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Executive Summary
Airlines conduct periodical MROs (maintenance, repair and overhaul) to upgrade the reliability and airworthiness of their aircraft. Parts have to be changed to provide safety and reliability to aircrafts. Parts coming from original manufacturers, the Original Equipment Manufacturers (OEM), have become so expensive that they accumulate a big portion of the budget of airline carriers.
Parts Manufacturer Approval (PMA) is the answer to airline carriers woes. Costs of replacement parts produced through the PMA system are up to 50 percent lower than the original OEM parts. This is the main reason why PMA has become popular. Parts manufacturers under the PMA system offer many benefits to aircraft owners in their MRO needs.
The U.S. Federal Aviation Administration (FAA) is the agency responsible for request approval of replacement parts. It is now supportive of the PMA system giving the industry some leeway in choosing low-cost replacement parts. The FAA also provides strict guidelines to the PMA system so that quality, reliability and airworthiness of replacement parts are not jeopardized.
OEM replacement parts were originally focused on engines and turbines but as cost-cutting measures of airlines grew, parts for other stages of an aircraft are needed; this includes replacement for electronic articles. OEM manufacturers believe that replacement parts market is their aftermarket and therefore a source of income. They have reacted to the popularity of the PMA system and parts that they have instituted measures to discourage airlines to support the PMA system. One reaction is to deprive the PMA manufacturers of the needed information for certain parts. OEMs also charged the quality, reliability and airworthiness of the PMA replacement parts, stating that this should be a primary cause of concern for the industry and the riding public because it involves safety. But there has been no concrete evidence that PMA replacement parts are of low quality, in fact, some airlines support PMA manufacturers and their products, indicating that the latter have better or superior performance than the original.
The FAA assures the industry that the procedures and guidelines are so stringent that they assure quality and reliability of the replacement parts. Once the request for design and production are approved, quality and reliability go with it; meaning the quality of the part can speak for itself as it can withstand vibration and heat in a flying aircraft.
The background of the PMA system has become intensive. This means it has been in practice since the last fifty years. It started in the eighties, became quite popular in the nineties, and now its popularity is gaining ground due to global events that have forced aircraft owners and airline carriers to dramatically cut costs: the aftermath of terrorist attacks against the United States, the intermittent wars in the Middle East and elsewhere in the globe, global terrorism and the United States war on terror, the SARS pandemic, calamities and natural disasters, and so on. These negative global events have slowed down travel and tourism and reduced profits and income of airline carriers.
North American airlines, the European and Asian airlines are continuously suffering from high costs of maintenance parts. Many airlines have resorted to outsourcing MROs to cut costs. Industry insiders believe that the ultimate solution to the high cost of maintenance is the PMA system where replacement parts approved by the FAA in the US, the EASA within the European Union and many other Asian countries, are of low-cost and quality oriented.
Introduction
Parts Manufacturer Approval (PMA) is an alternative to the expensive parts provided by Original Equipment Manufacturers (OEM). The Federal Aviation Authority (FAA) is now very supportive of the use and popularity of PMA parts. In a Special Airworthiness Information Bulletin, FAA authoritatively provided a reason why PMA parts popularity is emerging: airline owners and operators want to reduce maintenance costs particularly on replacement parts. (Azcué 2011, p. 2)
Engine manufacturers became worried of the competition posed by PMA but the blame rests on OEMs because of their expensive parts. FAA assures everyone OEM manufacturers and the general public that to acquire parts approval means following stringent procedures that would ensure quality, reliability and airworthiness of the replacement parts being applied for. Replacement parts that are FAA-approved ensure peace of mind for aircraft operators and owners and the public can rest assured that safety and airworthiness are the number one priority. FAA procedures are exactly the same with FAA guidelines imposed on OEMs. (Azcué 2011, p. 3)
Airlines have been using PMA parts over the last fifty years, but the need and acceptance escalated only very recently. The industry is vulnerable to economic downturns and whatever kind of disturbance. (Doll 2010, p. 2)
The effects of 9/11 and the subsequent economic downturn forced airlines, specifically the North American airlines, to initiate cost-cutting measures. Other countries particularly those in Europe and Asia followed and made their own approval, sometimes coinciding with the U.S. FAA processes and guidelines. The European Aviation Safety Agency (EASA) is the PMAs counterpart in Europe which provides even stricter approval procedures. (Doll 2010)
