Air NZ's outsourcing far from plane sailing

A worker at Ameco, the huge maintenance plant near Beijing which is 40 per cent owned by Lufthansa Technik.

The moment Air New Zealand indicated it was planning to outsource engineering work overseas, the assumption was that China would benefit.

But members of the flying public asked themselves: Is it safe enough?.

"Quality and safety could easily be compromised by a poor work ethic and the face-saving syndrome prevalent in Asia," Robin McGrath of Takapuna wrote to the Herald. He said he had "worked for a major Asian airline and seen its penchant for cost-cutting.

"One has to wonder at the mentality of risking an excellent reputation for the sake of an increased profit."

Air NZ has yet to make a final decision about sending such heavy maintenance offshore as it tries to cut costs. In a bid to save jobs, unions have offered big cuts in pay and conditions. A vote this week will determine whether workers accept a deal that has been negotiated by union leaders.

While the airline has never said it will send the engineering work to Asia, many shared McGrath's concerns.

However, Bernd Habbel of Lufthansa Technik - one the world's largest plane maintenance companies - said such claims were unfounded.

Lufthansa Technik is a 40 per cent owner of Ameco, a huge facility near Beijing. It is one of the likely contenders for the Air NZ work if the proposal to outsource has wings.

Habbel said increasing numbers of airlines were looking to outsource maintenance, repair and overhaul work, with standards just as high in China, despite its lower wages.

"I would say in the world market, it's normal that many airlines source out at least part of their maintenance, repair and overhaul business," he said.

United Airlines has begun sending its Boeing 777 aircraft to China for work. While labour costs are cheaper in China, Ameco has to be certified by US and European safety agencies.

Aviation Week magazine says the Chinese maintenance, repair and overhaul market was US$1.4 billion last year and set to grow at 8.7 per cent a year.

"Lufthansa Technik has to look for quality guarantees," said Habbel. "If you look at qualifications, these workers are at the same level as European workers."

Safety concerns from big customers were not something Lufthansa Technik or its Ameco operation needed to address.

"I would say in the world market, this is not a serious concern. If you take the example of United Airlines - this is one of the biggest airlines in the world - and if they trust a provider like Ameco, giving their heavy maintenance away for very modern aircraft, the 777, this means to me that they accept there is a quality and a security level which is outside any discussions."

Any maintenance, repair and overhaul provider has to be certified and accepted by the customer's national aviation safety authority. European and US aviation safety authorities have given Ameco safety accreditation.

Air NZ would not be drawn on what, if any, company might get its maintenance business. Legally, it must not be seen to pre-judge any decision while it is still negotiating with workers.

Many Air NZ engineers have already elected to take voluntary redundancy and, if the union plan is rejected, the airline will start looking closely at which of the world's big maintenance operations will win its work.

Engineering, Printing and Manufacturing Union national secretary Andrew Little is among those suggesting safety may suffer if work is sent offshore.

"The public has a huge interest in the future of Air New Zealand, not only as shareholders but also because safe and reliable travel is vitally important to our society and economy," Little said.

One of the world's biggest aircraft maintenance companies, Singapore's ST Aerospace, has been chosen by the Royal NZ Air Force to reconfigure its two Boeing 757 planes. The company is being paid $55 million to refit them at its base in Alabama, US.

ST Aerospace says it is the world's largest independent maintenance, repair and overhaul company, having worked on more than 3500 commercial aircraft.

With bases around the world, ST says it can accommodate up to 24 wide-body jets and 33 narrow-body planes. "Stringent quality controls and procedures" had earned it recognition and airworthiness approvals from aviation authorities in Singapore, Europe, Japan, China, Britain and the United States.

In December, Air NZ chief executive Rob Fyfe said the airline had been sending work offshore for some time.

"For many years, Air New Zealand has outsourced various component, engine and airframe maintenance work to organisations in Europe and Asia without safety issues being raised," he said.

"Recent questioning over the outsourcing proposal is nothing more than scaremongering."

Habbel accepted that workers at Ameco's plant in China were paid less, but said that did not mean the quality was any different.

"I don't see there is a direct relationship to the absolute level of payment," he said.

"If you compare these levels in the US and in China, they are completely different but that doesn't mean necessarily that the work done in China is of less quality. I wouldn't say so."

Contenders

Ameco, Beijing, joint venture between Lufthansa Technik and Air China.

Haeco, based in Hong Kong.

Taeco, a Haeco subsidiary, does aircraft maintenance in Beijing, Shanghai and Xiamen.

MTU Aero Engines. This German company is working on the first engine from Air NZ and "turns over" more than 400 engines annually.

Shannon Aerospace, part of Lufthansa Technik, does maintenance work in Ireland.

ST Aerospace, claims to be the biggest operator in the world with plants around the globe.