Submitted by CARPE DIEM

San Luis Talpa, El Salvador/LA TIMES BUSINESS–Southwest Airlines planned to begin flying planes to this small Central American nation this year — but not with passengers aboard. The carrier wanted to outsource some of its maintenance to a Salvadoran repair shop called Aeroman (pictured above).

Aeroman already services jetliners operated by U.S. carriers JetBlue and America West. The airlines fly empty planes hundreds of miles from the United States to have them refurbished, repaired and inspected. It’s like driving across town for a cheaper mechanic — except that airlines can save millions of dollars over the life of their rides.

Industry experts say maintenance outsourcing will only increase as airlines grapple with post-9/11 security costs and sharply higher fuel prices. Already a $41-billion business, so-called MRO (for maintenance, repair and overhaul) outsourcing is expected to reach nearly $60 billion within a decade.

HT: Ben Cunningham

MP: Just in case you have any objections to this type of outsourcing, consider your own frequent personal outsourcing at the level of your own household. You probably outsource the cleaning of some of your clothes to a local dry cleaner, you often outsource the preparation and cooking of your food to a local restaurant, you outsource the upkeep and maintenance of your vehicle to a local car wash, oil change service, and repair shop, you might outsource the cleaning of your house and your lawn maintenance to an outside agency, you outsource the preparation of your taxes to a tax service, etc. etc.

In almost all of these examples, you could have performed those services internally within your own household (cleaned your own clothes, prepared your own food, changed your own oil, cleaned your own house or prepared your own taxes), but a personal cost-benefit analysis suggested that it was more cost-effective for you to outsource those tasks to someone outside your household, compared to performing those services yourself. In that sense, a household is just like a small business firm, which continually make business decisions that involve comparing the cost of external vs. internal production. Just like a small or large firm, your household chooses the least expensive alternative, and outsources when it makes economic sense.