PMA parts provide the solution with as much as 30 to 50 percent savings. The benefits offered by low-cost PMA parts enabled companies to earn savings in millions. Europe and Asia regions have already recognized that use of PMA parts in lieu of the high-cost OEM parts can reduce costs and provide savings particularly in the MRO (maintenance, repair and overhaul). This PMA popularity is bolstered with the emergence of low-cost carriers, approximately 50 carriers of the existing 80 carriers in Europe. They also outsource MROs; there is the emergence of third-party MROs. Europe has a disadvantage because there are no parts manufacturers except the existing OEMs. (Jensen 2006, para 2)
Martin Ambrose of the European Regions Airline Association (ERA) argued that there is still the great debate over PMA parts but which can favor the latter. According to Ambrose, PMA parts are an additional source to OEM parts; the two can be equal with respect to reliability but they can also fail. However, there is still the question of whether the lessor community would permit the use of replacement parts. Nevertheless, EASA has given the go and the assurance of the reliability of PMA parts. (Ambrose n.d.)
Historical Background
In the 1990s, there emerged spare articles for aircraft without FAA approval which when investigated was traced to suppliers. FAA advised suppliers to obtain a PMA. But there was again another issue on this when it was found that some articles were installed that were not type certificated products. These electronic articles were known as suspected unapproved parts (SUP). (FAA Advisory Circular 3a and 3b)
Why is there a need for PMA replacement parts? Why not require Original Equipment Manufacturers (OEM) to manufacture spare parts as reserve parts like what automotive and appliance manufacturers do?
The questions provide an immediate and definite answer: owners and operators as well as MROs do not want to buy OEM parts because the parts are too expensive. In these trying times, the airline industry needs to cut costs to remain in business. With Iran on the brink of closing the Strait of Hormuz, oil prices are likely to go up with travel and tourism going low. Oil and travel are related. And this is one of the reasons why air carriers have to consider using PMA parts as a means to save operational costs without sacrificing safety of the riding public. (Azcué 2011, p. 2)
High fuel prices will add to the airlines operating costs while less fuel-efficient planes are also costly to maintain and operate. Less fuel-efficient planes prompt airlines to retire the old ones. Michael Howard of AeroStrategy (Marpa 2011) explained that air carriers are retiring old aircraft in large quantities, an average of 400 aircraft a year. Continuing the operation of these aircraft and allowing them to fly would add more operational costs to the owners. The logical solution is to retire old ones and allow MROs to use PMA parts for those aircraft that dont require high maintenance costs. (MARPA: economic outlook for the PMA marketplace 2011)
In 2004, in spite of an improvement in the airline business, US airlines had a collective deficit of $9 billion. Net profit, operating profit and total revenues of major US airlines are demonstrated in Appendix B. (Doll 2010, p. 2)
AeroStrategy provides analysis of the PMA market. Howard indicated that in 2010, the air transport MRO (maintenance, repair and overhaul) market was estimated at $43.6 billion but in 2007, it was high at $45 billion and $42.7 billion in 2009. Growth in the MRO market is seen at 3.5% this next decade and will reach $54.8 billion by 2019. MRO supply chain has to be simplified in order to gain cash, Howard said. Airlines have to cooperate with MROs to use PMA parts. (MARPA: economic outlook for the PMA marketplace 2011)
In 2009, the airline industry recovered $47 billion in excess inventory. Simplifying excess inventory is one way of saving; likewise reducing MRO excess inventory is a way of reducing spending. But this is not a permanent solution. Another way of saving, aside from PMA parts, is disassembly or parting out of aircraft. Surplus parts reached $2.3 billion in 2009. (Doll 2010, p. 2)
If fuel stabilizes at $80-$110 a barrel, there could be modest growth in the U.S. gross domestic product (GDP), that is, to include the airline industry. PMA growth was 4% in 2010, from $353 million to $367 million in 2009. (MARPA: economic outlook for the PMA marketplace 2011)
The growth potential for the use of PMA parts is great. MRO shops have been using PMA parts, and those non-OEM shops that are not using PMA are in the process of doing so. Airlines are becoming convinced of the acceptability of PMA. Other countries are now considering PMA parts. Japan has contracts with HEICO and Wencor to use PMA parts. (Jensen 2006, para. 13)
PMA parts are considered new because they are manufactured according to specifications and guidelines by the FAA. PMA suppliers can deliver parts anytime. (Doll 2010)
Definitions and Concepts
