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Abstract Number: 008-0675

Value Chain for Airframe Heavy Segment of MRO Industry

Sayyed Hamid Hosseini, Sharif University of Technology, Tehran, Iran, teesfoon@hotmail.com,

+989126540644

Karim Mazaheri, Sharif University of Technology, Tehran, Iran, mazaheri@sharif.edu, +98-21-66018541

Seyed Mohammad Mirbagheri, Fajrashian Aviation Repair/Overhaul Services Co, Tehran, Iran,

mirbagheri@farsco.com, +98-21-66050351

POMS 19th

Annual Conference

La Jolla, California, U. S. A.

May 9 to May 12, 2008

Abstract

Due to the great growth in passenger and cargo transportation, industry of Maintenance Repair

and Overhaul (MRO) of civil aircrafts has become one of the attractive industries. Safe

investment in different segments of this industry needs an analytical method. In this paper, we

introduce the new idea of combination the “value chain” and the “value shop” methods for

modeling MRO Industry. So all important engineering activities are considered and personal

costs are calculated for each activity. Finally, a new formula for calculating the value of each

activity is derived. As a case study, our analyses are applied to a company in Heavy

Maintenance segment of MRO, and they demonstrate that the “repair” activity is the most value

producing one that identifies the most value producing shops in this industry.

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Introduction

The aircraft Maintenance, Repair and Overhaul (MRO) industry has a large and competitive

market. In 2005, the value of this market exceeded 100 billion dollars of which 52 billion dollars

belonged to the military aircraft market, and the remaining belonged to the civil, and cargo

aircraft market [1]. Value of the MRO market was even more than the value of aircraft

manufacturing (75 billion dollars) [1]. To succeed in this industry, one needs to have an analysis

of resources of the firm, to be able to formulate a resource-based strategy. Also, to formulate a

new strategy for a company active in the field of MRO, “Value Chain Analysis” can be used.

The result of this analysis is used in many different ways. First, it can be used to arrange for a

cost bench marking, and to optimize the cost structure of the company. Second, it is useful for

finding the key Success Factor (KSF) in different sections of the main or support activities, and

integrating KSF with an internal resource analysis result in strategic recommendations to achieve

competitive advantage in the selected activities. The third application goes to feasibility studies.

In this paper, we perform a market segmentation analysis along with the value chain analysis to

find profitability of each ring of the chain, which could later be used to recommend profitable

rings of activities for further development in the company. All these applications need to a

thorough and detail value chain analysis. Here, we develop a model for value chain analysis in

MRO industry and we will show how this model may be applied in a real scenario.

The value chain framework, which was introduced by Porter [2], is a reliable method for analysis

of the structure of value production in a specific firm. According to the three typology of

technologies mentioned by Thompson [3], there are three distinct value configurations that each

one is appropriate for one type of technology. These three typologies of technologies are: long-

linked, intensive and mediating. The value chain models the activities of the long-linked

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technology, while the value shop models firms where value is created by mobilizing resources

and activities to resolve a particular customer problem, and the value network models firms that

create value by facilitating a network relationship with their customers using a mediating

technology [4].

Having considered the following three issues:

activities which is done in the aircraft MRO industry

the logic of producing the value

the technology type that is used in this industry,

we believe that the aircraft MRO industry is a combination of the industries that the logic of

producing value are modeled by both the value chain and value shop. Thus in order to

understand this logic, we will use both the value chain and value shop. In most of the value

chains, each activity has the specific structure of costs [5], which is needed to find.

In this paper, in addition to introduce the rate of regional and international development of this

industry, we try to show the chain of activities and the value chain that dominates on it. Also, we

examine this industry from the cost analysis point of view.

Introducing the Aircraft MRO Industry

Aircraft manufacturers beside their products, deliver a complete set of information and methods

of maintenance and repair of their products to clients [6]. Clients also have to consider all those

recommends regarding to the international organizations laws. These recommends are due to

developing flight quality, increasing flight safety and correctly using the products, prepared in

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high standards and delivered to the aircraft owners. Thus, in addition to perform the flight

services, they are responsible for the maintenance and repair of their aircrafts. This responsibility

is carried out by the maintenance and repair engineering companies that they could be a part of

the airline itself the same as Lufthansa Technique and Air France or they could be an

independent company like Fars Co. and GAMCO. These engineering companies should perform

the interval checks which are defined by the manufacturers.

