The engine manufacturer says it is actively engaging the leasing community as it looks to adapt its TotalCare service offering for the Trent engine. Dickon Harris investigates.
Rolls-Royce states it is adapting its aftermarket service. The engine manufacturer has been the market pioneer with its TotalCare package – a fixed-cost engine maintenance contract for airlines which use Rolls-Royce engines.
Despite the success of the programme with airlines, the company is looking to adapt its maintenance programme principally to cater better to lessors which havebecome a growing, and vocal, owner of aircraft engines.
Lessors complain that because Rolls- Royce dominates the aftermarket for the Trent family of engines there is no natural parts market for engine investors looking to sell the aircraft. More than 90% of Trent engine maintenance is controlled by Rolls-Royce. Lessors state this reduces the residual values on the engine types, including the Trent 500, and worry it could affect the populous Trent 700 if the market does not open.
“The Trent 500 is not a liquid type. It is what Rolls-Royce will pay for it. If you are an investor you would be careful about buying certain types of planes, unless you can strike a good deal with Rolls-Royce,” explains Olga Razzhivina, a director at aircraft appraisal firm Oriel.
Lessors state that TotalCare limits their control over their exposure to the potential workscope of the engine maintenance because Rolls-Royce collects the maintenance reserves for TotalCare directly from the airline. Lessors require flexibility because they need to transition engines between operators, or part-out the engine. Different airlines may have different maintenance packages with the manufacturer, which causes additional problems for the lessor. All these problems limit how much value the engine owner can extract from the assets.
Speaking to Airfinance Journal, Rolls- Royce states it recognizes there has been “negative market sentiment” directed towards the mature phase of the engine lifecycle, but adds it is “committed to further improvements to meet customer needs”.
Since January the firm has begun conducting specific surveys for lessors as well as operators, and has “upskilled” its customer service team. But the Rolls-Royce team has also stated it is looking to go further and change the provisions of the TotalCare package itself.
“It is a question of segmenting your customers. Lessors are not the same as operators – hence, we need to understand their needs and respond to them differently,” explains James Barry, senior vice-president, customer strategy and marketing, civil large engines at Rolls-Royce.
More than just the Flex
Last year the manufacturer stated it was adapting its package with a new model of its programme called TotalCare Flex aimed at helping lessors, and engine owners, extract value from the engine before it is finally parted out. The programme is still at a pilot stage but Rolls-Royce expects to “make more announcements on the Flex in quarter two”, according to Barry. “We have led and shown where great- est value can be given to customers and as the lifecycle advances we are leading again as the lifecycle shows different demands. Flex is one solution, not the solution, but one that addresses market requirements,” adds Richard Goodhead, vice-president customer marketing, Rolls-Royce.
The manufacturer has already signed a contract with United Airlines to use elements of the TotalCare Flex programme to maintain the airline’s RB211-535 engines operated by United on its Boeing 757 aircraft. Specifically, this means altering the workscopes on the engines for United.
“We will be changing workscopes to more closely align with a retirement profile. In the normal phase of life you would build a workscope that will continue for argument’s sake six years. You can effectively overinvest in the asset and therefore may leave goodness in the engine, which you cannot extract or utilize. It is about how you change workscopes, how you build the engines to meet different profiles, whether it be different compositions of used materials, etc,” adds Goodhead.
Rolls-Royce hints that it is examining other potential changes to its maintenance programmes. Lessors will hope this may mean a further opening up of the parts market, as the manufacturer previously did with the RB211 engine. The engine manufacturer is exploring ways of adapting its maintenance programmes for lessors and engine owners. Other engine manufacturers will be watching closely to see what the UK firm may offer.