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Should Pacific Jet Outsourse the Inspection

In: Business and Management

Submitted By buzzard93063
Words 1523
Pages 7
Should Pacific Jet Outsource the 72 Month Inspection
Brian S. Dondlinger
March 20, 2012
Embry-Riddle Aeronautical University

Abstract
The required 72 month inspection on our Gulfstream G IV is coming due in a few months. There are basically two options available to complete the inspection. We can perform the inspection in-house or we can outsource it. In our situation the main advantage of performing the inspection in-house is that we will have direct control over the inspection. While the main disadvantages are that we do not have the man-power or special tools that might be needed. The main advantages of outsourcing the inspection are that the inspection can be completed much faster by technicians that perform it regularly and have all of the special equipment necessary. Taking everything into consideration I recommend that we outsource the inspection.

Should Pacific Jet outsource the 72 month inspection?
This is the first 72 month inspection that our 135 charter company (Pacific Jet) has coming due. Since we are a small operation with only 3 aircraft and 4 maintenance technicians performing a 72 month inspection in-house will be a huge undertaking. The main items to consider are costs, aircraft downtime, and quality control issues. We have to decide if we want to perform this inspection in-house our outsource it.
The airlines have been outsourcing maintenance for decades and have accelerated this outsourcing rapidly since 2001. In 2005, some airlines outsourced as much as 62 percent of their maintenance and that number continues to grow. While they have increased their outsourcing of maintenance their accident rates have declined, statistically proving that outsourced maintenance is safe (Armstrong, 2007).
There are many companies that could perform this inspection for us if we decide to outsource it, but the best one based on price and reputation is Western Jet Aviation in Van Nuys CA. Western Jet Aviation is the World’s largest independently owned Gulfstream aircraft maintenance and service team; they have over 100 years of combined Gulfstream experience. They are a full service FAA certified repair station, and are skilled at performing comprehensive maintenance packages and repairs. They have over 50 employees and over 50,000 sq-ft of hanger space. Western Jet strives to maintain a dedication to customer service, quality work, and attention to detail all wrapped in a cost-effective package (Western Jet, 2010).
Costs
The 72 month inspection is estimated by CMP.net to take 359 man-hours. Included in the inspection are the removal and inspection of all primary and secondary flight control surfaces and actuators, as well as removal and inspection of associated bell-cranks and cables. Finally all of the control surfaces must be reinstalled rigged and operationally tested (CMP.net, 2012)
Western Jet Aviation
I have contacted Western Jet Aviation and have received a quote from E. Mckeirnan (personal communication, March 19, 2012) of 15 working days and a cost of $42,686 to perform this inspection. This quote covers the estimated 359 man-hours at $98 per hour for a total of $35,186.00. Plus the $7,500 for the parts kit needed to complete the inspection. Also there will be a 1.5% fee added to the final labor charge for shop supplies and environmental disposal fees, and it is recommended to budget an extra 15 to 20% for the repair of any discrepancies found during inspection.
Since we are located in Scottsdale AZ. we will have to reposition the Airplane to Van Nuys CA. if we have Western Jet perform the 72 month inspection. I have added the estimated cost of the reposition into the total cost of outsourcing. The flight is two hours round trip with a direct operating cost of $1,500 an hour for $3000 plus $400 for two round trip airline tickets. This comes to $3400 in extra costs, so all totaled for just the necessary inspection items the bill from Western Jet should be $46,612.50.
Pacific Jet The exact cost of performing the inspection in-house is hard to calculate since I have no previous inspections to use as a baseline. We have all of the tools needed to perform the inspection, so that will not be a factor. The estimated man-hours of 359 from CMP.net are an average time to complete each part of the total inspection; our mechanics have never performed this inspection so they will undoubtedly be on the slow side of the learning curve. So I am going to figure an extra 20% in man-hours for a total of 431. Our cost per man-hour is $65 for regular time and $87 for over time. The cost for contracted labor is $85 an hour. We will still have 2 airplanes that will need there regular maintenance, so I am estimating that our mechanics will be able to provide 16 man-hours a day toward this inspection. Taking the 16 man-hours a day of available labor and dividing it into the total required to complete the inspection of 431 has the inspection taking 27 working days. I am sure that 27 working days to perform the inspection is unacceptable, however this would be the cheapest option, labor would only be $28,015.00 and the parts and shop supplies would remain the same at $7,500 and $528 for a total of $36,043. To reduce the airplane’s down time I could bring in a contract mechanic and authorize overtime for our mechanics. There is one local contract mechanic that should be available 8 hours a day and I could get 4 hours of overtime out of our mechanics. With 28 man-hours of labor a day we should be able to complete this inspection in just over 15 working days about the same time as Western Jet, but the total cost would be $39,875.20 which is more than Western Jet.
Quality Control Issues
Western Jet Western Jet is a part 145 Repair station, this means that they are certified by the FAA to perform maintenance, preventative maintenance, and alterations in accordance with CFR part 43. The FAA requires that part 145 repair stations maintain a very high level quality control. They start with training and experience for each mechanic, and encompass all aspects of the company up to the manuals required and supervisors needed. This all means that the FAA requires and inspects to make sure that part 145 repair stations have the highest standards in safety and quality control (ECFR14-145, 2012). With all of the FAA oversight and Western Jets experience and reputation for performing this inspection both on time and within budget they are a great option for performing this inspection.
Pacific Jet Our in-house maintenance technicians are very experienced at conducting normal maintenance and troubleshooting of squawks. Also, all of our maintenance technicians have received training on the G IV so they are approved to perform the inspection. However, they have very little experience performing large inspections, especially inspections dealing with fight controls. Since we operate under part 135 the FAA has over sight of our maintenance department. Part 135 requires us to have a General Maintenance Manual (GMM) and to conduct maintenance in accordance with it. The FAA has specific requirements for the GMM such as Training requirements, Inspection requirements, and procedure requirements (ECFR14-135, 2012). Our manual allows us to conduct this inspection in-house, however, because of the lack of familiarity with this inspection; I am concerned that we could have problems if we conduct it in-house.
Conclusion
Based purely on the cheapest way to complete the inspection it would seem that we should perform it in-house. However if you factor in the downtime of the aircraft, the cheapest way is not the most economical, because when we try to complete the 72 month inspection in house as fast as it can be completed if outsourced it ends up costing more. Looking at safety there is a big difference between completing the inspection in-house and outsourcing it. Performing the inspection in-house is not as safe as having it outsourced. This is because of our lack of familiarity performing the inspection, and Western Jets very close familiarity with the inspection. Taking everything into consideration, I feel that we should definitely outsource this inspection to Western Jet.

References

Armstrong, D (2007, April 27). Airline maintenance comes under scrutiny; Carriers express confidence in outsourced work. The San Francisco Chronicle, p. D1.
Western Jet. (n.d.) Retrieved from http://westernjetaviation.com/index.htm
CMP.net. (n.d.) Maintenance Quote for 72 month inspection. Retrieved from Https://cmp.mygulfstream.com/UserHome/default.aspx
Electronic Code of Federal Regulations. (n.d.) Title 14, Part 145. Retrieved from http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=39b339e91923784e12a3ae69c16f3db2&rgn=div5&view=text&node=14:3.0.1.2.19&idno=14
Electronic Code of Federal Regulations. (n.d.) Title 14 Part 135. Retrieved from http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=39b339e91923784e12a3ae69c16f3db2&rgn=div5&view=text&node=14:3.0.1.1.11&idno=14

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