Parts Manufacturer Approval or PMA is an official approval from the FAA on the design and production of aircraft replacement parts. The PMA system has a go signal by the U.S. FAA to manufacture aircraft replacement parts subject to stringent procedures. PMA has become a system itself wherein TC or certificate holders are authorized to manufacture and supply aviation parts to owners, operators and aviation agencies in lieu of the parts originally manufactured by OEM companies. PMA parts are subject to FAA regulations and guidelines. PMA approval includes the design and production, two important aspects of the PMA approval system. (Federation Aviation Administration: parts manufacturer approval (PMA) 2011)
There is currently big demand for PMA parts because of the high-quality and low cost attributes as compared to OEM parts. OEM parts are becoming too costly that airlines have demanded other sources of parts. (Doll 2010)
The government through the FAA has the authority to screen and approve manufacturers in their application to manufacture aircraft replacement parts. Aircraft parts manufacturing and sales are a part of the so-called aftermarket which expanded due to airlines cost-cutting measures. From its inception in the 1980s, obtaining FAA approval has always been difficult. Many had failed but others who followed the guidelines to the letter succeeded. (Azcué 2011, p. 2)
The FAA made moves to help PMA applicants because government regulators saw the potential of improving replacement parts manufacturing and what it could do to the airline industry. The FAA conducted an enhanced enforcement to educate manufacturers about the significance of approval or certification processes. As a result, many parts were approved. Manufacturers who had previously no PMAs could now apply and acquire certifications in accordance with the FAA regulations. So there was a resurgence of approved PMA parts. The Modification and Replacement Parts (MARPA) has a goal to harmonize the standards set by FAA which became effective by April 16, 2011. (Azcué 2011, p. 2)
The FAA Aircraft Certification Service issued a bulletin stating that parts being licensed to TC/PC holder, PMA, and STC can be used interchangeably because these products are approved in compliance to the provisions of Title 14 of the Code of Federal Regulations (14 CFR). Therefore, PMA or STC parts are approved replacement parts pursuant to FAA regulations. (FAA Aircraft Certification Service: special airworthiness information bulletin 2008)
FAA authorizes some manufacturers of aviation parts in accordance with the requirements of the PMA system. PMA parts hold the quality and airworthiness of parts manufacturers by OEM for as long as manufacturing provisions and requirements are followed. The FAAs motivation and warning states that for as long as a manufacturer does not infringe upon another manufacturers patent, the former can manufacture a part that can be installed on an aircraft. (Stephens 2008, para 2)
Moreover, PMA parts are not considered bogus or fake because they follow certain quality standards and systems during manufacturing. The big difference is that they are much cheaper than parts manufactured by OEM, which provide the needed benefits airlines expect with respect to safety and validity, and airworthiness. (AEROSUP: FAA PMA aircraft parts distributor 2009)
The airline industry has accepted the fact that PMA parts offer the same quality with even better performance than OEM with respect to safety and reliability. (Yi cited in Holland 2008, p. 53)
Terms and Acronyms
Terms and acronyms used in this Report (U.S. Department of Transportation FAA: advisory circular 2010): Original Equipment Manufacturer (OEM). Original Equipment Manufacturers are so-called manufacturers of engines, turbines and other major parts of an aircraft. Actually, an engine is a combination of outsourced parts, manufactured by suppliers, making OEMs systems integrators and not manufacturers as what they are called. Legally, OEMs are Type Certificate and Production Certificate holder (Doll 2010, p. 5)
Code of Federal Regulations (CFR). The Code contains rules from the Federal Register, formulated by the executive departments and other agencies of the U.S. government. (Code of Federal Regulations 1999)
Parts Manufacturer Approval (PMA). This is a system defined in the CFR that provides procedures and guidelines for requests and approval of replacement parts of an aircraft. Requests and applications are forwarded to the Aircraft Certification Office which has jurisdiction over the geographic area where the application/request is made. (MARPA.org: what is PMA? 2012)
Type Certificate (TC). Type certification assures that the PMA part follows the stringent guidelines set by the FAA. (Code of Federal Regulations 1999)
Supplemental type certificate (STC). This is issued to an aircraft owner who does not introduce a major change on an engine, and his change may not require a type certificate. (Code of Federal Regulations 1999)
Suspected unapproved parts (SUP). Any replacement part that did not pass or is not applied for request with the FAA is called SUP. (Code of Federal Regulations 1999)
Design approval holders (DAH). This pertains to the PMA manufacturer with an approved design of a PMA part. (Code of Federal Regulations 1999)
Aims
This paper aims to conduct a study, including background and concepts of the PMA system, how it evolved and the many challenges PMA manufacturers encountered in the course of its introduction into the aviation replacement parts.
