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OEMs Unapologetic Over Changing MRO Dynamics

Airframe manufacturers map out ambitions but still see a competitive aftermarket.

Executives from Airbus, Boeing and Embraer have told delegates at MRO Europe that they are responding to customer demand by moving more heavily into the aftermarket, but plenty of competition remains.

Speaking on a panel in Amsterdam on Oct. 16, Boeing VP Commercial Services Mike Fleming said the huge number of exhibitors at MRO Europe shows how many maintenance, repair and overhaul (MRO) options are available to aircraft operators.

He said Boeing sells “an operating cost,” when an airline buys an aircraft, and the move into MRO is a natural progression in terms of cost-management. Boeing started a push into the aftermarket just over a year ago and Fleming said the company is “very optimistic” after seeing the gains from that strategy.

“Our expansion into the aftermarket is really a pull that is coming from the customer. It’s really a call from the market place to provide a one-stop shop,” Fleming said.

Embraer VP Global MRO Centers Frank Stevens agreed and said Embraer’s JV with Boeing also plays into this trend. “We are giving our customers a portfolio, not only of aircraft, but also services,” Stevens said.

He added that Embraer is now “aggressively obtaining market share” in MRO, because airlines want an overlap between their business and human relationships. “People want people to talk to,” he said. “Our customers want to see a full-service product. They want to buy a lifestyle.”

Airbus SVP Customer Services Philippe Mhun said this is part of a wider trend, where airlines are focusing on their core business and outsourcing non-core functions. He said customers still have choice. “It’s up to them, they select the partner they want to select.”

The conversation about OEM ‘dominance’ of the aftermarket – a term that Fleming from Boeing rejected – comes hand in hand with the debate over who controls data from the connected aircraft.

The OEMs said the data has no use, or value, unless it can be turned into knowledge. “Unless you have the ability to understand it, it is nothing,” said Stevens from Embraer.

Mhun from Airbus added: “After one workshop, the debate on data ownership goes away. If they [airlines] want to download the data elsewhere, it’s up to them. They’re not trapped.”

The true discussion, said the panel, is about the cost-value that the data creates when it is used for predictive maintenance. Mhun said the future will be all about “digital continuity” and companies becoming more relevant and targeted in the way they do business.

“We are predicting things that, 10 years ago, we couldn’t even visualize were going to happen,” Stevens from Embraer said.

Predictive maintenance remains a cost-benefit decision, because a non-failed part – by its nature – did not fail. Stevens believes there is scope to go still further. Each airline operates their own fleet in their own way and their own market conditions, which may not fit with the wider predictive average. More targeted answers could result in greater cost savings and reliability.

Despite the huge technological advances in predictive maintenance over recent years, Fleming from Boeing does not see a future where 100% of maintenance events are accurately predicted. However, he said the market is changing, particularly in terms of man-hours.

“Just like the automotive industry, where mechanics’ skills had to change, we have to change in our industry too. We have got to transition into that [digital] market place,” Fleming said. “It will never get to 100% predictability, because humans are involved, but we certainly can get much better.”

Demand for greater predictability is not just limited to aircraft operations. Boeing said being one step ahead is becoming more and more relevant in manufacturing too, as aircraft demand and production rates continue to grow.

 

“The key for us is speed. As the rate goes up, we need to recognize potential issues and resolve them much quicker. We need to identify a problem before it becomes a problem. From our perspective, it’s just a matter of being prepared,” he said.

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