The two big and competitor manufacturers of aircrafts i.e. Boeing, Airbus and the other

manufacturers consider some regular checks for their productions that usually named as A, B, C

and D. The time of each check reaches after either a definite flight-hour or spending a definite

age of aircraft (The one that reaches earlier). The maintenance and repair phases for each family

of aircrafts (Boeing, Airbus …) are different. Among different checks, D check is a heavy one

and is called “Overhaul”. In this check, the aircraft grounded for long time and its entire

components are being inspected and if needed, become repaired. During the overhaul of a large

body aircraft, usually about 10 to 15 thousands activities are carried out. Thus, aircraft MRO

industry is defined as an industry in which all the regular checks mentioned by the aircraft

manufacturer, are done on the aircrafts.

Structure of the Aircraft MRO Industry

MRO industry is divided into five segments:

Engine

Airframe Heavy

Component

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Line

Modifications

These segments are different with each other according to dependency to some factors such as

labor, parts repair, materials etc. For example, engine overhaul that has the most share of MRO

market, extremely depends on materials and on the other hand labor has the least effect on this

segment, but line maintenance is completely vice versa, i.e. materials has the least effect on this

segment and labor has the most. Table 1 contains the percentage of dependency of each segment

to the factors that was mentioned before.

Table 1: Structure of each segment based on cost producing factors [8, 9, 10]

Labor Materials Parts Repair Other

Engine 10 60 25 5

Airframe Heavy 70 20 10 0

Component 35 50 15 0

Line 80 20 0 0

In addition, this table shows that in each segment of the industry what the cost producing factors

are and how much their share is. For example, in Airframe Heavy segment, labor is both the

most effective and cost producing factor in that 70% of the costs is due to it.

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International Aircraft MRO Industry Growth

Air fleet international growth has a direct effect on MRO industry. In fact, the capacity increase

of the air fleets enhances the aviation transportation market so this causes more needs to MRO

industry. Comparing the statistics of air fleets with the forecasting statistics for 2015 shows the

growth of demand for aircraft MRO. Table 2 contains this statistics for large body, narrow body

and regional jets for 2005 and 2015.

Table 2: Statistics of the aircraft types for 2005 and 2015 [11]

Large Body Narrow Body Regional Jets

2005

Number 4006 10710 2487

Percent 23 63 14

2015

Number 5489 14571 5696

Percent 21 57 22

Rate of Growth (Percent) 31 30 78

Table 2 shows a considerable growth in all types of aircrafts after 10 years, but the trend of the

market is to acquire the regional jets because the growth in this segment is much more than that

of the other segments. Moreover, these growths imply that the market of Aircraft MRO industry

will have brilliant changes. Table3 shows the share of five segments of the industry from the

total amount of 38.8 b$ market in 2005 and also indicates the percent of growth up to 2015.

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Table 3: Share of each segment of the industry from 38.8 b$ market [11, 12, 13]

Segments b$ (2005) Relative Share (2005) Growth Percent (2005 to 2015)

Modifications 2.716 7% 3.7

Airframe Heavy 5.432 14% 2.7

Component 8.148 21% 3.9

Line 8.924 23% 3.7

Engine 13.58 35% 4.2

Total Growth Percent - - 3.6

Different regions of the world, based on their specialties and abilities in materials, technology

and labor have become dominant on some parts of the market. For example, Europe has achieved

the most part of the engine overhaul segment [14, 15] and Asia, due to inexpensive labors that is

the most effective factor in Airframe Heavy segment, has achieved the most share of this market

[15, 16, 17]. The share of different parts of the world from the total value of the market in 2005

is presented in table 4. In addition, the rates of growth for each part up to 2015 are also shown.

