Airinmar - News

Warranty Matters

by Airinmar - Matt Davies | Aug 13, 2014
Why Does Aircraft Warranty Matter?

Much like when you buy a new car, when an airline purchases a new aircraft they receive a warranty. However, where a brand new Ford Focus will cost $17,000 and come with a basic ‘bumper-to-bumper’ warranty of 3 years or 36,000 miles, a shiny new Boeing 777-300ER costs $315,000,000 and comes with a basic component warranty of 4 years and a range of other assurances and guarantees that last from 4 years to the life of the aircraft.

New Aircraft Warrranty Benefit Areas

 

The basic component warranty will ensure that the product will be free from defects in material, workmanship and design, and be fit for the intended purpose for the specified time period.

Industry guidelines suggest that an aircraft operator could expect to recover 2% of the aircraft value in warranty and guarantee benefits over the initial warranty period. So, we could expect to recover $6,300,000 over 4 years for our new 777-300ER!

When the basic component warranty of 4 years expires, an airline can typically expect to pay for the repair of failed parts (there are a few exceptions). But, much like when you get your car repaired, when an aircraft’s components are repaired you receive another warranty. This ‘repair warranty’ typically lasts 12 months.

It is clear to understand how this relates to airlines, but how does this affect Maintenance and Repair Organisations (MROs)? If an organisation buys or sells parts or repairs, they will be affected by warranty. Warranty is also built into Power-by-the-Hour (PBH) rates and other charging mechanisms. There are five main steps to the component warranty process:

By managing warranty benefit we are contributing to supplier product improvement/reliability because suppliers are financially incentivised to reduce their warranty returns. In addition, warranty management contributes to the profitability of MRO PBH agreements and offsetting back-to-back warranties on parts/repairs MROs sell to airline customers.

Airinmar specialises in component warranty, but we also have extensive knowledge in the other areas too. If you need any advice or support, just get in touch.

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