capability but also At the 2017 , Boeing shared some details of stimulate new markets, likely in the 4,000-5,500 mile range, what may become its MoM aircraft. As expected, this aircraft which cannot be served economically with present aircraft. will make heavy use of composite materials and will feature A new MoM aircraft is expected to open up new city pairs new engine technology. The most significant part of this new as represented in the table below, just as the 787/A350 did development, however, is the “hybrid” design of the fuselage, earlier in the decade. Such an example is shown in the map which will combine the comfort and boarding efficiency of below, which illustrates new markets or those regaining a twin-aisle widebody aircraft with the economics of a service due to the introduction of the 787. The attractive single-aisle narrowbody aircraft. economics of a new MoM aircraft are expected to stimulate Norwegian, already a beneficiary of expansion due to the growth in low cost long-haul service, potentially introducing 787 and 737 MAX, has expressed interest as a launch new entrants to the industry. customer of the MoM aircraft. Market interest has been Route Pair Distance (miles) reiterated by many industry leaders. John Plueger, the Chief Tokyo – Las Vegas 5,500 Executive Officer of , stated at the ISTAT Barcelona – Beijing 5,476 Americas 2017 Conference that the MoM aircraft “…could be Berlin – Bangkok 5,345 the airplane that creates the next phase of growth for Miami – Stockholm 4,967 the low-cost carriers.” Newark – Kahlui 4,895 Interest is not limited to Low Cost Carriers. Speaking about London – Goa 4,780 Boeing’s MoM aircraft concept, United Airlines Chief Financial Dublin – Seattle 4,527 Officer Andrew Levy said, “It has a lot of merit and, if they Cancun – Saõ Paulo 4,101 decide to launch it, we’d be very interested in considering it.” Other major airlines, such as Alaska Airlines and Delta INTERNATIONAL SERVICES LAUNCHED WITH BOEING 787 AIRCRAFT Airlines, have also indicated interest. FROM THE U.S. It is likely that Boeing will launch the first MoM aircraft design both as a defensive measure against the A321’s order book dominance and to reassert leadership in the MoM category it once dominated after the simultaneous introduction of the 757 and the 767. Given its current development cycle commitments with the 737 MAX, 777X, and 787-10, Boeing will likely target entry into service of its new MoM aircraft around 2025. Concurrently, while Airbus has the engineering bandwidth to certify an aircraft earlier, it risks cannibalizing part of its very successful A321neo program. For that reason, Airbus has chosen to continue advertising the A321neo along the A330-8neo as the pair of aircraft best positioned to fulfill

Source: ICF analysis based on OAG July 2016 data the mid-size aircraft market requirements.

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 12 a last done/next due algorithm, but the compliance for a Calendar Controlled last done needs to be taken manually from the authorized Maintenance Items release certificate (normally an FAA 8130-3 or EASA Form 1) date and not from the installation or task compliance date. for ALTA If these tasks are not manually checked, ICF recommends setting a flag in the system to ensure a manual override by David Louzado | Principal, ICF of the compliance date is entered unless the IT system [email protected] is advanced enough to include full optical character recognition and a flag to identify those specific tasks that In this day of high-tech maintenance planning systems need to have the release dates entered, which are still quite and highly experienced planning and engineering staff limited. Even with smart technology that tags the release across the industry, ICF’s asset management team is still data from the certificate and ties it to the task, it is not that finding situations where control of calendar driven tasks simple. Many release certificates contain additional life limit is not being managed effectively. Despite great steps in data in block 13, which is effectively a “free hand” area to automation and computerized control of maintenance, add information that is relevant. human intervention is still required to ensure compliance in Compliance audits may not identify potential shortcomings all but the most advanced maintenance planning systems. in such practices and procedures, therefore these issues When performing compliance audits, pre-purchase often only come to light when a lessor inspection or inspections, and redelivery audits, one of the easiest items redelivery is taking place, or the aircraft is being sold to a to look for is the datum point for the calculation of next due third party. In this case it may be too late to remedy without compliance for a task which is calendar driven and requires significant costs to the business. ICF recommends that off-wing action such as a landing gear overhaul or the operator quality assurance procedures specifically look at expiration of a fire extinguisher cartridge. the control of calendar driven tasks. Please reach out to ICF directly if you have additional questions on this or Some organizations track compliance from the aircraft related subjects. part installation date. Whilst this is acceptable for a newly delivered aircraft from the factory, where all tasks take their initial start point as the date of delivery or issue of the first Certificate of Airworthiness, different rules apply once the aircraft is in service. When challenged on this subject some may argue that the clock starts from the day of installation, but if that were the case, it would not be a calendar controlled task. If, for example, a landing gear assembly with a twelve year overhaul life was to sit in stores for six years before installation, would it be right to wait eighteen years until the next overhaul? ICF’s technical services and asset management team believe not, as the deterioration is driven by time as well as use. For many systems in use, the planning is controlled by

Aviation Briefing Prepared by ICF for ALTA 2018 Edition 1 13 ICF International Aviation Expertise For more than 50 years, ICF International (formerly ICF SH&E) has been serving the air transportation industry. ICF provides trusted aviation and aerospace expertise to airlines, airports, governments, international agencies, manufacturers, and financial institutions.

ICF’s core aerospace capabilities include strategy and network planning, forecasting, operations, and logistics; revenue management; asset management and appraisals, supply chain and maintenance management, safety, and security and regulatory compliance; financial due diligence; and privatization, alliances, mergers, acquisitions, and alliances. For airports, ICF is a leader in air service development, demand forecasting, commercial planning, system and economic impact studies, sustainability, ground handling, and cargo operations. In addition to aviation, ICF is a leader in the energy, environment and transportation industries, public safety and defense, health, social programs, and consumer and financial business. This breadth of expertise further enhances the wealth of knowledge and experience available to its aviation clientele.

Committed to providing expert and impartial advice, ICF is both results and value driven. By participating directly in many emerging trends, ICF’s aviation consulting group is especially well equipped to assist its clients in adapting to a rapidly changing environment. The firm’s staff of nearly 100 professionals dedicated to aviation is based in offices in New York, Boston, Ann Arbor, London, Beijing, Singapore, and Hong Kong. ICF draws from a network of associates worldwide.

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