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ANALYSIS: How MROs respond to OEM aftermarket ambitions

As Airbus and Boeing make efforts to grow their aftermarket business – particularly through new support activities based on digital services – a key question is: who controls and has access to the data required to develop those services?

The range and volume of technical data that is automatically generated on board aircraft and can provide insight in potential maintenance issues has sharply increased with each new aircraft generation.

Airbus and Boeing have repeatedly said that airlines own the data that is generated during their operations.

However, Airbus has taken a controversial approach with the introduction of its data recording and transmission device FOMAX – short for flight operations and maintenance exchanger – which increases the volume of available parameters on A320-family jets and A330s.

The Rockwell Collins-supplied unit has been designed for both line- and retrofit, and raises the number of available parameters on A320s to 24,000 per flight, from 400.

Under Airbus’s policy, operators will gain access to the increased data range only if they subscribe to, at least, a basic, free service of the airframer’s Skywise digital services platform.

Airbus says that operators are free to use the FOMAX data and pass it on to potential third-party maintenance partners. But nonetheless, the airframer gains access to the anonymised data for fleet-wide analytics, for example, to enable Skywise customers to benchmark their operations against other carriers.

Norman Baker, head of digital at Airbus’s services division, told FlightGlobal at the MRO Europe convention in Amsterdam in October that the manufacturer made a considerable effort to create the Skywise platform where data from, he says, 10-12 sources – including the aircraft, airline operations, OEMs, maintenance providers, spare part inventories and logistic providers – can be aggregated and harmonised in a coherent and usable format.

“We invested a lot in the ability to process this data, in the ability to bring it to a position where it can be analysed and used to create value… This is not something to be taken lightly,” says Baker – adding: “It is not taking your [the airline’s] data and selling it back to you.”

For Lufthansa Technik chief executive Johannes Bussmann, however, the idea of airlines having to subscribe to Skywise and then having to share data with Airbus in order to gain access to the FOMAX information is not acceptable.

In his view, the manufacturer’s position is a matter of “market abuse”.

Bussmann tells FlightGlobal: “The [FOMAX] data belongs to the airlines, without encryption… And then the airlines decide what to do with it. Obviously, Airbus can have it too, there is no question about it. But they have no right to exclusively claim that data [via Skywise].”

He argues: “It is important that everyone, who can add value to it, can have access to the data.”

LHT launched its digital services platform, Aviatar, in 2017 – the same year when Airbus and Boeing established their respective Skywise and AnalytX portals.

NEUTRAL PLATFORM

The German maintenance, repair and overhaul group intends to spin out Aviatar as standalone business in the short term and share its ownership with other aftermarket players – including competitors – in order to establish a “neutral” system for operators and service providers to access and analyse aircraft onboard data.

Detailed talks are under way with several MRO providers and, Bussmann says, LHT is open to discuss potential participation with select equipment manufacturers too.

He says Aviatar’s objective is not to establish a non-OEM competitor to Skywise and AnalytX that is ultimately controlled by a single party in LHT. “We would just replace one monopoly with another: that makes no sense,” he says.

Instead, the non-OEM system is to become an “open platform” for data tools and services from different, potentially competing specialists, which would provide operators with “free” access to their aircraft data.

Air France Industries KLM Engineering & Maintenance vice-president digital and innovation Rodolphe Parisot welcomes LHT’s initiative.

“Hopefully it will have an impact on competition on the market,” he says.

Parisot confirms that AFI KLM E&M is evaluating options to address the topic, including the possibility of establishing an own-digital-services platform, and is in talks with potential partners, he says.

“We don’t believe in models where only one single entity owns a platform which is… for a global industry.”

He says: “For us, a platform has to be neutral, open to competitors, and it should… respect data ownership of all users.”

INDIVIDUAL APPLICATIONS

Parisot notes that an own platform is not necessary to develop digital services.

AFI KLM E&M has developed a range of predictive maintenance solutions for specific components, as have other aftermarket players.

The analytics are based on data routinely downloaded from aircraft – for example, via the quick-access recorder – and the solutions have been made available to third-party customers.

Airbus says it intends to partner with airlines and aftermarket specialists in order to jointly develop applications for Skywise, which the airframer also describes as an “open” platform.

Despite the possibility of developing individual solutions, Parisot says that having access to a platform is important as it represents a “key business channel” to sell services and compete with other specialists – a marketplace “where you can do business from many to many [parties]”.

But more importantly, digital service platforms are set to become central for the planning and management of aircraft support services in future, as maintenance events will be determined by data analytics rather than predefined inspection schedules.

Parisot believes that “many” airlines – especially carriers with in-house engineering capabilities – and smaller OEMs are “not at ease” with the prospect of having to rely for their equipment’s maintenance on platforms controlled by Airbus or Boeing.

However, Delta Air Lines – a legacy airline with long-standing in-house maintenance capabilities and a third-party MRO business – was revealed in October as the 29th Skywise customer.

Airbus foresees that, until the end of 2019, the number of Skywise customers and aircraft under contract will treble to 100 and 10,000, respectively.

Christophe Bernardini – previously chief executive of Zodiac Aerospace’s cabin branch and MRO specialist Sabena Technics – confirms to FlightGlobal that aircraft equipment suppliers view the airframers’ aftermarket efforts with concern.

