Lufthansa Technik is the leading provider of maintenance, repair, overhaul and modification services for civil aircraft. It is the number one company for MRO services around the world, having been in this line of business since the early 1950s. The German company, which is known to be quite innovative also on the front of VVIP and VIP aircraft refurbishments, was in full strength at the Middle East Business Aviation (MEBA) event in Dubai where its Vice President (Sales) VIP & Special Mission Aircraft, Wieland Timm spoke in detail of the company's footprint in the aviation industry with the Editor-in-Chief of SP's AirBuz, Jayant Baranwal. Excerpts of the interview....
Jayant Baranwal (JB): What are you exhibiting at MEBA 2016?
Wieland Timm (Timm): We are exhibiting the design ideas of the next Maybach which will come out in 2022. The next generation of the Mercedes Benz-Maybach will have the same design language than this cabin which you can buy now.
JB: What all are you offering in terms of business aviation?
Timm: We are offering technical services for existing aircraft, based on Airbus, Boeing and Bombardier aircraft. We have a joint venture with Bombardier in Germany, a company called, LBAS, Lufthansa-Bombardier Aviation Services. And we are doing modifications and outfitting on all Airbus and Boeing aircraft.
JB: What does outfitting mean, what all it includes?
Timm: Outfitting means adjusting airline cabin to a full VIP aircraft or a government aircraft or an aircraft belonging to a heat of state as well as special Medevac cabins or parts of it.
JB: I notice that your responsibility also belongs to special mission. What does that mean?
Following the recent world premiere at the Monaco Yacht Show 2016, Lufthansa Technik presented the final version of the Mercedes-Benz Style VIP cabin design in the Middle East at the MEBAA 2016 for the first time. Introducing a totally new cabin concept and opening up a whole new dimension of private air travel, sensual purity and technological perfection reach their peak in this jet.
Timm: Special mission means for us aircraft which are based on Airbus or Boeing aircraft but they are in military use or in special use. We built three years ago a special zero g aircraft wherein you can have the same environment like an astronaut or we also build what is very famous in Germany, an Ebola aircraft which has tents in it for intensive care of Ebola patients flown out from Africa to Europe, into hospitals. Also we have done some modifications on tanker aircraft, air refuelling.
JB: Which aircraft?
Timm: The A310 for the German government, the air refuelling aircraft and we are doing service of that aircraft and also the new type of refuelling aircraft A330 and Boeing 737.
JB: JB: Does it mean that you have started serving the military market recently or your have already been there for some time?
Timm: We started the first military work, I think nearly, 30 years ago. Most of the governmental aircraft where we have a very big footprint in are mostly used as Medevac aircraft and so on. The German government, the Belgian government, the French government, the Italian government and others are our customers.
JB: Can you repeat which all customers are there for your military solutions?
Timm: We have good relationship with Airbus Defence and Space which is the military arm of Airbus. They produce the A330 so we have a broad product then for those A330 air-refulleing aircraft which they are selling, yes the MRTTs. It is the same with the Boeings. For example we are serving the air refuelling aircraft from the Italian air forces which is the Boeing 767.
"Most of the governmental aircraft where we have a very big footprint in are mostly used as Medevac aircraft and so on"
JB: They are also coming up with KC 60 Boeing?
Timm: Yeah, but yes.. based on the 767 there onwards we can do some work. But we are not doing work on aircoolers or whatever type of aircraft or fighter aircraft. This is not our business. It follows our normal business because we are serving round about 3,800 aircraft around the world. So it's nearly 20 to 25 per cent of all commercial use aircraft of Airbus and Boeing. It has to do with components or parts or repairs of landing gears of engines or whatever and that is one of our core business. So this is what we can do on that aircraft or special aircraft. For example there is one aircraft, the Boeing 747 SP which belongs to the NASA and the German Centre of Space Aviation, they have a telescope in, which can fly and which can open during flight a huge cargo door so that the telescope can look around in the space. It's a unique aircraft, for a typical special mission and it is unique because it is only one piece.
