An outsourcing decision model for airlines' MRO activities

Abstract

PurposeThis paper aims to evaluate the main business models used for airlines' maintenance, repair and overhaul (MRO) activities and determine the activities to which these relate.Design/methodology/approachA critical literature review is used to develop a conceptual model of MRO activities. This is evaluated through a SWOT analysis before an exploratory study of eight airlines is used to confirm the applicability of the conceptual model.FindingsFour levels of MRO outsourcing are identified; from fully outsourced to fully in‐sourced. From the exploratory study it is shown that critical MRO activities such as line maintenance are frequently in‐sourced, while activities with low demand at an airline level such as engine maintenance are often outsourced.Practical implicationsMRO represent around 10‐15 per cent of an airline's operational costs. By identifying the strength and weaknesses of different MRO models, it is possible to evaluate alternative MRO strategies.Originality/valueUnlike other research in maintenance which was aimed mainly at the manufacturing sectors, this research provides insights into the maintenance practises in a service sector. In particular this research studies the different outsourcing levels existing in airlines' MRO. The knowledge gained by understanding the mechanism of outsourcing in airlines' MRO can be further extended to other industries and help in best configuring their maintenance units.