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Aviation-related businesses have engaged in partnership and outsourcing (contracting) activities for many years, but recently the pace and scope of aviation outsourcing has increased. While considerable opportunities exist, businesses need to prepare carefully and take into consideration a plethora of strategic, business, operational and legal issues in deciding what to outsource and whether to form partnerships.

This has been seen in:

  • The contracting of aviation maintenance, engineering, and logistics services by nearly every major airline some without robust reporting systems in the contracting organizations.
  • Increasing US airport reliance on contracting/outsourcing of a wide range of facilities and services.
  • The emergence of virtual airlines where aircraft are owned by a leasing company and operated by a separate airline entity
  • Airlines, IT vendors
  • Complex industrial partnerships between engine, airframe, component and system manufacturers Increased complexity and interactions of the world’s financial systems cascading into financial pressures on the aerospace system.

Potential hazard

  1. Degradation of prior, robust, aviation cultures that were previously based on personal relationships
  2. Sudden ruptures in economic relationships including just-in-time supply chains, and available safety resources due to world market upheavals.
  3. Failure to detect emerging issues resulting from faulty or broken reporting systems in dispersed organizations across world economic centers.
  4. Operation by airlines at maximum profitability – e.g, at their cost minimums – increases the likelihood of an accident. Organizational profitability impacts safety risks in predictable ways. A recent analysis documented a 7 percent decrease in the likelihood of an accident for every 10 percent deviation in an airline’s performance from its profitability goal. Risk tapers off when airlines move away from their target in either direction according to a report by Brian Maffy at BYU. Statistics of rare events requires that this result be treated cautiously.

Corroborating sources and comments

  • An assessment of trends and risk factors in passenger air transport;
  • Principles of Successful Outsourcing of MRO Services
    Paul Kerpoe Aviation Consulting
  • Practices and Perspectives in Outsourcing Aircraft Maintenance
    DOT/FAA/AR-02/122, Office of Aviation Research Washington, D.C. 20591
  • Virtual Safety – Airlines are tightly regulated as they are for a good reason – and while virtual airlines can provide what looks to customers like an airline product, there are crucial differences, editorial in Flight International, 22-28 February 2011
  • Maffly, Brian, BYU scholar finds safety risk highest when airlines are closer to financial targets, The Salt Lake Tribune, December 28, 2011

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