Torqued: Repair stations argue customers aren’t being charged enough

 - October 4, 2007, 6:06 AM

Face it: maintenance providers don’t charge enough for what they do. Pilots complain about being charged $65 an hour for corporate jet maintenance and then gladly pay $90 an hour to get their Lexus fixed.

“Let’s be realistic about this,” Sarah MacLeod, president of the Aeronautical Repair Station Association, told AIN. “Airplanes are more complicated than cars, they are highly regulated, there are enormous liability issues and the technician literally puts his career on the line with each signature. Operators should be paying more for maintenance, but unfortunately we don’t have cost standards in this industry.”

MacLeod explained that aircraft maintenance done by a local shop relies on a highly experienced mechanic who will do most, if not all, of the work on an aircraft. “Think about the training, experience and investment in personal tools that requires,” MacLeod said. “Management can’t attract and retain technicians with that level of skill for $12 an hour.” Then there is the maintenance, repair and overhaul (MRO) facility.

“An MRO is structured differently from an FBO’s shop. It operates on a team concept,” MacLeod explained. “A given aircraft might have half a dozen technicians working on different things at the same time. There are backshops and specialists supporting them, and the operation is geared to doing high- volume work on high-end aircraft. It might not make sense to pay $35 an hour to someone who just bends sheet metal, but what about the avionics guy with advanced troubleshooting skills? At the end of the day, the operator should pay appropriately for the level of service received, and that rate should include an appropriate wage for the technicians involved. At a time when the aviation industry is losing mechanics to Disneyland, it’s time to get real about what we charge our customers and what we pay our technicians.”

It is somewhat understandable why one might look at a Lexus dealer and anticipate a higher rate. A typical Lexus maintenance facility is highly organized and spotless. The shop will have runners who drive the car into the mechanic’s bay. The mechanic goes from one job to the next with no wasted time or movement.

Aircraft maintenance is markedly different. Certainly there are FBOs with new buildings and state-of-the-art equipment, but all too often maintenance is being done in old hangars. For safety reasons, engines must be run outside, so diagnostics and run-ups require the aircraft to be moved in and out of the hangar. The nature of hangar design usually means if you want to move an aircraft, you have to move another one to do it, bringing all work to a halt on at least two projects. For many reasons, it takes longer to work on an aircraft than a car. The larger MRO facilities tend to have newer, better-designed layouts and greater efficiency, though not always.

Regardless of the type of maintenance facility, the role of technician is subtly different from that of the automotive mechanic. An aircraft owner should, and often does, establish a personal relationship with his maintenance provider. “A good mechanic inspects your aircraft and helps you understand your options,” said PAMA president Brian Finnegan. “You are given choices to make decisions that best fit your operation, such as using OEM, PMA or rebuilt parts. You also have the option of deferring some maintenance or scheduling multiple tasks during a single visit. In the automotive world it is primarily about replacing bad parts and getting you out the door. With an aircraft you have to have highly qualified people working with you as a team member. If you’re going to have good technicians working for you, you have to pay them.”

According to Finnegan, an industry rule of thumb for the cost of labor is about one-third the shop rate. If the shop is charging $45 per hour for maintenance, the cost of labor is about $15 an hour. “If you consider that every shop has a manager making more money than the technician, that means the technician is probably getting about $12 per hour. How can you expect to attract and keep quality, experienced staff for $25,000 a year?”

Finnegan said the industry should be paying highly trained, experienced technicians $35 an hour ($72,800 a year), which equates to a shop rate of $105 per hour. “My experience is that operators want to get quality maintenance at a reasonable price,” he said. “You have to recognize that paying more often means paying less in the long run. The experienced technician will be more efficient, take less time and make fewer mistakes.”

Rates aside, there is a lesson to be learned from the Lexus dealer. Andy Biery, Cutter Aviation’s general manager of operations at its Dallas Executive, San Antonio International and Arlington Airport, Texas facilities, said he was in awe of his local Lexus dealer. “If you want to charge a higher rate you must provide a value for the cost, and that’s where our attention is focused,” he said.

Cutter has a business plan for an employee/customer-management model based on Carl Sewell’s book, Customer for Life. “We’ve talked with Sewell about how he runs his Lexus dealership service department. It’s very enlightening because they run it for the purpose of selling cars. Their service department drives business to their sales department, not the other way around. The service is so spectacular they could sell any car they want and still have customers flocking to the showroom because it is designed to make customers for life.”

Biery said what he learned from Sewell’s philosophy is that no matter what happens, the customer’s opinion of how he was treated is what others hear about. “We don’t want satisfied customers,” he said, “we want ecstatic customers who tell their story to everyone they know. Satisfied means they had enough for lunch; ecstatic means someone did something that really impressed them enough to be a loyal customer.”

According to Sewell, the philosophy is based on the premise you can’t separate the goal of being profitable from having a loyal customer base. The primary means of being profitable is making customers happy. “Most of the time the decision that is profitable in the short term leaves the customer unhappy, unlikely to return and probably talking negatively about your business,” Biery said. “We’ve concluded that if customer satisfaction is the goal for everything we do, we will have a following of customers who are willing to pay a fair price.”

Biery stressed that when choosing among equal service providers, price can be the driving factor, but price ceases to be the primary discriminator when superior customer service is available. “We now have a sliding scale of $73, $75 or $78 an hour based on the type of aircraft we’re working on. It’s important to recognize that we operate in an atmosphere where our competitors are charging $50 to $65 an hour,” he said. “When we raised our rates we did lose some customers, but we quickly realized something of great significance. The customers we lost were the ones who always argued about the price. Losing them freed up our schedule to do more of the work we wanted to do for customers who appreciated it. Our business continues to grow, and we’re currently operating at about 120 percent of our full-time employee capacity. We are regularly using overtime and supplemental employees. Our goal is to get the shop rate above $100.” Biery’s local Lexus dealer charges $90 an hour for service.