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IATA-CFMI Agreement Shows Market Cooperation, Not Complete Safety Solution

On July 31, the International Air Transport Association (IATA) announced an agreement with CFM International (CFMI) to increase engine maintenance competition. As a result, IATA has withdrawn its formal complaint filed with the Competition Directorate of the European Commission (EC) in March 2016.

CFMI, a 50/50 partnership between General Electric and Safran Aircraft Engines, agreed to adopt a set of “conduct policies” and associated implementation measures to enhance opportunities available to third-party providers of engine parts and maintenance services on the CFM and LEAP series engines. As described by IATA, CFMI has 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.
  • Honor warranty coverage of the CFM components and repairs on a CFM engine even when the engine contains non-CFM parts or repairs.
  • Grant airlines and third-party overhaul facilities the right to use the CFM Engine Shop Manual without a fee.
  • Sell CFM parts and perform all parts repairs even when non-CFM parts or repairs are present in the engine.

“This agreement shows how powerful the global airline community can be when it is determined,” said Sarah MacLeod, ARSA executive director. “The airlines applied pressure and contractual obligations to address problems that go beyond minimum safety regulations. IATA ensured the contract ‘beneficiaries’ included airlines, lessors, parts manufacturers and independent repair stations. 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.”

ARSA assisted the EC in its initial investigation of IATA’s 2016 complaint by responding to a questionnaire seeking in-depth information on certain practices of specific design approval holders. The association’s responses focused on aviation safety rules and how the national aviation authorities’ failure to enforce regulations even-handedly directly affected competition.

“This agreement is an important lesson,” said Marshall S. Filler, 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.”

To see all of ARSA’s work related to instructions for continued airworthiness, click here.

To read IATA’s complete release on the CFMI agreement, click here.

To read the agreement as issued by CFMI, click here.

Previous updates on IATA's ICA complaint...

3/29/16 - IATA Files Formal Complaint in European ICA Investigation

March 29, 2016

On March 23, the International Air Transport Association (IATA) announced it filed an official complaint in conjunction with the European Commission’s Directorate General for Competition’s (DG-COMP) investigation into alleged abuses of dominant positions by aviation equipment manufacturers.

Last October, the DG-COMP opened a preliminarily investigation into how manufacturers may be limiting the availability of maintenance manuals and possible anti-competitive effects.  According to a statement by the EC at the time, it was “closely monitoring competitive conditions as regards maintenance of engines and components of large commercial aircraft.”

Individual companies and aviation industry trade groups (including ARSA) received questionnaires seeking in-depth information on certain practices of specific design approval holders. ARSA’s responses focused on aviation safety rules and how the national aviation authorities’ failure to enforce regulations even-handedly effects competition.

IATA’s complainant status is a promising development as the DG-COMP continues its examination and determines whether it will open a more expansive probe into alleged anti-competitive practices by manufacturers.

 



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