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Engine Leasing Slow To Adopt Digital Records

Leasing experts believe greater standardization is needed to enable more effective digital record-sharing

Printed headline: Adoption Issues

Technology disruptions are taking place across the aviation aftermarket, with the increasingly data-driven landscape being an agent of change. One important disruption has been a shift away from relying on paper documentation to track the life of aircraft, their engines and components to doing so in a digital way.

While the shift to a paperless environment is underway, with more hangars across the world drawing on electronic documentation, this trend has nevertheless been sluggish, and barriers still exist. This was the conclusion of a panel at the Aviation Week Network’s Engine Leasing Trading and Finance event in London in May.

David Hygate, business development consultant at British parts trading company Vaayu Group, is seeing the advent of new technologies across the industry, but he believes aviation in general is struggling to come anywhere close to the level of digitization being seen elsewhere. “Before they buy an asset, everybody wants to know that it’s genuine and comes with the necessary back-to-birth paperwork with it,” he says. “We’re somewhat in the dark ages in terms of having to rely on the record-keeping system that has been built up over the past 20-30 years.”

Hygate believes that given the level of investment often required to implement such large-scale projects, it could be up to large lessors with the necessary resources to “force the pace” of change. “They should be motivated to get the best records possible for their assets, and the technology is out there allowing them to do that,” he says.

Often whether to adopt digital records comes down to a simple business decision, says Klaus Broker, engine lease manager at Swiss MRO SR Technics. “There are companies set up with a digital focus, and they will be the disruptors with a business case and a budget to drive this forward,” he explains.

While the MRO industry has been buoyed by good health in the past five years, Broker feels this may be influencing companies not to invest in new technology. “If you look at the current state of the market, it’s been impressively good on both the leasing and MRO side. What immediate benefit does a lessor or MRO have to invest a significant amount of money to try and drive the next generation of new technology?” he says. Nevertheless, SR Technics is actively looking to reduce its reliance on paper records in its leasing business and in its dealings with customers, although Broker concedes that a totally paper-free operation is perhaps unrealistic, at least for now.

Trish Gray, managing director at TGIS Aviation, an engine and airframe asset management company, supports a standardized form of digital records and believes technologies such as blockchain could be a positive step for the leasing industry. Nevertheless, she agrees with Broker that there are barriers to achieving a more effective digital landscape. “Engine reviews are being increasingly done remotely, and when we receive documentation from an engine review for redelivery, we tend to find that it’s from different platforms, customers, shops, airlines and lessors. This means we always have to rebuild the packs [of records]  before passing them on to to the next customer,” she says.

Engine values are particularly important to lessors, and sometimes simple human errors such as not regularly updating records can hamper the process, Gray says. “Ultimately, engines are traded on the records that are provided electronically. Therefore, if there are missing records within the electronic database, then value can be lost on an engine,” she says. She estimates that a lost document for a life-limited part, meaning a lessor is unable to trace a part’s life back to birth, can end up reducing an engine’s value by $300,000.

Gil Krazier, director for engine lease and trade at Israel Aerospace Industries (IAI), which mainly focuses on CFM56-5 and -7, V2500 and PW4000 engines, shares Gray’s view of the need for greater standardization. “There is still no clear way to share documents in this industry—each lessor, airline and MRO holds its own solution for documentation, and it can be difficult to access these,” he says.

He also sees a shortage of standardized, compatible software available worldwide to multiple parties. At IAI’s facility near Tel Aviv’s Ben Gurion Airport, which is moving toward becoming increasingly paperless, Krazier says it operates an SAP system to manage its engines, but this solution is specifically designed for this purpose. Ultimately,

IAI will develop asset-management software in-house and has already collaborated with tech startups in its native Israel. “We envisage one aspect of this management software being digital record-keeping showing us the history of the engines,” Krazier says. 

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