Jumping into 2020, many of the challenges that aftermarket suppliers have faced over the years have either maintained due to lack of resources to address them, or will become exacerbated by the influx of digitalisation demands.
In this article, we outline six challenges that we feel the aftermarket is going to continue to face moving into a new decade. Some are old problems seeing new strength; others will come about as the global fleet shifts towards more efficient, and connected aircraft.
With an expected influx of new aircraft to join the fleet, there will be a demand for more robust aftermarket services. They will need to be designed to increase availability, lower operational cost, limit AOG times and extend the overall lives of aircraft.
The aftermarket faces a significant challenge with this, because of inconsistency with the level of digitisation. The paper-heavy past of the parts market has yet to be completely overhauled and adds the frustrating levels of inefficiency when dealing with sometimes poorly organised parts records.
Innovations that are in demand for newer fleets, like predictive maintenance and data sharing across decentralised cloud storage, are in direct competition with some of the archaic systems used throughout the aftermarket.
As we reported recently in an article questioning whether aircraft retirements would create a potential USM goldmine, we sited some statistics found in a recent report by Flight Global stating that 75% of the current fleet is forecast to be retired during the next 20 years. This creates some exciting opportunities for aftermarket sales. It also presents some challenges in how the data around those parts are handled.
While USM is projected to be one of the fastest-growing MRO segments to hit the market, the majority of those parts are going to come with a paper-trail—not a digital one. This means that traceability could become an issue.
USM provides a unique opportunity to compete with OEMs that are entering the market, as on average, a USM part can be 60-80% of the price of a new part. But if the spares serviceability and pedigree are not adequately documented, then it may become difficult to maintain a cost vs convenience advantage.
As we discussed in our 7 Big Aftermarket Trends of 2020, OEMs dipping their feet in the aftermarket pool causes some substantial issues for smaller MRO and parts providers. Smaller parts providers will almost always have a disadvantage to larger OEMs that have the power to develop vast aircraft service packages that encompass both proprietary systems software and product solutions.
As we move into an industry that will soon be driven by decentralised parts and service data, we could see OEMs able to harvest large pools of aircraft and parts data, which can be fed into AI-driven, blockchain protected, systems to provide highly accurate maintenance data.
The simple fact that airframers and OEMs are getting better and better at maximising the efficiency of their parts. This is fantastic news for airlines, but not so much for suppliers. Newer aircraft are not only more technologically advanced, they're also more efficient and require less maintenance. As these newer generation fleets gain numbers dominance as more and more prior aircraft are retired, this could inevitably mean fewer replacement parts requested or less service across the lifecycle of a part.
Newer narrow-body aircraft are estimated to be about 15%-20% more efficient than the versions they are replacing. These aircraft will have longer maintenance intervals and lower heavy maintenance spend, simply because they are designed better and use better materials.
Overstocking might not be the best thing for an airline, but it's a pretty sweet gig for a supplier. Unfortunately, long term service contracts by airframers and OEMs, facilitated by services like predictive maintenance, airlines are now becoming more emboldened to make the most out of their initial spares.
This trend in lower spares demand has been cooking for several years, as it was reported by Roland Berger back in 2015. Fast forward four years, and in a similar report, it shows that suppliers are still under pressure from airlines cutting costs, doing more in-house and shoring up their supply chain.
The last, and arguably the most significant challenge that the aftermarket will face in the coming years, is simply a lack of qualified staff to operate the global aviation machine. The looming threat of labour shortages in material management and maintenance could lead to bottlenecks along the supply chain.
Rapid advancement in aircraft technology and data-driven software analytics is already driving demand for technicians that can cross the gap between digital and mechanical expertise. This same demand can be seen in material management, where new technologies are requiring further knowledge and understanding of subjects like additive manufacturing, enhanced GSE, and inventory management.
Looking at the challenges presented above, it's safe to say that none of them crept up on the aviation aftermarket unaware. In fact, many of these challenges are as a result of parts suppliers not having the same resources as larger OEMs to keep pace with the steady march of technological progress. Regardless, progress is relentless, and aftermarket suppliers are going to need to address the challenges we stated above head-on to maintain a competitive presence in the market.
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This blog is driven by Satair Marketing & Communication with input from both internal and external contributors.
Satair is a world leading provider of aftermarket services and solutions for the civil aerospace industry. Satair is a stand-alone company and Airbus subsidiary.