JetBlue pushes maintenance suppliers to expand US presence due to tariffs

The airline is considering tariff implications when making maintenance decisions, reflecting its belief that the USA’s tariff-heavy strategy will not shift soon.

JetBlue Airways has been adjusting some maintenance practices in response to import tariffs imposed by US president Donald Trump, despite the aerospace industry having secured exemptions from the administration’s most sweeping import duties.

But the US airline and aerospace sectors remain subject to several tariffs imposed by Trump in the last year, including those levied against aluminium, steel and Chinese imports.

The aluminium and steel tariffs can hit aerospace components, while airlines must pay tariffs on the value of maintenance work outsourced to Chinese firms.

The taxes may not yet have significantly shifted airlines’ maintenance practices, but JetBlue is starting to consider such factors when making sourcing decisions.

The carrier also found itself needing to closely monitor suppliers to ensure they are passing accurate tariff surcharges onto the airline — no easy feat considering the complexity of the tariff regime.

“We are structurally evolving into a world where we expect that… there will be tariffs applied on products going forward, and as a result we are pushing the supply chain pretty aggressively — the MRO supply chain — to start establishing their capabilities here in the United States, in order to de-risk this,” says JetBlue Airways vice-president of technical operations Dave Marcontell.

“Material sourcing decisions that we make are based upon, where are you performing the work? And what is our exposure to tariffs?” adds Marcontell, speaking on 21 April in Orlando at the MRO Americas exhibition.

The aviation industry lobbied hard in the last year to keep their products tariff-free, and the Trump administration largely delivered. It exempted aircraft and their parts from tariffs under agreements with numerous trading partners, and a recent global 10% import duty.

But the aluminium, steel and Chinese tariffs have proved difficult to sidestep. Meanwhile, the Trump administration is still considering whether to impose tariffs directly against civilian aircraft and their parts under so-called “Section 232” authority.

“There are still other tariffs that are absolutely valid… and we have to keep paying,” says Jason Dickstein, general counsel of Aviation Suppliers Association.

Some US airlines send jets to China for heavy airframe maintenance. That work is subject to US tariffs on the “value added” portion of the work, which typically means the cost of labour, says Bruce Spear, partner at consulting firm Oliver Wyman.

He declines to specify how much maintenance work US carriers outsource to China, but says, “It’s significant… There’s much heavy maintenance done [there] for US and other international carriers”.

Spear has not yet seen airlines rushing to move airframe maintenance elsewhere, saying Chinese maintenance shops remain competitive thanks to relatively inexpensive labour rates. He also notes that airlines typically sign long-term contracts.

Marcontell says many of JetBlue’s suppliers have passed on their tariff costs to the airline. Problem is, correctly calculating tariffs requires understanding both incredibly complete tariff regulations and potential exemptions.

Suppliers do not always get the numbers right.

“We’ve had a lot of situations where suppliers and business partners are passing along a tariff cost without substantiation. They’re burying it into the price of a product,” Marcontell says. “That’s not going to work for us… At the end of the day, we are the ones paying the bill.”

To ensure accuracy, JetBlue’s sourcing team “dug in and started trying to understand… the various tariffs”.

“We are very much interested in being able to validate that the costs that are being passed through onto us are indeed accurate… tariffs according to the law,” he says. “It’s a burden-of-proof mentality.”

Spear agrees, saying, “No documentation, no payment.”