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For industry watchers the publication of the latest newsletter from the Australian Licensed Aircraft Engineers Association may qualify as a collector’s edition.

It overtly says the same things that voices within Qantas have covertly been saying about the Singapore Airlines response to concerns about the Rolls-Royce Trent 900 engines that both use on their Airbus A380 fleets following the near disaster that occurred when one of them disintegrated on QF32 on November 4 shortly after it had taken off from Singapore for Sydney.

In short, why did Qantas ground its fleet for weeks while Singapore Airlines shrugged it off with brief groundings and inspections?

I doubt that many talk back radio hosts or print media identities have not received such ‘messages’ or ‘suggestions’ from both Qantas and the licensed engineers union. That is how media management works, in airlines, in politics, in business and so forth. Issues are drawn to the ‘attention’ of those who write or broadcast about matters affecting powerful stakeholders.

That isn’t to say for a moment that the ALAEA views on Singapore Airlines are totally congruent with those of Qantas.

The union newsletter expresses a fierce and learned concern for what it sees as very serious consequences of Qantas management policy in terms of the off-shoring of maintenance and draws attention to the loss of control over a key component of the Qantas brand’s strength, the airline’s safety reputation.

In short the ALAEA is saying (once it stops agreeing with Qantas about Singapore Airlines) that Qantas management has sold out safety for the sake of around $150 million in savings.

Given the controversial quality of information Qantas received back from Rolls-Royce concerning what was going on with its Trent 900 engines both before and after the QF32 incident the ALAEA commentary deserves serious consideration.

The newsletter, which is reproduced below, also includes unattributed extracts from Plane Talking but that’s cool.

It is worth comparing the careful argument that the newsletter makes beside the 10 second sound and vision grabs that ALAEA Federal Secretary Steve Purvinas makes in the running media war he wages against Qantas.  Brevity, and over simplification, is a function of media formats and public intolerance of in-depth discussions when people are in motion or attempting to have a life when they are at home.

The bigger and unanswered questions are whether or not Qantas will reconsider the value of outsourcing of maintenance to organisations which may be conflicted by being owned by the designers and makers of engines or critical systems, and of course, reconsider and actively retain its experienced pilots and a tradition of exceptional excellence in flight standards.

QANTAS, SingaporeChalk and Swiss Cheese

After the infamous QF32 Trent 900 A380 incident on 4 November 2010, the ALAEA has been attacked by Qantas management for making well-educated and knowledgeable comments in the media. Qantas spin doctors have attempted to portray the ALAEAs concerns in regard to Qantas brand as an industrial campaign.

Qantas management, and in particular Alan Joyce and the Qantas board, miss the point. The ALAEAs actions are founded on a genuine concern for the sanctity of the famous Qantas brand, its impressive long-term aircraft safety record being its only distinguishable and marketable advantage. That record, and the Qantas brand, was created and protected by strict quality control and the skill and diligence of Australian aircraft engineers performing the major overhaul and repair on Qantas aircraft (including engines) in Australia under the Australian regulatory regime. The only thing that distinguishes Qantas in a very competitive market, where Qantas suffers the disadvantage of remote location from major world markets and unfair competition from subsidised airlines, is its safety record. Australian aircraft engineers have been the protectors of this record.

The ALAEA’s actions over a number of years have been aimed at correcting the current Qantas board and management direction of cost-cutting without considering the serious threats to its main product, a container that gets people through the air from one place to another, safely. Qantas managements own actions degrade the brand by handing over the control of its product to companies overseas. Ill-considered, short-term cost-cutting and a lack of investment in Australian-based engineering will have detrimental medium to long-term effects on Qantas, its employees and the Australian aerospace industry skills base.

Qantas approach after the recent incidents involving Rolls Royce aircraft engines has to be applauded. It drew the line on the world aviation chalk board in black and white when on 4 November Qantas Chief Executive Alan Joyce told reporters in Sydney, we will suspend all A380 takeoffs until we are fully confident we have sufficient information about (flight) QF32.