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Table 4: Share of different parts of the world from the total value of the aircraft MRO market in

2005 [12, 13, 14]

Region b$ (2005) Relative Share (2005) Growth Percent (2005 to 2015)

Asia / Pacific 8.924 23% 5.1%

Europe 11.64 30% 2.7%

N. America 14.356 37% 2.6%

L. America 1.552 4% 3.4%

Middle East 1.552 4% 6.6%

Africa 0.776 2% 6.3%

Table 4 indicates that the growth rate in Middle East is very considerable and represents high

potential for investment in MRO industry. Whereas we need a good analysis to invest in this

industry, we use the method of value chain to figure out the different activities and their shares

on profitability. Therefore, we can suggest strategic proposals for this industry, but because of

the lack of information for all segments, this paper focuses just on Airframe Heavy segment and

does engineering analyses on this segment.

Method of Analysis

In addition to Porter’s value chain, C.B. Stabell et al. with considering to Thompson’s three

typologies of technologies, introduced two new methods for value analysis. Thompson divided

technologies to long-linked, intensive and mediating. Stabell believed that for industries that are

using the intensive and mediating technologies, it is better to use value shop and value network

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configurations for value analysis, respectively. However, in the industries using long-linked

technologies, the value chain configuration is appropriate.

Value shop models the firms that supply and develop their sources and abilities in order to

resolve a particular customer problem. Therefore, their activities are related to problem finding,

problem solving, choice, execution and control/evaluation for customers’ special problem. If the

abovementioned procedure is applied but the solution of the problem is not satisfactory then this

procedure will be repeated cyclically. Hospitals, professional service firms, and educational

institutions are examples of firms that rely on an intensive technology. Therefore, value shop

configuration should be used for modeling them [4].

Value network models firms create value by facilitating a network relationship between their

customers using a mediating technology. Therefore, their activities are related to network

promotion and contract management, service provisioning and infrastructure operation. The logic

of activities and value producing are not the same as a chain or a cyclic issue but they are

simultaneous and parallel. Examples of companies that create value by facilitating exchange

among their customers are telephone, transportation and insurance companies and banks [4].

Porter defined value chain as the set of activities through which a product or service is created

and delivered to customers [18]. The value chain is a framework for identifying all these

activities and analyzing how they affect both a company’s costs and the value delivered to

buyers. Therefore, value chain models the firms in which value is created through transforming

the inputs to final products. In fact, in these firms, the productions are mediums for transmitting

the values from the firms to the customers. The most manufacturing companies and the factories

that convert the minerals to the materials useful for the different industries [19], are examples of

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industries producing the value by successive activities. Usually, industries are divided to some

segments that each one can be analyzed by one of these three methods (value chain, value shop

and value network). Thus, the most firms cannot be purely analyzed by one method [4].

In this paper, based on some case studies, several active MRO companies are considered and all

working activities related to the overhaul of a B747 are identified. The criteria used to identify

these activities are as follows:

Considerable effect on value and distinction

Considerable share of cost

Same activities from the point of strategy and economic

Traditionally, to analyze the value chain, one considers the primary activities (inbound logistics,

operations, outbound logistics, marketing & sales and service) and support activities

(infrastructure, human resource management, technology management and procurement).

However, according to above criteria, we believe that the nature of major and value producing

activities is the chain of shop servicing that in each shop the value chain model cannot be used.

Instead, we should use the value shop model. Also, expertise investigations show that this chain

contains several engineering activities among the shops. Thus, the model used here is a

combination of both “value chain” and “value shop” models. The value of each activity is

estimated by a method introducing in the next part of this paper. We use the following criteria to

evaluate each activity:

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Human resource costs

Type and amount of especial instruments

Type and amount of especial establishments

There are three major engineering aircraft MRO companies in Iran. They are FARSCO, HOMA

and SAHA. This investigation carried out in FARSCO and HOMA. These three companies cover

the engine, airframe heavy and line maintenance segment of this industry in Iran. Component

and modifications segments are outsourcing. FARSCO is specialized in airframe heavy. In this

research, we focused on realizing the successive activities and estimating the value chain of

airframe heavy segment.

In each industry for determining the value chain, one needs to separate the activities done on the

inputs unless they are transformed to the final products. These successive activities are called

“activity chain”. There is a value chain parallel with the activity chain that is determined

according to the criteria that are realized as the value producing criteria.