Objectives
The study focuses on the advantages and disadvantages of the PMA system and the replacement parts industry in relation to the aviation industry. Through the vast literature on the PMA system provided by the different organisations and stakeholders, this Researcher dug up records, ideas, concepts and opinions of people involved in the replacement parts industry and provided a clear emphasis on the advantages and disadvantages of the PMA parts.
Other specific objectives include:
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To know and understand how the PMA system works;
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To discuss the pros and cons of the PMA system and why is there a need for PMA replacement parts;
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To investigate the quality and reliability of the PMA parts compared to the OEM parts;
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To determine how the Federal Aviation Administration (FAA) approve application for PMA parts and the processes of approval;
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To determine how the industry lays down the framework for the PMA system;
Deliverables:
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Advantages and disadvantages of the PMA system;
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Background of the PMA system and the OEM;
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Background researches on the FAA and FEASA, two regulatory agencies from the United States and Europe, respectively, pertaining to procedures in PMA parts approval;
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An investigation into the procedures of the various regulatory bodies regarding the PMA parts industry
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Definitions and concepts of the PMA system;
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Background and the monopoly of the OEM;
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Maintenance-repair-overhaul sector of the aviation industry;
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Background and operations of the various organisations involved in the replacement parts industry and the PMA;
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Other topics of great importance in the replacement parts industry.
Differences between PMA and Bogus Parts
The question of bogus parts attributed to PMA parts is being posed by OEM manufacturers. PMA could be mistaken for bogus parts but PMA parts performance so far proves that there are those approved parts that performed better than the genuine parts or those manufactured by OEM. Moreover, PMA parts should not be mistaken as bogus because the approval process is legal and follows a stringent method of production. The PMA is approved by the FAA of the United States, the EASA of Europe and other government agencies of other countries whose guidelines are also parallel to the FAA guidelines and regulations. (Doll 2010, p. 4)
Another thing is the performance of PMA parts with respect to reliability and airworthiness, and longevity. True, both OEM and PMA parts can fail and have their own weaknesses. This is true with any other man-made object or appliance. But many airlines and organisations that have been using PMA have attested to the PMAs quality and reliability. (Doll 2010, p. 4)
FAA authorities have also assured the public that they are on guard of bogus parts and warned repair stations not to use bogus parts for they surely will backfire on their performance, safety and airworthiness. Using bogus parts is a criminal offence under U.S. laws. Violators can be meted jail terms with corresponding huge fines. But there are those in the airline industry that have kept their mouths closed on the subject of bogus parts. Why? They could be using some parts for substitute. Others said that the airline industry is susceptible to this kind of problem. FAA is investigating some cases of airlines using bogus parts. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
Bogus has a term in the FAA dictionary and this is suspected unapproved parts (SUPs). Bogus refers to different instances and uses in the aircraft under maintenance, for example, it can refer to parts with incorrect documentation, counterfeited or copied parts with no quality but look like the original, and parts made from inferior raw materials. These parts could also be the result of thief, or from unlawful manufacturing, and not checked for quality. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