It was reported that Joyce said the plane was capable of flying on two engines. This was a significant engine failure. We are not underestimating the significance of this issue. Grounding the A380 fleet is a significant issue for us, he said. Effectively what this meant was that the Qantas A380 fleet would be grounded until they could inspect all engines and be sure they were safe to fly. Qantas have 6 A380s and 24 engines to inspect. Joyce firmly placed safety before schedule and safety before revenue. The Qantas fleet remains grounded after Qantas engineers, conducting thorough and detailed inspections, found oil in areas of other engines where it shouldnt be.

By contrast on 4 November after the Qantas incident, Singapore Airlines grounded its entire fleet of 11 A380s and 44 Rolls Royce RB211 Trent 900 engines for a short space of time and had them back in the air after about 24 hours, declaring that after checks they were fine. It seems logistically impossible to carry out detailed inspections on 44 engines to ensure their safety within such a short period of time but Singapore Airlines was prepared to risk it. Then on 10 November, Singapore Airlines could not further ignore the problem after Qantas engineers found oil problems in some of its other Rolls Royce engines on A380s, and Singaporeconducted further inspections on its engines and found similar problems. It had to take action and did so by grounding 3 of its A380s but left the other 8 flying. StillSingapore is taking a calculated risk for revenue versus safety.

These events and the different approaches demonstrated in the current circumstances by the two airlines illustrate the massive difference in safety and risk management philosophy of these two airlines. They are like chalk and cheese. Qantas shows a cautious absolute safety approach and Singapore just how prepared it is to take a risky approach.

The cheese relevant to this situation is well known in the aviation industry as the James Reason Swiss cheese model. This is based on the hypothesis that a series of seemingly unrelated safety events, occurring like holes in Swiss cheese, one day line up to cause a major, catastrophic event. Safety and risk management practice should therefore be designed to address the minor events so a catastrophic one doesnt happen. Definitive action to apprehend a sequence of events prevents a major disaster. In the current situation, Qantas decided to take definitive action to arrest the sequence of events whilst Singapore appears to be waiting for the holes to line up.

But whilst there may be events that appear unrelated, it is worth asking whether there are any common factors, actions or changes that have been taken that could directly or indirectly be causing the events?

Prior to July 2009, since the introduction of the B747-400, Qantas maintained and overhauled all its RB211 engines for B747 jumbo jets in its Rolls Royce centre of excellence Sydney engine line facility. Qantas established world records for reliability in longest engine hours on wing for its Rolls Royce engines, fuel efficiency and Rolls Royce used Qantas experience to improve its RB211 engines. The engine that had problems on 5 November on the B747 out of Singapore had been in service at Qantas since 1992 after being bought from British Airways. Qantas had maintained it, in-house, for approximately 18 years up until June 2009 without any major events. In the early part of 2009 Qantas commenced the implementation of a shutdown of its Rolls Royce engine overhaul facility after making a cost-cutting decision to outsource its RB211 – including Trent 900 – overhaul work to HAESL in Hong Kong. 360 Australian engineering jobs were lost. This cost cutting approach sacrificed some of Qantas control over its own product in that it handed over the safety and security of its engines to a competitor, Singapore Airlines.

Interestingly this was a complete turn-about from Qantas corporate philosophy and principles of the late 1980s and early 1990s, which led them to make the decision to have the Rolls Royce engine centre in the first place. One of the major factors influencing the decision to do the work in-house was the issue of tracking parts and those parts hours of usage. This is a critical factor in determining when particular parts should be serviced, repaired or replaced. The other option for Qantas was to have the work done in Singapore by Singapore Airlines engineering company and a subsidiary. This, however, would have involved a system of pooling parts where there was no guarantee your part i.e. a Qantas part tracked for hours of usage in the Qantas system, would come back on the engine, and no guarantee the records of usage for the parts used on your engine were in fact correct. In effect, Qantas identified too many holes in the cheese and would not take the risk. It decided the best way to control the quality of its engines and the safety of its product and aircraft was to do the work in-house under Qantas strict regime of quality assurance. Qantas wanted to retain control over its product and the brand of the airline – its international safety record.

