You can begin by putting in your money to lease your fleet of aircraft and then give over its maintenance to an engineering company. You can get the flight and cabin crew and ground staff on contract through local hire companies and in-flight catering from a local caterer, while roping in a media company to provide in-flight media entertainment and a logistics company to manage the aircraft’s freight space. On the ground, you can outsource airport check-in and baggage handling to local airports, reservations to a global distribution system, and ticketing to travel agents or call centers. Then, of course, you can outsource the regulars, such as IT, HR, F&A, customer service and office administration. (This example has been taken, as an extreme example of outsourcing, from a recent KPMG study titled Asia Pacific Outsourcing Survey that analyzes buyers’ experience in outsourcing relationships.)

Outsourcing evangelists, often citing Peter Drucker, argue that since business has only two basic functions-marketing and innovation-you should outsource everything except those two, for only they produce results while the rest are all cost elements. Also, didn’t Carly Fiorina once say, “There is no job that is America’s God-given right anymore”? Those who are risk averse, on the other hand, talk about selective and strategic outsourcing, citing risks of reliability, quality of service, contractual obligations, and security, to name just a few.

How much outsourcing is okay for you to run a successful business and when do you run the risk of crossing over the Rubicon calls for another article; in this article we will stay with outsourcing by airlines. So, getting back to the airline example, let’s see what processes airlines are already typically outsourcing and what are some known outsourcing issues in those areas.

Fix it even if it ain’t broke

Outsourcing heavy maintenance work is nothing new for US airlines-they have been outsourcing such work for almost 30 years, as have the trucking, shipping and railroad industries. The new angle now is that the number of airlines outsourcing such work has gone up and outsourcing as such is attracting so much more attention that such instances get talked about-both favorably and not. Off late, some airline mechanics’ unions have been quoting instances of aircraft doors not shutting properly, fuel leaking into cargo bays and wing flaps not extending, to stress on the security issues that may arise from sending repair work to third-party maintainers.

Source: Asia Pacific Outsourcing Survey: Who is Conducting the Orchestra?, KPMG

Most airlines send heavy maintenance (engines, airframes etc) work to the original equipment manufacturers, notable here being GE and Boeing, whose core competence lies in specialized repairs and checks. This way the airlines not only get their multi-million dollar fleet looked after by specialists but they also don’t need to maintain a specialized technical staff through their peak and non-peak repair periods that develop during the maintenance schedule.

Quality can be assured because regardless of the work carried out by a third-party vendor or the airlines, all maintenance work is subject to the Federal Aviation Administration (FAA) audits. In fact, FAA claims to now be doing surprise checks on such centers. But at the end of the day no matter who provided the maintenance, the airlines is held responsible for it.