AIRBUS’ increase in MRO fees does not appear to increase safety, but looks like a push for more Francs

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Airbus Intends to Charge Royalty Fees On MRO Invoices

Airbus notified MROs that it intends to start charging a royalty fee on maintenance revenues.

Already charges for Access to Data Now imposes Royalty for Actual Charges

No assessment to Airlines, only Independent MROs- price discrimination?

No discernible Safety Benefit; may be decrease

“Airbus notified maintenance providers using its technical data that it will start taking a percentage of MRO specialists’ gross invoices as a royalty fee on top of what the providers pay annually to access the data in the Airbus World platform.

MROs from around the world are alarmed and have called the policy “abusive” and “aggressive.” The royalty fee model applies to all MROs working on Airbus aircraft and using the OEM’s technical data, except those that are owned by an airline and do not perform any third-party work.

It appears that MROs would be double billed for services that it obtains from Airbus under this new royalty fee structure. Sources say the royalty fee is based on the total invoice—including material and parts, labor and all other services such as painting. So if an MRO purchased Airbus parts or other services, they would still count as part of the total gross invoice that would be the basis for the royal fee.

Several sources confirmed that Airbus has proposed a royalty fee of 0.5% of total gross invoices in 2019, retroactive to Aug. 1. However, because of the short notice, the OEM has changed the option to 0% this year, 1.25% in 2020 (instead of the original 1.0%), 1.5% in 2021 and “to be determined” in 2022.

Sources have said MROs have until Oct. 31 to sign this new agreement or risk losing access to Airbus data.

Airbus World is the OEM’s platform used by around 250 MROs to access technical documents and support Airbus aircraft. The aircraft manufacturer says “Based on the solutions selected by the MRO and/or delegated by the aircraft operator or lessor, the entity can have access to more than 30 applications.” The OEM says the fees it charges are confidential.

Several MRO sources that spoke with Aviation Week said they think paying an annual fee to access the Airbus World portal is fair, and would have tolerated a slight increase in their annual fee opposed to having to now submit their customers’ invoices to Airbus, which the OEM said it would have the right to audit.

“The new commercial policy covers the usage of Airbus Technical Data and its intellectual property (IP),” says Airbus. Its “strategy is to collect remuneration for the usage of its IP by the users and the MRO organizations, which are the main beneficiaries of its IP. Airbus is investing significantly in the data updates, data upgrades and most importantly in the digital solutions for the benefit of the MRO organizations.”

Because Airbus has “determined that the current situation was not sustainable,” it launched this royalty fee initiative.

MROs said Airbus notified them about this policy via a prerecorded webinar and has not been answering questions from individual companies. It did distribute a letter this week with answers to “frequently asked questions.”

The new fee could incentivize MROs to stop using Airbus World or pass fees onto airlines, which are opposing to this because they also paid Airbus for the IP when they purchase aircraft.”

 

Intellectual property in the aviation maintenance is a troublesome problem, which has torqued the OEMs and the MROs. The manuals are a prerequisite for any Part 145 work worldwide. Those books and the electronic forms of that information are major assets of airframe and powerplant manufacturers, as are the replacement parts. Those sources of revenue

 

May be a means for those enterprises to pay for research, a positive consideration for safety.

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At the same time MROs offer critical safety services for the world’s airlines. They constitute important capacity for all types of air carriers and their technical competence, inside and out of the US, is excellent plus are often subject to multiple CAAs and customer audits.

Airbus’ proposal to charge only the independent MROs may constitute price discrimination under anti-trust laws. The new cost to the Part 145 certificate holders, while airlines are not charged, has little apparent economic justification for the difference. That’s one analyst’s frank opinion.

Safety may also be affected by the Airbus World access to platform charge plus its royalty fee on the MRO’s gross invoices. Clearly the double charge will be passed on to the airline. Or to remain price competitive, the independent facility might decide to reduce costs, such as the number of AMTs to do the work. That could translate to fewer eyes to catch human errors.

 

 

 

 

Whatever the point of the Airbus additional levies against the MROs may be, it does not appear to raise the Company’s safety standard.



 

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2 Comments on "AIRBUS’ increase in MRO fees does not appear to increase safety, but looks like a push for more Francs"

  1. As I said many times before, MRO is much more about data than wrench turning. And now the OEM’s are capitalizing on it. The next big fight who controls capturing, analyzing, airline operating data, the engine PBH contracts give the OEM’s unprecedented control. This bodes I’ll outcomes on independent MRO’s.
    Ray

  2. Having worked on and been a chairman on the Airbus products during my tenure with the FAA I am not surprised, the caution here is where Airbus is getting that data, and are they imbibing on the data prior to releasing it to EASA. In the past I and my team caught Airbus/ATR cheating and not meeting the spirit of the rule (compliance) EASA is better than the past (DGAC) with new processes and procedures that account for being in compliance. However with that said their fees are way out of line (blame the EU union) the BASA should account for this BUT it does not.

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