The FAAs stern warning is that without its approval, parts are considered Unapproved parts and must not be considered PMA parts or OEM parts. FAA inspectors only recognize legitimate parts from licensed OEMs and FAA-approved PMA parts manufacturers. Investigators easily recognize the markers and features in PMA parts. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
Armando Leighton of CRS Jet Spares however says that with todays technology, it is so difficult to spot an SUP and sometimes the only way to spot an illegal part is through documentation. There are also instances that SUP fabrication is superior than PMA or the original OEM parts that only those with expert knowledge of the original can recognize a bogus part. FAA has issued a directive to its governing bodies that documentation is very important and if this is not produced along with the parts, it should not be used. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
There could be infiltrators of counterfeited parts, especially now with airlines cost-cutting measures. Leighton says that there were many counterfeiters in the past because these parts could be made in ordinary machine shops Doing business with PMA has produced vigilance among manufacturers and buyers. They are now more aware of the presence and infiltration of bogus parts. Any suspected parts are reported to their loop or the manufacturers. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
Technology has helped them track bogus parts, especially with fast communication. PMA manufacturers have also made use of holograms in tracking genuine parts and distinguishing them from bogus or unapproved parts. Leighton says that it is somewhat the same as tracking counterfeit dollar bills. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
The solution really is vigilance, for no one will sell bogus parts if no one buys. The FAA has made great efforts in instilling awareness to the aviation industry and provided difficulties to bogus manufacturers and sellers. There is also the danger of using bogus parts without one knowing it but if documentation processes are followed, then theres no reason of using bogus parts. FAA and PMA standards have been stricter because of these circumstances, and to get a part approved it would take about six to twelve months. FAA informs the industry and the public through its website the procedures needed in applications and approval requests. The information can range from ordinary procedures to how to spot or recognize SUPs or parts for an airframe or engine. ((AV Buyer: bogus parts: are they still a problem for business aviation 2009)
Vigilance on avoidance of bogus parts has been observed by many involved in repair and maintenance and those on safety and airworthiness. Experts are one in saying that the FAA has been successful on this regard. If you know the paper work, deal with authorized vendors, and be watchful about these parts, there could be no reason a bogus part could infiltrate. There might be some mistakes that could not be avoided because, as Leighton says, aircraft owners and operators buy thousands of parts annually, but for as long as safeguards are observed mistakes can be avoided. What to do if someone finds a bogus part? The bogus part should be quarantined and immediately reported to the FAA office. The best defense is to trace the origin of the SUP. It is necessary to buy parts from reliable vendors. (AV Buyer: bogus parts: are they still a problem for business aviation 2009)
Procedures in PMA Approval: Europe Aviation Safety Agency (EASA) and Federal Aviation Administration (FAA)
The U.S. FAA
In the United States, PMA parts purchased should have FAA-PMA marks that include the name, trademark and other important details of the product, but not missing out the model designation for the part installation. Some parts which are too small for marking or etching should have a tag as it is enclosed in a plastic bag. But what is most important in purchasing PMA part is the PMA letter of approval which lists the part number that differs from an OEM part by a prefix or a suffix, and the eligibility for the product. (Lombardo 1999)
FAA regulations state that manufacturers of replacement and modification parts that will be installed on a type-certificated product should have a PMA. The design of a PMA part and the already-approved design of corresponding OEM part are exactly the same (Doll 2010, p. 7).
