Story ID: CBiatacfm08012018
IATA, CFM Reach Competition Settlement 
By: Cathy Buyck
Caption: Airline lobby group “hopeful” other OEMs will follow suit 
Word Count: 621
The International Air Transport Association hopes that other OEMs will follow CFM International in adopting a code of conduct meant to increase the opportunities available to third-party providers of engine parts and MRO services on the CFM56 and the new Leap series engines. The global airline trade body and CFMI, a 50/50 joint venture between General Electric and France’s Safran Aircraft Engines, Tuesday announced they had signed a commercial settlement agreement concerning CFM's MRO policies and activities.

“IATA is hopeful that other OEMs will review this agreement and see how they could apply it to their own aftermarket activities,” an IATA executive told AIN. The person declined to comment on whether IATA had entered discussions with other OEMs, adding that the association remains open to any effort to support industry competition. “IATA does not exclude any pathways in supporting the efforts of our members to ensure a vibrant and competitive market for MRO services,” the executive said.

The voluntary agreement with CFMI stems from a formal complaint lodged with the European Commission’s Directorate General for Competition (DG COMP) by several airlines and MRO providers over some OEMs’ practice of withholding repair information from third-party maintenance shops, thereby limiting competition and consequently allowing the manufacturers to increase prices. IATA joined the complaint on behalf of its members in March 2016 after DG COMP opened a preliminary investigation.

The EU competition watchdog in 2015 sent questionnaires to several industry stakeholders seeking in-depth information to back claims that manufacturers have abused their dominant positions in the sale of aftermarket parts and services. While non-exclusive, the request for information focused on the CFM56 engine and Honeywell auxiliary power units due to the platforms’ high market share. The CFM56 serves as the sole powerplant of the Boeing 737 and the 737 MAX. CFM56-series engines power some 13,400 single-aisle aircraft flying today, IATA noted.

According to IATA, CFMI agreed to license its engine shop manual to an MRO facility even if it uses non-CFM parts, permit the use of non-CFM parts or repairs by any licensee of the CFM engine shop manual, and honor warranty coverage of the CFM components and repairs on a CFM engine even when the engine contains non-CFM parts or repairs. The company also agreed to grant airlines and third-party overhaul facilities the right to use the CFM engine shop manual without a fee and sell CFM parts and perform all parts repairs even when non-CFM parts or repairs exist in the engine.

The agreement includes specific provisions ensuring the implementation of CFMI’s commitments with regard to CFM56 series engines. The OEM, however, committed to apply the agreement to all commercial engines produced by the company, including engines in its new Leap Series. Also, GE has agreed to apply the “conduct policies” to other commercial aircraft engines that it produces in its own right, IATA said. In return, IATA has withdrawn the formal complaint it filed with DG COMP.

“This agreement is an important lesson,” said Marshall Filler, Aeronautical Repair Station Association (ARSA) managing director and general counsel. “IATA and CFMI deserve a lot of credit for its comprehensive nature—it establishes a model for future contract negotiations between aircraft purchasers and the entire manufacturing community.”

ARSA executive director Sarah MacLeod also lauded the agreement. “This shows how powerful the global airline community can be when it is determined,” she said. “The airlines applied pressure and contractual obligations to address problems that go beyond minimum safety regulations.” However, she warned, “Aviation safety agencies grappling with maintenance data availability issues should not take this agreement as an answer to their obligations to establish and ensure compliance with basic safety requirements.”