So whats changed for Qantas after having the worlds best practice in engineering for Rolls Royce RB211 engines? Fundamentally Qantas has taken the risk to sacrifice its control over the safety of its product for a perceived cost reduction by handing over its RB211 and Trent engine work to Hong Kong and Singapore. Thus, they have created their own Swiss cheese hole by taking the risk they purposely avoided in the late 80s and early 1990s.

In July 2009, Qantas handed over its RB211 work including the RB211 Trent 900 to HAESL and SAESL. HAESL is Hong Kong Aero Engine Services Ltd, a joint venture of SIA Engineering Company (10%), Hong Kong Aero Engine Company (HAECO) (45%) and Rolls Royce (45%). Their principal activity is engine repair and overhaul of Rolls Royce Trent and RB211 series engines. SIA Engineering Company (SIAEC) is a wholly owned subsidiary of Singapore Airlines.

Another Rolls Royce and Singapore Airlines joint venture is International Engine Component Overhaul Pte Ltd (IECO). It is made up of SIA Engineering Company (50%) and Rolls Royce (50%). Their principal activity is specialising in the repair and overhaul of Rolls Royce Trent & RB211 Nozzle Guide Vanes and Compressor Stators. IECO currently has a worldwide customer base that encompasses the Asia Pacific region, such as Singapore, Hong Kong, Australia, China, and the rest of the world, which includes the United Kingdom, USA and Europe. It is a Rolls Royce certified Gold Centre of Excellence for the repair of Rolls Royce aero engine components.

In addition SIAEC, HAESL and Rolls Royce have another joint venture based in Singapore, Singapore Aero Engine Services Pte Ltd (SAESL). This is made up of SIA Engineering Company (50%), Rolls Royce (30%) and Hong Kong Aero Engine Services Ltd (HAESL) (20%). Their principal activity is as a Rolls Royce Centre of Excellence in the Asia-Pacific for the repair and overhaul of Rolls Royce Trent engines. SAESL began operations in 2001 and has grown their capability to support the full series of Trent family engines globally within a few years. Rolls Royce has SAESL as the first Trent 900 Centre of Excellence and SAESL are supporting Singapore Airlines fleet of A380s.

Just prior to the full handover of its RB211 and Trent work in 2009, Qantas had been getting parts of the complete engine in module form, from a contractor overseas. This might include getting a turbine module and fitting the completed module to Qantas engines. Before this, however, the Qantas/Rolls Royce centre did the complete rebuild of all modules and had never had a major failure. Sources within Qantas say that the engine with problems flying out of San Francisco in August and out of Singapore on 5 November, had been one of the last engines assembled out of the Qantas/Rolls Royce facility in Sydney but also had an overseas reconditioned turbine module fitted. This, however, is yet to be confirmed.

On 13 August 2010, the USA FAA issued an airworthiness directive for Rolls Royce RB211 Trent 900 engines, those engines used by Qantas, Singapore Airlines and Lufthansa on their Airbus A380 aircraft. In part the directive said, rearward movement of the IP turbine would enable contact with static turbine components and would result in loss of engine performance with potential for in-flight shut down, oil migration and oil fire below the LP turbine discs prior to sufficient indication resulting in loss of LP turbine disc integrity.

On 30 August 2010, a Qantas B747 jumbo powered by Rolls Royce RB211 engine with a Trent variation had an uncontained failure with one of its engines shortly after it left San Francisco and had to turn back.

On 4 November 2010, a Qantas A380 powered by Rolls Royce RB211 Trent 900 engines had a massive uncontained engine failure after take-off from Singapore and returned safely to Singapore.