ACO and MIDO
Responsible for approval of PMA applications is the FAAs Aircraft Certification Office (ACO) and the Manufacturing Inspection District Office (MIDO). The ACO determines whether the part can provide the airworthiness standards. There are many ACO offices in various parts of the United States that provide services to PMA applicants. If the applicants part is too complicated and considered critical, then the local ACO will pass this on and coordinate the matter with the Certification Management ACO (CMACO) which is an agency much more authoritative and experienced on matters pertaining to airworthiness standards. On the other hand, the MIDO is the office responsible for auditing the manufacturing facility. The MIDO sees to it that the production and quality system can produce the part according to the approved design. (Doll 2010, p. 6)
Two prerequisites have to be made in order to attain approval:
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FAA has done an intensive review of the design of the part and that it is assured that the requirements of FAA regulations are met; and
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FAA examined how the part was produced or manufactured according to existing production quality system and it is convinced that there is an existing system that applies quality production according to FAA standards. (MARPA: economic outlook for the PMA marketplace 2011)
A PMA features design and production approved by the FAA for replacement parts. Design and production are two most important aspects of approval requests. The FAAs guidelines on safety standards have to be met in the design stage. The production system should also satisfy FAAs production standards. In case of third party manufacturers, the PMA can also be used using the two aspects of approval requests. (Azcué 2011, p. 1)
The manufacturer must prove that the part has the qualities of the original that it intends to replace. Parts that need modification can also use PMA and is applicable for supplemental type certificates (STC) holders. In case of articles used or installed in an aircraft, a PMA for replacement parts can be issued under a Technical Standard Order (TSO) certification for as long as the article is within the products type design, and the part is a replacement part for the product. The PMA can be changed for a minor modification but the product has to meet the required airworthiness. (U.S. Department of Transportation (Federal Aviation Administration): subj: parts manufacturer approval procedures 2008)
The design approval has to be based on the OEM design of a particular part. The FAA formulated three standards on the design approval:
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Identicality with an OEM design agreement the OEMs design is an approved design, therefore, the PMA applicants design that is identical to this design is already approved.
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Without an OEM design agreement the applicant will have to prove that his part is identical with an OEM part.
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Tests and other methods The applicant will have to prove through tests that his PMA part is identical or better than the originally approved part. (Doll 2010)
After the part has been tested whether it met the airworthiness standards, the next step is to determine the criticality of the part. Will the part fail and what will be the causes are some of the underlying questions. After this test analysis, the results will be classified into three: critical, important, and not-critical or important. Most approved PMA parts are not considered critical or important. Other problems involving part complication, a more detailed plan is needed, such as a Project Specific Plan wherein testing is more rigorous and detailed. The procedures are costly for the applicant. Sometimes the applicant will need an OEM representative sample to be used as a benchmark. (Doll 2010)
A fabrication inspection system is also needed to provide assurance that the approved part has conformed to the design data and is now safe for use. The requirements for this system are the same as the OEM requirements. The requirements include: conformity of the materials to the design; processes that should conform to the required specifications; drawings should be available to FAA personnel; major design changes should be approved by the authorities; and many more. (Doll 2010)
Processing of application for PMA has been stringent and this is no surprise to PMA manufacturers who understand the requirements of airworthiness and reliability. Some PMA companies produced only non-critical parts, but others have made bold moves of producing critical and sophisticated parts to really compete with OEMs. (Doll 2010)
There are instances that PMA parts perform better since PMA manufacturers now have access to the latest technology and information necessary to make state-of-the art aviation parts. So what airlines do is to go to PMA manufacturers in order to improve their cost-cutting measures. OEM manufacturers are therefore restrained to raise prices. This makes the competition advantageous to the aircraft industry. (Companies and markets.com: parts manufacturer approval (PMA) parts: a global strategic business report n.d.)
The FAA also worked with other regulatory bodies around the world in order to forge ties with respect to aircraft safety and production. The agreements that they have worked out include the Bilateral Aviation Safety Agreements (BASAs). The aim is to form a regulatory network which will focus on the airworthiness of aviation parts. In an agreement under the BASA treaty, both parties will respect the findings and certifications of either party. PMA approved parts can be sold and applied in the countries that have a BASA treaty. However, critical parts will have a separate study. (Doll 2010, p. 12)
The United States has signed a BASA with the European Aviation Safety Agency (EASA) of the European Union, and airworthiness authorities of the countries of Brazil and Argentina. BASA has helped in the settlement of fees. When an airline requires the use of PMA parts in another country, the regulations are provided in the State of Registry of that country. Sometimes, a host country will require the certificate of airworthiness of the PMA part in question or certification from the FAA that the part meets the FAA guidelines. (Doll 2010)
There are several BASAs the United States has signed with about 42 other nations. Approval for the use of PMA parts has been one of the relentless efforts of the government to support the replacement parts industry and this is to spread to other countries through Bilateral Avi
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