JB: You seem to be an established name in ground based solutions to the airframe manufacturers in terms of refurbishing the aircraft, MRO support and outfitting?
Timm: Outfitting means green aircraft where there is no cabin and at the end there is a full equipped aircraft.
JB: Do you also convert passenger aircraft into cargo aircraft by any chance?
Timm: No, this is not our core business and we're not stepping in it.
JB: What about the pilot training, an area which needs zero compromise?
Timm: Yes of course we have huge training. The Lufthansa Group that means all companies which belongs to the Lufthansa family, has training, dedicated pilot training where we have a flight training schools in Germany and as well in the U.S. Also we are doing training for all kinds of services on aircraft, mechanics, engineering or whatever. We also have dedicated schools where we are offering it around the world.
JB: So you do some sort of partnership with certain countries to have joint collaboration to start schools, quality solutions?
Timm: Yes. we have done it for example in South America. And when somebody is asking us for it and ofcourse we are open to that.
JB: In case any opportunity comes up also in India, would you be willing to do it?
Timm: Why not? So we have no restrictions. Otherwise it's not allowed to do some cooperation, for example I could imagine in North Korea maybe. But India of course. So we have several companies which belong to Lufthansa in India, established for components etc.
JB: Your pilot training, does it cover the complete gamut of the aircraft or is it basically concentrated only to business aviation aircraft?
Timm: No, we also train airline pilots.
JB: You mean whether it is an Airbus or the Boeing or Bombardier or Cessna or Gulfstream?
Timm: No it is only limited to Airbus, Boeing and Bombardier. We also have some Embraers because we are flying from the airline side.
JB: If the pilot comes out of your training institute, is he able to fly any kind of commercial aircraft?
Timm: No. Only Airbus, Boeing and Bombardier.
"We want to follow that together in one department so that the best for the digital solutions as we call it are there"
JB: So you have kept the domain restricted as of now. Are you planning to expand the scope in the future?
Timm: I have no clue because I'm not responsible for this field of business. But I could imagine that we are may be not expanding, because our core business is still our airlines. Think we have nearly 6000 pilots in our company, hence we have these trainings and we are focusing on these types of aircraft which are normally used, Airbus, Boeing and Bombardier.
JB: How is the business going for the VIP aircraft, is it growing?
Timm: The business is currently picking up. In our case in general the market is really slow because a lot of rich individuals are not spending that money because the income is in the moment little bit limited for example due to the oil price or some other economic reasons around the world. So the request is a little bit slow. The second topic is also that the Airbus A320 family and the Boeing 737 family will change to a new generation, to the NEOs and to the MAX. So in a lot of people are waiting for the new ones but they are coming into the market in 2019, 2020 and the following year.
So at the moment the current built aircraft is going down because they are picking up with the new ones. So therefore the availability of what we call new green aircraft is limited but we have very good link in the governmental market as they are still purchasing aircraft.
JB: JB: You mean the Heads of States?
Timm: Head of State and Government for us are different. A Head of State for example is the ruling family and the governmental aircraft is like in India or in Germany wherever politicians are ruling. So this is where we split it. But it's how we see it. Of course you are right, Head of State or Government could be the same. So and everybody sees it that in that specific way and so therefore we split it. We are number one in outfitting 747. We have done in all 25 aircraft and there is no King around the world with such an aircraft which is not built for by our company.
JB: So you have good relationships with the Kings in particular?
Timm: Not with the Kings but with the organizations.
JB: What number of VIP aircraft are flying which are refurbished and configured by you?
Timm: We have the track record for green ones which we have outfitted or did heavy modifications and heavy conversions because we are doing a lot of smaller ones. I will explain to you. In total we have done 137 aircraft which I think is the biggest number, nobody has done more. We are doing mostly the checks for example. We are doing checks on about 70 VIP and special mission aircraft a year. In most checks small modifications are included changing cockpit, changing some seats or doing something on the table or whatever, but these are not heavy mods. This is why we said the heavy mod means that nearly 50 and more per cent of the cabin is new or totally new arranged with newer materials or whatever. It's 137 and smaller ones would be at 50 to 60 a year, so it is 75 which I mentioned which we are doing every year.