On 5 November 2010, a Qantas Boeing 747-400 made an emergency landing after leaving Singapore due to another Rolls Royce RB211 engine failure.  Passengers on board the flight said they heard a bang and saw smoke coming from the aircraft’s engine minutes after takeoff.

These events are serious, life threatening events. So why would Singapore Airlines keep flying its A380 Trent 900 engined aircraft and risk it? The answer probably lies in what is really at stake for them and Rolls Royce. They have to be seen to be backing their own work and product, out of their engine joint ventures or risk losing credibility and their massive capital investment in the ventures. Depending on what unfolds in the QF32 investigation it may well be that SIAEC and Rolls Royce have to foot the Qantas compensation bill together.

One thing needs to be kept firmly in mind. Rolls Royce, the maker of the Trent 900 engine which disintegrated, knew about the faults that the current airworthiness directive on these engines says are likely to have caused an intense oil fire in a structural cavity in the intermediate pressure turbine area of the engine. But Qantas was cut out of the information loop.

On 18 November 2010, the Sydney Morning Herald reported that, Rolls Royce had made changes to the design and manufacture of new A380 engines to stop oil leaks, but it had not done so to the engines on the Qantas A380 fleet.

If this was significant, and was known to be significant, we would have liked to have known about that, Mr Joyce said.

It doesn’t look like it is a significant modification, but it is a modification that has an impact on how the engines are performing and it is a modification that indicates whether you are going to have a problem or not with the engine.

Rolls Royce was responsible for all maintenance on the A380 engines, Mr Joyce said. He said the modification made by Rolls Royce to the engines on the production line appeared to be an indicator of potential problems.

This acknowledgement by Alan Joyce, Qantas CEO identifies a direct ramification of outsourcing, particularly overseas, and is a major problem. Once you outsource offshore you not only lose control over your product, but control over the flow of relevant information affecting your product and, in Qantas case, you jeopardise the sanctity of the brand. This is something that Qantas and its shareholders cannot afford. If your brand is based on having the worlds best practice, which Qantas had, then outsourcing things such as engine and aircraft overhaul and repair then you lose control over the management of your brand.

Prior to 5 November 2010, as outlined in a report attributed to Airbus Technical Services:

Rolls Royce had designed and was introducing a fix for the oil leak issues for this into the engines at its own speed. Qantas was left in the dark. It is fair to suggest that Qantas needs to review relationships with engine manufacturers in which it pays for power by-the-hour and leaves much of the maintenance and oversight of those engines to the designer and manufacturer.

To emphasise the obvious, the questions concerning the timeliness of the Rolls Royce responses to a known problem, and its capacity and willingness to share them with the airlines concerned will not go away. If the engine maker doesn’t address them its customers will.
The interests of the engine maker and holder of the service agreements are not the same as those of the airline. A carrier might want to correct and replace inadequate design features to a different, more urgent timetable than the party that benefits from the support contract, and has its own brand image to protect.

Whilst Alan Joyce has distinguished Qantas from Singapore by grounding the Qantas A380 fleet he still faces the same engineering quality problem of having no real control over the quality of the engines used on its A380s and some B747s. In fact Singapore Airlines (through its engineering subsidiary SIAEC, SAESL, HAESL and IECO) and its higher risk philosophy has more control over the Qantas brand than Qantas itself. Joyce and the Qantas Board continue to put the Qantas brand at risk, and this is no longer just a possibility it is definite.

What the shareholders don’t know is that a relatively small investment of about $50 million or less would have kept the Qantas Rolls Royce engines facility in Australia under their and Qantas control.

The Qantas Board should be intelligent enough to recognise that putting the Qantas brand in the hands of overseas engineering is an unacceptable risk, both from commercial and a passenger safety considerations.

The Qantas Board needs to commit to and spend the capital (approximately $100 million) to have its A380 and new B787 fleets overhaul and maintenance done in Australia. Its a cheap price to pay to protect the only market advantage Qantas has, its brand and safety record.

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