Satair Group has confirmed a first customer for its innovative IMS (Integrated Material Services) contracting construct. The customer is Cathay Pacific, who will use Satair to provide a complete end-to-end service for expendables and consumables on the carrier’s fleet of 48 Airbus A350s. The value and duration of the deal have not been disclosed.
“We will take care of all the procurement planning and inventory-holding for the consumables and expendables for the A350 for Cathay Pacific,” says Satair Group CEO Mikkel Bardram. “The entry into service of new aircraft is the right time to come in with an offering like IMS, because you don’t have an existing setup or inventories. For existing fleets it would be a different type of discussion, but the dynamics and the long-term value of the deal [are] similar.”
Satair developed IMS in response to emerging requirements among aircraft operators. Bardram’s belief is that Cathay Pacific will be the first of many IMS customers, but his company needs to learn to walk before it can run.
“What we’re trying to make sure right now is that we deliver,” he says. “These are some new areas that we are exploring here, and we want to make sure that the first ones are a success. Once we have that proven and delivered, then we can ramp up with other customers. We’re trying to pace it at the moment. It’s not a lack of customer interest that we’re facing – it’s the opposite.”
The solution has obvious advantages for the customer, which will realize cost savings and improved parts availability while freeing up its own resources to concentrate on core business. The benefits to the provider are a little harder to see from the outside. Satair will embed a small team – Bardram says it will be 10 or fewer – in Cathay Pacific’s Hong Kong hub while delivering improved service at lower overall cost.
“A service provider has some interesting network effects,” Bardram explains. “As soon as we have part numbers in stock, other customers come to buy from us. So we will be expanding our general product portfolio by taking care of Cathay Pacific’s A350s, and some of those parts will be interesting for other customers. We will of course reserve what we need for Cathay Pacific, but as soon as we start seeing interest in these part numbers from others, then we will stock more of them, create the availability in the market, and then generate some ad hoc sales as well.”
Part of ensuring IMS is as efficient as possible – both to increase benefits to the customer and realize margin for Satair – will be an increased use of platform data to aid predictive maintenance.
“We’re constantly identifying ways to ensure that we can do our forecasting and therefore our inventory planning better,” Bardram says. “One is to work together with Airbus on the initiatives that they have on this. Airbus is progressing fast in this area and already has some good models in place for how to do that. That’s of course a big part of the value proposition for us as well – that we’re right in the middle of this, and can ensure that we can use this data going forward.”
Data from customers will also be required to bring maximum benefits.
“Of course, we also need the input from the airline about what type of maintenance checks they do and at what point in time,” Bardram confirms. “We’ll try to make a projection based on their maintenance events as to what they will need.”
Satair is in final negotiations with its second IMS customer. Bardram is not ready to identify them yet but confirms that the platform under discussion is an Airbus aircraft. Despite being owned by Airbus, Satair is able to supply parts to Boeing customers too, and Bardram believes IMS is as applicable to their needs.
“In terms of the supply-chain setup, the role we have, the access to those suppliers for those customers, we can do that for both Airbus and Boeing customers,” Bardram says. “Of course, we have an advantage with the technical planning side on Airbus, and we would need to find out how can we use the airline’s data to do that when it comes to a Boeing aircraft. Once we are hooked well into Cathay Pacific or to other customers, and are part of their daily operations with our setup, then we hope that they will want to give us the opportunity to also offer other products to them.”