Printed headline: Lest We Forget . . .
Not a week goes by without reading a press release, news article or blog post about the fierce competition for control of MRO data and aftermarket revenue. Recent announcements that Boeing is targeting $50 billion in services revenue during the next decade (over three times its current share) and that United Technologies will acquire Rockwell Collins (still digesting its purchase of B/E Aerospace) have only intensified the discourse.
In all industries, as the supply chain evolves and continues to innovate, there will always be winners and losers. One company’s gain in market share ultimately will come at the expense of a competitor. Yet the imagery evoked by the often hyperbolic and provocative headlines regarding this so-called war for MRO data and aftermarket revenue can make the battle scenes in HBO’s “Game of Thrones” seem like child’s play.
Accordingly, while MRO industry participants retreat to their respective corners to formulate their strategies for how best to monetize MRO data and maximize aftermarket revenue opportunities . . . we should proceed with caution!
MRO, while a simple three letter acronym, is the name of the highly complex commercial aviation aftermarket industry that is valued at $75 billion and is projected to grow to more than $100 billion within the next decade.
Numbers like these obviously have captured the attention of investors and boardrooms alike. Given the significant dollars in play, there is no doubt that the already blurred lines of the traditional supplier/customer relationship between manufacturers, Tier 1 suppliers, aircraft operators and MRO suppliers will become further distorted.
The introduction of certain competition-related services that potentially limit the flow of what has historically been viewed as non-proprietary technical and operational information among these players could become counterproductive.
As industry observers and pundits debate whether anyone can stop the OEM aftermarket incursion freight train, or what role airline-affiliated and independent MRO suppliers will play, let’s all take a collective deep breath and take stock in how far we’ve come as an industry.
The year 2016 was yet again a historically record-breaking year for commercial aviation in terms of safety and reliability. Many carriers are consistently achieving technical dispatch rates in excess of 99.8%, a remarkable accomplishment when compared to just a decade ago. Results like these are no coincidence; they are the product of decades of cooperation and collaboration between OEMs, aircraft operators, regulators and MRO suppliers.
The highly successful airworthiness directive process is a great example. Each industry participant plays a vital role:
- Airline/operator technicians and engineers discover and report technical issues.
- OEMs, owners of the engineering design and certification data, have the analytical prowess required to develop the corrective action.
- Regulators coordinate rulemaking activities, implementation time lines, and provide the requisite compliance oversight across all participants.
- Independent MROs provide the capacity and competitive cost structure required to efficiently complete mandatory inspections/modifications.
While a cliche, the aviation safety and reliability chain truly is only as strong as the weakest link. Further improvements can only be achieved if all stakeholders continue to transparently and efficiently share information, experience and knowledge.
So, while corporate strategists devise clever schemes to monetize this newly recognized asset class called MRO data, we mustn’t allow long-time industry colleagues to view each other as potential competitors who may hesitate to share information.
As an industry, we must stay vigilant to ensure that the well-established, decades-old lines of communication and collaboration among key stakeholders are not compromised, and the noble pursuit to continuously improve safety and reliability remains our collective common goal and top priority.
A wise man once told me there is no “I” in MRO. Lest we forget, MRO is a team sport.