As aftersales revenue is “at the heart” of suppliers’ business models, he says that “strategies will have to evolve, knowing that [airframers] will have the power in negotiations of new programmes”.

ENSURING ACESS

Noting that access to operational data is “clearly… a key factor of success in the aftermarket segment”, he says that equipment suppliers “must develop strategies to get that data”.

He adds that operators have a “role to play” as it will be “in their interest that these data [sets] are available to all the players” in order to create competition for solutions.

Baker describes questions around data ownership as a “tangential” issue while airlines are, in his view, interested in a “common source of truth” – data from multiple sources, readily available for analytics according to airlines’ objectives.

He insists: “The airlines have control and ownership of their data, they can choose whether to share or not… We have created a great ecosystem for them to provide their data into and get much greater value for.”

Mike Fleming, vice president of commercial services for Boeing Global Services, takes a similar stance.

“Ownership of data without being able to turn it into something valuable… is not a good place to be in,” he said at the MRO Europe convention.

“The more relevant aspect to it is: who is best positioned to turn that data into knowledge?” he asks.

Fleming argues that Boeing’s domain knowledge is key in the design of analytical tools and that it is “not very efficient” for airlines to individually prepare huge data volumes and devise algorithms.

“Anybody can hire a mathematician to do a statistical analysis on data coming off the airplane,” says Fleming – adding: “The key is having to make knowledge what it is that you are looking for… which makes the big difference on the airplane”.

Fleming asserts that Boeing does not control the data, and that all operational data used for analytics is being supplied by operators: “We don’t have access to their data, unless they allow us.

“If the airline wants to provide their data to a particular MRO or an OEM… that’s up to the airline’s choice,” he says.

FlightGlobal understands, however, that Boeing’s supply of digital services and tools – for example, the airframer has introduced a set of “Self-Service Analytics” – is linked to an authorisation for the manufacturer to use its customers’ data for fleet-wide analytics.

THIRD-PARTY MAINTENANCE PROVIDERS

Bussmann thinks it feasible that in the long term, only Airbus and Boeing’s platforms plus Aviatar and a potential fourth system will be available on the market to access and analyse data from the entire aircraft.

Engine data might be handled differently as powerplant manufacturers have established separate data management systems.

This raises a question over what role third-party maintenance providers will play – especially independent companies that have no access to digital platforms.

Bussmann foresees that unless neutral platforms exist for all industry players to access aircraft data and analytical tools, some MRO specialists will have no choice but to join manufacturers’ aftermarket initiatives and thus are likely become “mere labour providers”.

“They are not solution partners, but are effectively told on a task card what and what not to do. With that, it is not possible to lead a business in a meaningful manner and invest in its development,” he says.

MRO facilities generate valuable data in their own right, when they disassemble equipment to determine sources for malfunctions or performance degradations.

That information is especially relevant for manufacturers as it can help develop further equipment generations and modifications.

But a question is what MRO providers will gain from manufacturers in return for the submission of the repair insights.

As the manufacturers do not intend to complete aircraft or component maintenance in-house, they have established partnerships – in some cases with equity investments – with external MRO providers.

Airbus has established an “MRO Alliance” with a select group of service providers and beyond that, Baker says, the airframer is “exploring models of how we leverage Skywise together with MROs”.

He acknowledges that the airframers’ increased aftermarket activity and digitisation will be factors in an MRO sector consolidation, and that the manufacturers will play a central role in shaping that future market.

“I would encourage the third-party MROs to create as much value as possible for the customers and to come to us with ideas of how we can work together,” he says.

He adds: “Digital is going to change that landscape… The market will make the determination about who will succeed [and] who won’t.”

The digitisation is one among several factors putting MRO providers under pressure.

Developing repair capabilities for new-generation aircraft has become harder as equipment has become more durable, while manufacturers guard their intellectual property more closely than in the past.

All parties interviewed for this article note a trend among airlines to source their maintenance requirements in fewer, more comprehensive hour-based MRO deals in order to reduce management efforts of handling a multitude of suppliers.

WITHOUT COMPETITION

That trend plays into the hands of the airframers and engine manufacturers as they are in a position to wrap up long-term aftermarket support agreements as part of equipment sales – without third-party MRO competition.

Bussmann warns if operational data is exclusively channelled to manufacturers under such agreements and is not freely available when the contracts expire, it will become difficult for third-party maintenance specialists to service equipment – and for operators to stimulate competition for follow-up MRO deals.

Operators may be in a strong negotiation position versus manufacturers during initial aircraft acquisitions. But having such a position when maintenance contracts are being negotiated at a later point in the aircraft’s lifecycle will arguably depend on MRO competition.

“If there is no possibility to provide operational data to others, then [airlines] will become dependent on a sole supplier from the aircraft’s acquisition until the end of its service life,” Bussmann says.

Meanwhile, LHT is evaluating development of an aircraft data aggregation unit – similar to FOMAX – to ensure access to operational information without the airframers’ involvement.

Bussmann says: “We can build such a box too, that’s no great feat… and we will do it if we can’t reach a sensible agreement. We have started with the development.”

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