What are the Basics of Rolls-Royce CorporateCare?

Considering the increased number of first-time Large Jet buyers, Rolls-Royce has received various fundamental questions regarding its CorporateCare hourly cost maintenance program (HCMP). Following, Tony Kioussis helps shed some light on the basics……

The following is designed as a primer, running through the features, benefits, and value basics for people new to aircraft ownership. It also provides a helpful refresher for those already operating jets enrolled on CorporateCare® or CorporateCare Enhanced (the term CorporateCare in this article covers both programs).

Engine Maintenance Warranty & CorporateCare

Engine maintenance can be grouped into three categories: (1) Preventative maintenance, which covers items such as Engine Health Monitoring, Service Bulletins, and Training; (2) Scheduled maintenance, covering calendar and hourly inspections or service; and (3) Unscheduled maintenance, meaning breakdowns or Aircraft on Ground (AOG) events.

During an aircraft’s early years, warranty will cover a major portion of any unlikely unscheduled maintenance event that occurs. However, there can be gaps between what a warranty covers and what the operator is likely to pay to address an Unscheduled event.

Preventive and scheduled maintenance is not covered by warranty. This is where CorporateCare helps ensure budget stability, as well as optimal aircraft availability, efficiency, and reliability.

CorporateCare & CorporateCare Enhanced

the company’s expansion of its highly-regarded, widelyaccepted CorporateCare Program.

In addition to the maintenance events traditionally covered under the original engine program, CorporateCare Enhanced engine coverage was specifically introduced to mitigate the disruption and high cost of troubleshooting and repairs on the engine cowls, Thrust Reverser Units (TRUs) and engine build-up on the BR710, BR725 and the brand-new Pearl 15 engines, including maintenance due to wear and tear, and corrosion.

The new programs also extended labor and/or parts coverage for certain events that were not previously covered through the original program offered on BR710, Tay 611, and AE 3007 engines.

Keeping in mind that CorporateCare coverage requires an operator to pay a set hourly fee each time they operate their aircraft, prospective first-time aircraft buyers may ask: “Are these programs worth the cost?”

A more appropriate question might be: “Can I afford to pass up the value of CorporateCare coverage?” It is Asset Insight’s view that CorporateCare’s benefits exceed the program’s fee – in some cases by a large margin.

Budget Predictability

Hourly Cost Maintenance Programs were introduced by engine manufacturers to provide operators with budget stability by eliminating large, unexpected maintenance bills.

CorporateCare coverage does not cap, or limit, the amount the program will pay to address any covered maintenance event, and there are no areas of the engine that are excluded from coverage.

If, for example, an operator has paid $500,000 into the program, and they experience a $1m enginerelated/qualified event, Rolls-Royce will cover the entire $1m event. There are no top-up fees, and there’s no increase to the operator’s hourly rate. Essentially, once on CorporateCare, all of the risk associated with engine maintenance cost is absorbed by Rolls-Royce.

Increased Asset Value

Aircraft whose engines are enrolled on CorporateCare routinely experience an asset value enhancement at time of resale. The level of value increase depends on the market environment and other factors, but it could be as high as the amount of fees paid for CorporateCare coverage.

Conversely, not enrolling an aircraft may result in a valuation reduction if the majority of the model’s listed fleet is enrolled on the program. Since more than 70% of the eligible fleet is enrolled on CorporateCare, the odds do not favor owners whose aircraft lack coverage.

Of course, in order for any Long Term Service Agreement to enhance the aircraft’s value at time of sale, it must be transferable – and CorporateCare programs are transferable, without a fee to do so. Priority Access to a Global Network

Rolls-Royce has established a global network of teams and capabilities that are focused on responding as quickly as possible to its customers. The company has put in place a network of authorized service centers that can work on its behalf, and has over 75 physical sites around the world that can work on Rolls-Royce products.

Additionally, it has spare parts located in nine stores around the world, along with more than 150 lease engines strategically positioned around the globe. CorporateCare clients enjoy priority access to these support capabilities, and to over 50 on-wing services specialists – engine technicians located worldwide.

All these support capabilities are coordinated through Rolls-Royce’s Availability Center, a 24/7 operations room. The company’s availability target is extremely ambitious: To rescue an aircraft within 24 hours, and avert missed trips 100% of the time. Although the latter target is difficult to achieve, the company is routinely exceeding 99% and is very close to clearing any AOG within 24 hours.

Benefits for the Owner

There are also benefits to CorporateCare with quantifiable value flowing directly to the aircraft’s owner.

• Additional Coverage While Under Warranty: During an unscheduled maintenance event, there may be ‘related expenses’ that are not covered by warranty, such as shipping the affected component to the maintenance facility, shipping a rental component to the aircraft, installing the component, the cost of the rental component during the repair period, removing the rental part once the original component has been repaired, return shipping for the rental component, return shipping of the original component, and logistical support associated with these tasks. That is not to say warranty is not valuable, but its coverage can be limited to the cost of repairing the affected component. • Financial Exposure to Resale: Depending on market conditions, an owner may need to enroll their aircraft on

CorporateCare rather than suffer a valuation decrease in excess of the Long Term Service Agreement’s buy-in fee.

While incurring the buy-in fee expense at time of sale, they will have enjoyed none of the LTSA/HCMP’s coverage benefits during their aircraft’s ownership period. • Days on Market: Detailed analytics by Asset Insight have revealed that an in-service aircraft will take longer to sell without LTSA/HCMP coverage. This could mean a substantial loss when market values are decreasing. • Related Costs: Many owners fail to account for the true cost of rental components, the total cost of charters during the asset’s down-time, and storage as well as other fees for their grounded aircraft. • Financing Benefits: Each aircraft financing entity has its own way of valuing Hourly Cost Maintenance Program 

coverage, so determining the exact value that any one financier may place on CorporateCare coverage is difficult. However, the savings differential over the term of a loan or lease could be substantive.

Remote Site Rescue

While an unscheduled engine maintenance event is uncommon, when one does occur, the aircraft is not usually located on an airfield with an authorized service center. This can cause extended periods of downtime, accompanied by tricky logistics, and high costs. When an aircraft is enrolled on CorporateCare, the protection and support of the Rolls-Royce service network is activated, marshalling the expertise and resources to rescue the customer in a timely and cost-effective manner.

Masset Island is located approximately 31 miles west of mainland British Columbia and has 800 residents. Masset has an airport with little infrastructure, but its 5,000-foot runway allowed a CorporateCare client to access the airfield.

Unfortunately, the aircraft developed a technical problem when it needed to depart, and an engine change was eventually deemed necessary. The only way to accomplish the engine change, was to charter a C130 to deliver a replacement engine, along with the people and tools required to complete the work on the island.

The necessary maintenance was completed expeditiously, the aircraft was returned to service, and all costs were covered by CorporateCare.

Another CorporateCare client who flew to the Maldives suffered an unscheduled maintenance event requiring a replacement engine and a support team to be flown in. Here again, the expense required to provide the necessary support was covered by CorporateCare.

CorporateCare and CorporateCare Enhanced reduce (and provide predictable) engine maintenance costs, increase an aircraft’s value at time of sale, and offer the ability to rescue an owner’s aircraft anywhere in the world. The only question remaining is why any owner would forego the value of CorporateCare coverage? ❚

More information from https://www.rolls-royce.com/products-and-services/ civil-aerospace/aftermarket-services/business-aviation.aspx

TONY KIOUSSIS

is president of Asset Insight. The company provides audit and valuation services and has developed a standardized Asset Grading System scale that evaluates an aircraft’s maintenance condition.

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