Printed headline: Aftermarket Updraft
Dassault Aviation’s acquisition of two major maintenance networks in business aviation signals a strategic shift to capture more of the revenue its Falcons generate over their service lives. A business aircraft may be in service for 25-30 years. While sales of new business aircraft remain slow, growth prospects for maintenance, repair and overhaul activities appear much more attractive. The expected income may fuel research and development in the context of fierce competition with Bombardier and Gulfstream.
MRO services for turbine-powered business aircraft will total $14 billion in 2025, thanks to average annual growth of 2%, according to New York-based consultancy Oliver Wyman. That is faster than the expected annual 1.4% growth of the global fleet. MRO activities are so regulated that forecasts are generally much more solid than those for new-aircraft sales.
To secure revenues, Dassault—like other airframers—offers a “pay-as-you-fly” program, which the Paris-based company has branded Falcon Care. Such worry-free arrangements are proving popular with customers. The airframer takes a comfortable profit margin, notes Jerome Bouchard, aerospace partner at Oliver Wyman.
Not only does MRO bring an increased turnover with high margins, it also provides valuable data. Learning how the customer uses his or her aircraft could help salespeople make a more attractive offer for a new Falcon.
Bringing Falcon aircraft maintenance into a company-owned network helps to control quality and “directly manage the customer relationship over the entire maintenance life cycle of our aircraft,” says Dassault Chairman and CEO Eric Trappier.
Company engineers are likely feeling confident about customer support. After almost two decades, Dassault’s support services are recognized as among the best in the industry.
The company announced its takeover of ExecuJet’s worldwide maintenance activities (from Luxaviation) in January. In February, it acquired TAG Aviation’s European maintenance activities, which expands the share of Falcon maintenance controlled by Dassault. The existing company network has sites in Europe (including Russia), the U.S. and, to a lesser extent, Africa and South America. The recent acquisitions extend the company’s footprint to the Middle East and Asia-Pacific and boost European and African coverage.
Increased revenue from expanded MRO services may help Dassault maintain R&D spending at a high level after years of slow sales (a record-low 41 deliveries was posted last year).
For decades, the company has striven to stay at the forefront of business-aviation technology. Its FalconEye combined-vision system is the first head-up display to blend synthetic terrain-imaging with actual thermal and low-light camera images for enhanced situational awareness. Development of the large-cabin, 5,500-nm-range Falcon 6X, set for entry into service in 2022, is in full swing. And a step change is planned in its use of big data analytics. The Falcon 6X will offer a much more powerful means of collecting and processing data, with real-time transmission to the ground multiplied by 1,000. “Big data is key to offering new services,” says Trappier.
The airframer is simultaneously gearing up for the launch of a new design. No details are available, but Dassault’s recent research work—in aerodynamics, composite materials and fuel cells—suggests significant technology advances.
Such projects require hefty funding. Instead of seeing R&D expenditure as having to be amortized on a given number of aircraft sales, the calculation may now also factor in after-sales revenue.
ExecuJet and TAG’s brands will eventually be replaced with the Dassault name, says Trappier. Aircraft from other manufacturers will still be serviced, he notes. TAG specializes in the Dassault and Bombardier product lines.