Power by the hour: The value airlines are leaving on the table

Power-by-the-hour (PBH) has become one of the most widely adopted approaches to aircraft engine maintenance. For powerplant managers, it can reduce complexity. For finance teams, it can improve cost predictability and provide protection against unexpected maintenance events.

While those benefits are real, they’ve also contributed to a common misconception that airlines have little control over engine maintenance once it sits within a PBH agreement.

The reality is more nuanced. While airlines hand significant responsibility to OEMs and maintenance providers, many PBH contracts contain flexibilities that are either overlooked or underutilised. Understanding those flexibilities can help airlines unlock greater value from existing agreements and take a stronger position in future negotiations.

The misconception at the heart of PBH

The appeal of PBH is straightforward. In exchange for a recurring fee, airlines gain greater certainty over maintenance costs and reduce exposure to operational surprises. As a result, many executive teams view PBH as an all-inclusive maintenance solution while others also assume that maintenance planning decisions sit largely with the provider. Neither assumption is always correct.

PBH agreements aren’t industry-standard products as they vary significantly between airlines, fleets, and engine types. The specific terms and conditions determine what is covered, what remains the airline’s responsibility, and how much influence the airline retains over maintenance decisions.

For airlines that treat PBH as a fixed operating cost rather than an actively managed commercial agreement, valuable opportunities can remain hidden in the contract.

What PBH covers and what it doesn’t

The promise of predictable long-term costs is often one of PBH’s biggest attractions. However, executives should understand exactly what sits inside and outside the agreement.

Many critical components are commonly excluded from PBH coverage. Life-limited parts, including discs and spools, are often not covered. External units attached to engines are frequently excluded too. Airlines therefore continue to carry significant maintenance costs despite paying recurring PBH fees.

These exclusions matter because shop visit costs are driven more by parts than labour. Life-limited parts are also among the most expensive engine components, which means the financial implications can be substantial.

The economics can also change over time. PBH often provides the greatest value during the early life of an engine programme, when maintenance requirements and reliability issues are less predictable. As engine models mature and operational data improves, some airlines find that traditional time-and-materials arrangements become increasingly attractive. This is particularly true for operators with strong in-house engineering capabilities.

How much control do airlines really have?

Many executives assume PBH providers dictate maintenance activity. In practice, contracts can provide airlines with more influence than expected.

Many agreements allow airlines to help define maintenance work scopes and shop visit timing. Some enable operators to take a much more active role in maintenance planning than management teams initially realise.

The extent of that flexibility varies by contract. But the key question for executives is not whether PBH transfers responsibility, it’s whether their organisation fully understands the levers available within its own agreements.

Airlines that regularly review contractual terms alongside fleet planning and engine utilisation are often better placed to identify opportunities that would otherwise remain hidden. This affects maintenance costs, asset values, and future commercial arrangements.

Three examples of value hidden in PBH agreements

One major flag carrier knew that its PBH agreement for an A320 fleet included maintenance tokens that provided access to future shop visits at guaranteed rates. A more detailed review of the contract revealed that the airline could influence the scope and timing of those visits. This allowed it to defer unnecessary maintenance during a period of delayed aircraft deliveries. The airline also sold back some high-value maintenance tokens and generated additional value through strategic use of spare engine assets.

In another case, a major airline realised several planned shop visits would occur after the end of its PBH term. Although it had been paying regular PBH fees, it wasn’t on track to receive the full benefit of the agreement. By adjusting utilisation across the fleet and increasing use of engines approaching the end of their PBH coverage, the airline was able to capture more of the value it had already purchased.

A third major airline was approaching the end of a restrictive PBH contract. By developing a clearer understanding of its operational requirements and commercial options before entering renewal discussions, it was able to negotiate from a significantly stronger position.

While each situation was different, all three examples point to the same conclusion: understanding the detail of a PBH agreement can create opportunities far beyond maintenance cost management.

Getting more value from PBH

PBH has delivered significant benefits to airlines for decades. But executives should be wary of viewing these agreements as fixed arrangements that simply run in the background.

The most effective operators understand exactly which costs remain exposed, where contractual flexibility exists, and whether they are on track to realise the full value of the benefits they have purchased. They also use that understanding to strengthen future negotiations with OEMs and maintenance providers.

For leadership teams, the opportunity is less about changing the agreement itself and more about leveraging it better. A closer examination of the contractual detail, combined with operational and utilisation planning, will reveal value that may otherwise remain hidden in plain sight.