Reasons Why Outsourcing Has Gained Popularity in Airline Sector
Airlines are increasingly been choosing to outsource their line and base maintenance services rather than using in-house engineering. Engineering and Maintenance (EM) of aircraft is essential to provide the maximum availability of aircraft capable of undertaking flight operations. It also ensures that aircraft are maintained and operated to acceptable levels of safety. The airworthiness of aircraft can be continuously monitored if maintenance is regularly attended to. While maintenance helps to keep the aircraft serviceable, engineering maintains safety. Both these areas have to follow certain guidelines and operate to certain standards defined by the authorities. The regulations permit sub-contracting of any or all maintenance activities but the responsibility remains with the operator. The firms offering such services need to have a minimum number of qualified and experienced staff. The number of employees depends on the number of aircraft with the airline which suggests that the EM department grows in size and complexity in proportion to the growth of the airline.In the early 1980s, EM was an integral part of the airline. The routes were controlled by the government and competition was non-existent. As small airlines emerged they demanded an equitable share of routes but they were not keen to set up large maintenance organizations as they were not capital intensive. Deregulation in the United States led to increased competition and the traditional carriers suffered in the process. As an aftermath of the Gulf War, the fares plunged and the airlines were forced to consider outsourcing of EM as it is capital intensive. This gave rise to the maintenance, repair, and overhaul (MRO) market which became an organized sector.Airlines are increasingly outsourcing their MRO which allows them to concentrate on their core business according to the Vice-President of Lufthansa Technik (Dore, 2006).