JB: Which is the number of one country operator of such aircraft, in terms of good number of aircraft?
Timm: I think, you mean where most of the VIP aircraft are flying. For us typically the Middle East region, the GCC . This is our major market but we have a huge share also in China because it's picking up and also governmental wise it's around the world. So we are very good, have a huge portion in Europe. And I think the American market is not a target for us as they are mostly linked to companies which are American and they buy American and we are German, even if we have companies in America.
JB: Lufthansa Technik does have some relationship with Boeing, specifically for BBJ, correct?
Timm: We have a relationship generally and the VIP Department which is the BBJ of course. Its the same with Airbus.
JB: Yesterday when I attended the press conference BBJ said that they sell six aircraft a year? Doesn't it appear a restricted number in terms for business?
Timm: It's not enough. If we look at the market for outfitting centres are requesting or have the capability of 30 aircraft a year. So six is very much limited and six will grow as i mentioned when the MAX is coming because currently they are not delivering six. But for the governmental side, also used aircraft are interesting for governments because they are not flying so much. The life of an aircraft is much longer than a car. So therefore it's not a problem if it's for example that an aircraft is 10 years or 15 years or 20 years old it can still fly for the next 10 to 20 years.
JB: So a total of about 25 to 30 years minimum.
Timm: I think the life cycle for modern types of aircraft is about 30 years. Military aircraft flying longer because they have heavy modifications and they also need some modifications on the older ones with new techniques, so they fly for almost 40 years.
JB: Can you elaborate on your MRO capability?
Timm: Yeah we are doing engine overhaul for these types of aircraft, which I mentioned Airbus, Boeing and Bombardier. We are doing landing gear overhaul. We are doing all components, services which are in those types of aircraft. We are doing as well base maintenance, line maintenance activities we are doing C services, that means carbon, or whatever products such as nascelles we are repairing. We have several cabin products, we are producing entertainment systems for VIP aircraft. Well we have a dedicated team with our OEM for specific parts, so we have a seat, we have some cooking topics, we have some patient transport units and so on several types of that. And we will found next year a new division which links to digital data of aircraft and develop products for it. So our idea is to have a preventive maintenance so you know in advance when that component will collapse and when you land the new component is there so that you can change it. This is the idea in general.
JB: and when is it going to be applicable?
Timm: Next year. We will start in the second quarter of next year it will be established. I think its fully running and will be next year because we need a dedicated team and so on. So everybody is there. But we have to bring the people together because Lufthansa Technik which is a technical arm of the Lufthansa family has round about 25,000 employees. So we want to put them together in one department so that the best for the digital solutions, as we call it, are there.
JB: Can you elaborate a little bit on Mercedes Benz style which sounds to be very interesting?
Timm: Mercedes-Benz style is the following Mercedes Benz is currently targeting the lifestyles of people so they are producing and designing parts which are not only limited to cars. So there are houses, there is a helicopter, there is a boat and so on. What was missing from them was a cabin for an aircraft. And they said okay we can do the design. We have some nice ideas but we need a partner who can produce it. Mercedes Benz stands for I think typical German style, It's engineering, its highest quality, always reliable and now it's emotional. This is a new target. This is why they say so and we are following the same ideas because we are a German company, highest quality, always processes, engineering, clever and all these types. Therefore we said as we are number one in outfitting aircraft and they have some nice ideas how to do it, and therefore they get to design with our engineering. our engineering collaborated if it could work. If we got a certification we spoke to the authorities that we want to produce something. At the end there was this cabin. Have you seen that cabin? You'll get to Google because we have a 3D walk through of the cabin. And we also did as well on the A350 design which you can have a look also and outside is one produced by us.
JB: When did you have this partnership finalized?
