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Four key themes raised at MRO Europe 2018

Although this year’s MRO Europe in Amsterdam is successfully completed, the top themes from the conference will undoubtedly continue to be discussed in the MRO and airline business in the years to come. What was on everyone’s lips this year? We bring you the voice of the people.

If you ever went to any kind of conference, you know that there are always certain buzzwords or themes which are mentioned over and over again, no matter what session you attend or whom you talk to during the lunch break.

It’s the hot topics. The trends that everyone talks about and the new, ground-breaking solutions that just might be the next big thing that will revolutionise the industry.

“Big data” and “digitisation” were those words at MRO Europe 2018. Everywhere you went—be it the exhibition hall, the sessions, even during coffee breaks—you would hear about it.

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5. HERO-film

Exploiting data isn’t exactly a new theme to aviation professionals. However, the continuing advances in the technologies that collect and analyse data are changing the rules of the game, and this was something that caused a lot of discussion among the MRO Europe attendees and drove a number of panel debates.

Digitisation and data wasn’t the only key theme present at the conference. Others included future workforce challenges, partnerships and OEMs, as well as uncertainty about the future economy.

Read along as we present you with four key themes from MRO Europe 2018, provided by a strong panel consisting of representatives from both the airline and MRO business.

1. Economics: Can the good times continue?

With low fuel prices, low interest rates and a global upswing in the economy, the aviation industry has had good conditions for growth in the last couple of years. However, these positive tendencies seem to have come to a halt, and rapidly rising fuel prices are causing concern about airlines future profitability.

»It would be presumptuous to say that I have a real idea of how the economy is going to evolve, but if you look at the trends compared to the past years with low fuel prices and interest rates, we see a change. Fuel prices are now increasing rapidly, and we all know that airline profitability is negatively affected by rising fuel prices. The record profits that we have seen in the past years most likely won’t continue in the coming years, and I guess the real question is if this will create a crisis and if so, how hard this will impact the airline business and MROs?« says Vincent Metz, Head of Strategy, Air France Industries KLM Engineering & Maintenance, and continues:

»Right now, we have an unprecedented amount of airlines coming into the market, and this growth could be heavily impacted by a potential economic crisis.

Bram Nikolai, VP Engineering & Maintenance, at Transavia.com adds:

»I very much agree with Vincent. My concerns are also about two years from now when the present problems with, for instance, engines have been solved. Then the economy might come a bit to a standstill. I’m also a bit concerned about the work-force that we have to employ to get over the hill in the coming years? Will we have a sustainable level of workforce after 2020?« he asks and adds:

»Another thing that I think we need to be aware of are the environmental issues, that are increasingly affecting politics and regulations worldwide.«

Igor Panshin, Deputy CEO Sales & Planning at S7 Techniques, who represent the MRO industry, agrees.

»The MRO business has always followed the airline business. The last few years we have seen a steady yearly growth of 3-4 percent in Europe, and even higher in other areas such as Asia. With more airlines coming into the market, we will need a stronger workforce to maintain all of these aircraft,« he says.

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As new-generation aircraft are making their way into the market, the coming years will also mean that MROs and airlines have to extend their repair capabilities or increasingly choose to outsource their maintenance efforts. Vincent Metz from Air France sees the new aircraft as an opportunity for further growth:

»With every generation of aircraft, the number of aircraft you must be able to repair grows, and as a result, more airlines decide to outsource when a new generation is coming in. I think this can be a good opportunity for MROs, and it is something we are very aware of at Air France. We have already announced that we will offer servicing of a series of new-generation aircraft, as we see it as a great opportunity, and it also makes us less vulnerable to a potential crisis,« he explains.

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2. An ageing workforce

With a rising demand that is set to continue to grow and an ageing workforce, it is critical that the aviation industry is able to attract new talent. However, both MROs and airlines are experiencing workforce challenges, and these are only set to become bigger in the next decade.

»At another session, I heard that the average age of our workforce is 8-9 years higher than in other industries. We are about to lose a lot of our experienced people in the next 10 years, and there isn’t a lot of influx of younger people – simply because the work we provide in this industry isn’t sexy enough,« Bram Nikolai, VP Engineering & Maintenance, at Transavia.com says and continues:

»It may pay well in the end after 10 years of experience, but the Millennial-generation is not prepared to wait that long, and that is what we experience every day at the moment. This is an issue every one of us has to tackle somehow. We want to provide more career perspective, but it’s very difficult.«

Vincent Metz, Head of Strategy, Air France Industries KLM Engineering & Maintenance, agrees and raises another issue:

»We invest a lot in new technologies, digitisation, predictive maintenance and so forth, so we need to attract a completely different kind of people – people who are not normally attracted by the maintenance or airline area. On top of this, these people are in very high demand as other industries and companies also need their skills – and companies like Amazon and Google can be hard to compete with,« he says and adds:

»Further complicating the case is the fact that the economy is doing very good, so the skilled people have a lot of options right now making it even harder to attract them.«

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3. Digitisation – marketing buzz or revolution?

Digitisation has been a hot subject for quite some time in the industry, but the level of adoption varies greatly among airlines and MROs.