In order to model this industry as a chain of activities, we consider an aircraft, which needs

overhaul as the input material, and the aircraft that was repaired as the output production. For

segregating the activities, one should consider to the same order of them in volume or size. In

addition, these volumes or sizes should be in mediate size. If these sizes are very small then the

number of activities will increase and cause a long chain of activity. This makes the value

analysis hard and impossible. For example, for starting an overhaul on a B747, about 5000 word

cards (WC) are issued. These WCs are the essential primary activities that generate 1 or 1.5

times new activities which are called Discrepancy Records (DR). It is clear that such a detailed

chain of activities is neither needed nor useful. On the other hand, the segregated activities

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should not be in large scale. The reason is that if they are so large then recognizing the activities

which have considerable value, becomes impossible. Therefore, this causes the loosing of

valuable activities. In the MRO industry, because of the competitive market and the need of

airlines to use their aircrafts as soon as possible, long time aircraft grounding does a large

amount of harm to the airline. Therefore, in general, all activities done on aircrafts have overlaps

with each other. Then, for realizing the segregated activities, one should consider that the start

and end of each activity is actually accompanied by the start and end of the other activities. Table

5 shows all activities which executed on an aircraft from the receiving up to delivering it. These

activities are distinguished for an overhaul (check D) and are general for any large aircraft.

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Table 5: Chain of activities for Airframe Heavy segment of aircraft MRO industry

No. Activity

1 Aircraft Delivery & Input Checks

2 Cleaning

3 Opening & Removal

4 Stripping

5 Technical inspection

6 Time change items

7 Repair

8 Repair confirmation, Storing and reinstalling

9 Functional & Operational Checks

10 Lubricating & Adjustment

11 Engine installation

12 Refueling & Leaking checks

13 Finishing Operation

14 Flight tests and aircraft delivery

For carrying out this procedure, different shops are involved. Generally, in such an engineering

maintenance company, the following shops exist: airframe and powerplant general (APG),

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electronics & avionics (AVC), cleaning (CLN), fuel, paint shop (PS), sheet metal (SM), fiber

glass (FG), fabric shop (FS), welding shop, non destructive test (NDT), engineering shop (ENG),

quality control (QC), etc.

Introducing a New Method for Calculating Value Chain

Our method for value analysis is based on profit (value). Generally, profit is equal to subtraction

of costs from incomes. Here, we consider three basic costs as follow:

Human resource costs

Material costs

Overhead costs

Subtraction of all these costs from incomes of overhaul services creates the profit. This profit is

the result of performing all activities on an aircraft through the shops. Therefore, just it is

required to distribute this profit among all activities by a definite and logic method. For this

target, here, we introduce a method that is based on five steps. This method finally results in

distributing the profit to all activities by the proportional coefficients. These five steps are

explained below.

Step 1- Calculating the mean value of man-hours ( hmV )

For calculating hmV it is required to divide the profit to total man-hours of the MRO services on

an aircraft. Relation 1 shows how to calculate the mean value for each man-hour.

(1 )Total man-hours / Total value (profit)( = hmV )Mean value of a unit of man-hour

Step 2- Calculating the share of each shop from the total value (jsV )

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For this target it is essential to find the share of each shop from the total man-hour of performing

MRO services. This information can be easily achieved from the division of “planning and

control of the production”. In this division, all the “work cards” and “discrepancy records” are

issued and documented. These two include a lot of information for each detailed activity such as

the required skill and the needed time or spent time for doing a specific activity.

Therefore, it is easily possible to estimate the total man-hour that each shop spent for carrying

out its specialized services on an aircraft. Multiplying the total spent man-hour of each shop by

the mean value of man-hour shows the share of the value, which is produced by each shop.

Step 3- Determining the share of each shop in performing each activity ( ijb )

For this target, it is essential to consider the MRO operation for each aircraft as a distinct project.

It leads to a work structure called “Project Base”. The advantage of this structure is that for each

project all the needs such as the following ones can be easily determined.

Defining the detailed activities that should be done on each aircraft

Determining which shops are required to be involved in each project

Determining the amount of man-day required that each shop should spent on each project

Thus, project base management for each aircraft causes to derive several useful data that the

most important one of them is the required man-day for each activity that performs by each shop.

This data leads to design a matrix, whose columns are based on shops and its rows are based on

activities. The numbers in the matrix are man-day and introduced by ijm . ijm means that amount

of man-days that shop j spent for activity i.