Timm: We started this idea round about one and a half years ago. Then last year at EBACE exhibition in May we showed the first pictures. we showed the full cabin this year in May at EBACE because in the first step there were only renderings for the first 10 metres of the cabin and now we have a product launch. This year we are going to be at the Monaco boat show because it is pure lifestyle product. Everybody who is interested in arts and unique design and all the innovations which will come in future in aircraft cabins is included here. So for example you will see in front of the windows, black glass. They call it black tunnel. And these black tunnels all switches, the monitors are included and it's like a touchscreen and you can turn the glass so its black when the sun is shining and you want to sleep or you can look through as you like . So this is unique and this follows the design ideas of the Mercedes cars. Currently the Mercedes have it in small pieces in the dashboard but they are going to extend it because the days of switches are gone. Right. It's more like an iPhone or smart phone. So these ideas are following is that you can move the switches where you like as everybody has different arm length. So if you are a smaller or taller person you will need it in a different way so that you can get it in a very convenient and comfortable way. So this will be included there for example. Also we have the kitchen which you will see in the front when you step in that aircraft which is the only kitchen in the world which comes out of our innovation department where you have live cooking in an aircraft which is normally prohibited. So we developed a kitchen which provides live cooking solutions and the approval from the authorities. It's unique.
JB: All these innovations are they a result of your R&D effort? What kind of investment do you make in R&D?
Timm: For innovations we have a time frame of five years. We are spending 200 million Euros only for innovation. So in our normal processes we also do some innovations in the engineering. In the VIP section in Hamburg we have 1100 people for outfitting. That means green aircraft cabins, and modifications and maintenance. So it's nearly 50/50. And we have round about 100 to 150 engineers in the VIP department and they develop everyday new things because somebody has a new design idea how we can do it and so on. This is a regular process. We do not count the money on that because these are developments during some normal work day. This is why we split it. So we have an innovation center which put some innovative ideas, for example we are currently working on a paint on aircraft which has specific structure so that you can reduce the fuel burn. The second one is in Hamburg which is one of the biggest areas of innovation industry in the world. Somebody says it's number two, somebody says its number three, regardless it is number one for cabins. There's an innovation center near the plant of Airbus which we have a chair and Airbus has a chair and we are currently working on sound reducing systems in aircraft cabins. We have been able to do it in our VIP aircraft to reach the next level you have to do it in a different way. We are currently searching for a new technology how to do it.
JB: Are you also in the business of FBOs?
Timm: No we are not in the FBO business.
JB: How do you rate your MRO capabilities in the world, number one, number two or number three?
Timm: Number one of course.
JB: You mean the other competition is definitely less than you?
Timm: Yes, from the MRO point of business, right. We are number one in the world, in size of capabilities of what we are doing around the world. As I mentioned to you we have really 3800 aircraft under service. This is huge.
JB: When you speak of Bombardier, which particular aircraft do you deal with?
Timm: It is CRJs 900, we are flying and in the business aircraft we have Challengers, Globals and so on which is done by our joint venture company LBAS. We have the commercial ones which we are using in our airlines and we have the dedicated for business aviation.
JB: I believe for you the Middle East remains one of the very prime markets in the World, is that correct.
Timm: Yes, correct. For both VIP and business aviation it is the same. At the moment the customers are reducing the size of the aircraft to reduce costs. So there were some customers who bought a wide body aircraft like A330 or 777 in the past and now they are stepping toward A320 family or 737, BBJ/ACJ type of aircraft. So those customers went before for A320 or 737 aircraft are now flying Globals for example. So this is currently a trend. And on the other hand there were a lot of companies which were founded who are offering aircrafts for rent like a limousine service or so and everybody who has in the past their own aircraft now are going there and saying OK we are flying 10-20 times a year so I can rent an aircraft for my trip.
JB: If we have too much of money, we also can rent it right?
Timm: Yes you can rent it but not from us. So you need a company who is offering that. We are not renting aircraft.