»I think we are really starting to gain some traction on digitisation, but there are still a lot of things which are in sort of a proof-of-concept stage. What we see is that some key players are moving way ahead at this stage,« explains CAVOK Team Vice President Robbie Bourke, a veteran who specialises in aviation business leadership. CAVOK Team is a division of Oliver Wyman, a leading global management consulting firm.

Air France KLM is one of the players who is looking towards digitisation in order to improve their operations. There’s a huge potential in utilizing new technologies, but changing the “old” ways isn’t easy.

»There’s a lot of talk around digitisation and predictive maintenance, and it can sometimes be hard to identify what is marketing buzz and what is real content. At Air France KLM, we prioritise digitisation, and the main driver for us is that if you look towards the user experience on our phones and everything around us, and you compare that to the way we work in the aviation industry, there’s a huge gap. Closing this gap is a huge motivation for staff and it has a positive impact on productivity as well,« Vincent Metz explains and continues: 

»The main issue is really to link the modern technology with the industry and work processes. Because the technology is readily available, we see it being used in other industries already, so we really believe the potential is huge.«

Bram Nikolai, VP Engineering & Maintenance, at Transavia.com also believes digitisation has potential, but he looks at it in a more modest way. 

»I agree with Vincent, but we look at the prospects of digitisation in a more modest way. I see a lot of push technology but not really a pull from operators. Sometimes it can be difficult for me to see how this data can help us in everyday business, for instance in preventing AOGs? I think we need smarter tools to mine the data we already have in the maintenance management systems, not necessarily more technologies,« he says. 

Most recently, Air France KLM has been successful with using a mix of engineering know-how and data to predict failures of fuel pumps form their A380 fleet. 

»I strongly believe there’s a lot of potential here. I think what we do at Air France KLM perhaps isn’t directly a big data approach, because the question is really if our industry is a big data environment? Fuel pumps, for instance, don’t fail by their thousands, luckily, so the observations we have to work with are not in their thousands at all. However, we have found a successful approach in working together with engineers and using data to predict failures of fuel pumps within a horizon of 5-6 days before failing, and this is very valuable to our operations,« Vincent Metz explains.

So-called “data democratization” was another hot topic at the conference. Should airlines and MROs share data with each other, in order for everyone to benefit from the results? Vincent Metz calls for a collective approach across the industry. 

»I think we should take responsibility and set up some kind of agreement, where we can actively share and benefit from each other's data. 

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4. Partnering with OEMs

Partnerships with OEMs were also emphasized during the conference. It seems like OEMs are increasingly moving into the airframe aftermarket, while already having been well-established on the engine and component side for some time. 

As OEM penetration into the aftermarket grows, independent MRO providers must develop new strategies and partnerships in order to stay competitive. Air France KLM is doing just that. 

»I think the aftermarket has become increasingly important for the revenue of OEMs. What you see happening is that the IP (intellectual property) they have on the components are used to enforce their grip on the aftermarket. As an MRO, we have to work with that, but we are still strong because we’re the consolidator on the component side of multiple OEMs. We still have the customer contact and that helps us in working with them. But more and more, we have to find a partnership approach with them to move forward,« Vincent Metz from Air France KLM explains and continues: 

»We do it on multiple levels. An interesting example is a deal we have with Safran Aircraft Engines to develop repairs for aerofoil in the north of France, where we basically – together with them and their technology – have come to develop repairs for a GE product.«

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The trend towards partnerships isn’t limited to MROs collaborating with OEMs. Other key players in the aviation supply chain, such as aftermarket integrators and logistics providers, are also focussing on developing relationships and tailored services in order to meet their growing material needs. 

One such example is Boeing’s recently announced expansion of its parts program, called Integrated Material Solution (IMS). According to Boeing, the new service promises to »streamline a customer's supply chain by combining multiple services from Boeing's parts solutions portfolio into one fully managed material solution.«

With the new program, Boeing Global Services follows in the footsteps of Satair, who launched their very similar Integrated Material Services (IMS) solution back in 2016 in response to customers’ growing demand for total parts availability – anytime, anywhere. 

Collaboration is at the very core of these fully integrated aftermarket solutions. It allows distributors such as Satair and Boeing Global Services to step away from their traditional role as solely a distributor and instead work more holistically with their customers – to everyone’s benefit, it seems.

»IMS isn’t an ‘off-the-shelf solution’; it is developed in close collaboration with the airline as both a customer and a partner,« Satair wrote when they announced their IMS solution two years ago. 

»We work with the customer, look at their strategy, their processes, their maintenance planning, their ways of working and then develop solutions together with them to add real value. This also helps to provide a more seamless transition of supply chain responsibilities,« said Stefan Stolzki, Head of Integrated Material Services at the time of Satair’s IMS announcement.

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Going forward, it’ll be exciting to see if the trend toward partnerships in the supply chain continues. With the rise of data analytics and the call for data democratisation, there are a lot of arrows pointing in that direction.

The question now, it seems, is how the industry can promote a balanced approach to collaboration so everyone benefits more or less equally.

 

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About this blog

This blog is driven by Satair Marketing & Communication with input from both internal and external contributors.