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Here, for more clearance, we consider an MRO base which performs activities A, B and C

through circle (), square () and star () shops as an example and using this for explaining

the other steps. Table 6 shows ijm for our example.

Table 6: Matrix of activity chain-shop chain

Sum

90 40 -50 A

70 10 60 -B

100 80 -20 C

130 60 70 Sum

In table 6, for example, 50 means that for performing activity A, circle shop should spent 50

man-day, and 90 means the total man-day which is needed for finishing activity A. 130 means

that the total man-day that star shop spends for its professional MRO service for a project. In

addition, the other numbers have the same meanings.

If each ijm divided by the sum of them in the last column and then multiplied by 100, then the

share of each shop in carrying out a special activity will be achieved. These coefficients are

calculated through formula 2 and are called ijb . The share of each shop for our example is shown

in Table 7.

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(2 )100

j

ij

ij

ijm

mb

Where i and j are counters for activities and shops respectively. It means that for each activity, i

is constant and for each shop, j is constant.

Table 7: Share of each shop for carrying out each activity

Sum

100 45 -55 A

100 14 86 -B

100 80 -20 C

For example, this table shows that 55% of activity A is done by circle shop and the 45% left is

done by the star shop.

Step 4- Normalize the share of each shop with respect to column

In order to normalize the shop share for each activity, each ijb should be divided to column

summation in the last row of table 7. Normalization causes equality between the total value with

the sum of value of each activity. These coefficients are very important. The reason is that

through these coefficients the total value of each shop is distributed among the activities. These

coefficients are calculated by formula 3 and called ijc . For our example, ijc are shown in Table

8.

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(3 )100

i

ij

ij

ijb

bc

Table 8: Normalized share of each shop for carrying out each activity

32 -73 A

10 100 -B

58 -27 C

Step 5- Calculating the value of each activity

Considering step 1 to 4 and their explanations, we are now able to calculate the value of each

activity through formula 4.

(4 )ji s

n

j

ija VcV 1

Calculating Value Chain for Airframe Heavy Segment of MRO Industry

Initially our target of doing this investigation was to become familiar with the value chain of the

total MRO industry. However, at the beginning of the research, we encounter with 2 kinds of

problems that each one imposes some limitations. The first problem was the dependency of

motor, component and modifications segments to abroad resources. Therefore, our field of study

was limited to the air frame heavy segment. The second problem was the data that were

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inaccessible for us but we strongly needed them. This problem had such strong effects on our

study that leads us to consider just “operation” ring of value chain.

For calculating the value chain for this segment of MRO industry, the introduced method in the

previous section of this paper is used. In addition, as it is mentioned, the MRO process is divided

to 14 activities, which are carried out by 12 professional shops. For calculation, the real

information of Fajrashian Aviation Repair/Overhaul Services Co. (FARS Co.) is used but here,

relative amount of jsV in Table 9, ijb and ijc coefficients in Tables 10 and 11 and relative amount

of iaV in Table 12 are presented. In fact, these tables are the results of steps 2 to 5.

Table 9: Value produced in each shop in percent – Step2

Shops APG AVC QC NDT CLN FUEL PS SM FG FS WELD ENG

jsV 36.9 12.7 8.5 1.7 3.8 3.4 5.5 18.8 4.9 2.3 0.9 0.6

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Table 10: Share of each shop for each activity ( ijb coefficients) – Step 3

ENG WELD FS FG SM PS FUEL CLN NDT QC AVC APG

0.000 0.000 0.000 0.000 0.000 0.000 0.037 0.000 0.000 0.222 0.370 0.370 1

0.000 0.000 0.000 0.000 0.000 0.000 0.000 1.000 0.000 0.000 0.000 0.000 2

0.000 0.000 0.000 0.041 0.205 0.000 0.000 0.000 0.000 0.137 0.000 0.616 3

0.000 0.000 0.000 0.000 0.000 1.000 0.000 0.000 0.000 0.000 0.000 0.000 4

0.000 0.000 0.000 0.000 0.086 0.011 0.017 0.023 0.029 0.144 0.115 0.575 5

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.091 0.325 0.584 6

0.008 0.017 0.042 0.083 0.274 0.023 0.052 0.052 0.021 0.031 0.104 0.292 7

0.000 0.000 0.000 0.000 0.000 0.000 0.041 0.000 0.000 0.259 0.363 0.337 8

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.200 0.500 0.300 9

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.313 0.391 0.297 10

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.278 0.444 0.278 11

0.000 0.000 0.000 0.000 0.000 0.000 0.056 0.000 0.000 0.056 0.833 0.056 12

0.080 0.000 0.000 0.000 0.080 0.000 0.005 0.000 0.000 0.246 0.267 0.321 13

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.333 0.556 0.111 14

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Table 11: Normalized Share of each shop for each activity ( ijc coefficients) – Step 4

ENG WELD FS FG SM PS FUEL CLN NDT QC AVC APG

0.000 0.000 0.000 0.000 0.000 0.000 0.177 0.000 0.000 0.096 0.087 0.090 1

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.930 0.000 0.000 0.000 0.000 2

0.000 0.000 0.000 0.330 0.318 0.000 0.000 0.000 0.000 0.059 0.000 0.149 3

0.000 0.000 0.000 0.000 0.000 0.967 0.000 0.000 0.000 0.000 0.000 0.000 4

0.000 0.000 0.000 0.000 0.133 0.011 0.083 0.021 0.579 0.062 0.027 0.139 5

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.039 0.076 0.141 6

0.094 1.000 1.000 0.670 0.424 0.022 0.250 0.048 0.421 0.014 0.024 0.071 7

0.000 0.000 0.000 0.000 0.000 0.000 0.199 0.000 0.000 0.112 0.085 0.081 8

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.087 0.117 0.073 9

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.135 0.092 0.072 10

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.120 0.104 0.067 11

0.000 0.000 0.000 0.000 0.000 0.000 0.266 0.000 0.000 0.024 0.195 0.013 12

0.906 0.000 0.000 0.000 0.124 0.000 0.026 0.000 0.000 0.107 0.063 0.078 13

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.144 0.130 0.027 14

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Table 12: Relative value chain for each activity in percent – Step 5

No. Activity iaV

1 Aircraft delivery & Input checks 5.5

2 Cleaning 3.9

3 Opening & Removal 14.4

4 Stripping 5.8

5 Technical inspection 10.3

6 Time change items 6.7

7 Repair 21.1

8 Repair confirmation, storing and reinstalling 5.2

9 Functional & Operational checks 4.2

10 Lubricating & Adjustment 4.5

11 Engine installation 4.1

12 Refueling & Leaking checks 4.2

13 Finishing operation 7.2

14 Flight tests and aircraft delivery 2.9

Table 12 shows that “Repair”, “Opening & Removal” and “Technical inspection” are the most

valuable activities, respectively.

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Conclusion

Using the innovative model of combination of the “Value Chain” and the “Value Shop”, all the

essential and technological activities related to the Airframe Heavy Segment of aircraft MRO

industry were understand and reduced to 14 activities. All these activities are carried out through

12 shops. Here, three different sources of costs are considered and subtracted from the total

income. Therefore, the profit was calculated. For calculating the value chain, it is required to

distribute the profit to the activities. For this target, a method based on 5 steps are introduced.

Finally, the results of this study are determined as follows:

Derive a method for calculating the value chain

Separating the valuable activities from the invaluable activities

Determining the share of each shop for carrying out each activity

The most valuable activities are “Repair”, “Opening & Removal” and “Technical

inspection”

The least valuable activity is “Flight tests and aircraft delivery”

Among all shops, “APG”, “SM” and “AVC” have the most share of value producing

In order to modify this study, it is required to avoid some simplifying assumptions for calculating

the costs. Also, using the same mean value of man-hour for all shops leads to disappearing of

some differentiations of activities. Therefore, this makes some misjudgments.

Moreover, to develop this study, it is necessary to do a feasibility study for the sake of

establishment a new MRO base. The result of this study, beside the result of value analysis, will

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help the investors to become familiar with the costs and values. Therefore, they can easily

reduce the risks of investment. For example, this study shows (without considering the feasibility

study) that for entrance in the field of Airframe Heavy segment of MRO industry, an investor

can safely invest on APG, AVC and QC shops and just services the “Repair”, “Opening &

Removal” and “Technical inspection” activities and outsources the other activities.

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