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It takes between eight and 10 years to design, manufacture and deliver an aircraft that will have a lifetime of 20 to 40 years. During its service, aircraft operating costs may reach more than four times the original purchase price. Little wonder then that aerospace manufacturers and maintenance, repair and overhaul (MRO) operators are looking at opportunities to grow their revenue from in-services support.
But how do in-service support models work, and what strategies and challenges need to be taken into consideration? This paper, adapted from a timely Accenture executive survey, takes an in-depth look.
Accenture commissioned an executive survey to identify the opportunities and challenges of existing and new in-service support models. The angle we took was to interview both support providers (OEMs and MRO) and their customers (airlines), and mirror their perceptions and expectations.
This paper examines for the first time how views of in-service support align, where they diverge, and the challenges that providers face to meet their customers’ requirements and build a winning competitive proposition for the long term.
The race to become one of a small number of end-to-end global service providers has startedFor some airline customers, the move to total end-to-end fleet support is well underway. More than half of all the airlines we surveyed said that they had plans in place or were already taking steps to achieve it. However, given continued cost pressures, in the longer-term it seems likely that more and more will need to investigate the possibility of new models of end-to-end service support.
Aircraft in-service support—The cost effectiveness dilemmaIn-service support providers (OEMs and MRO) are seeking to expand their portfolio of services to attract new clients and erect barriers to competition from new entrants in a growing market. They are pursuing a balance between growing their market share, containing their costs and maximizing operational performance.
Accelerating the move to end-to-end serviceWhile they have a clear goal to increase their in-service support business, providers face a number of challenges in reaching it. Responses to the survey indicate room for improvement across a wide range of areas, including cost to serve, increasing share of wallet and achieving higher levels of customer satisfaction.
The race for market shareSurvey responses reflect that in the current in-services market structure, the market is very fragmented and providers that are able to offer end-to end services are very limited. The big trends of the move to in-services support for the entire fleet are just emerging. Providers still need time to build their capabilities and persuade customers of the value they can deliver.
The right service mix and the challenge to deliverIn-service support providers identify a number of critical capabilities and service strengths that they need to master to meet their airline customers’ expectations. While providers are clear about the capabilities required to deliver end-to-end service support models, finding or developing them is more challenging.
Accenture believes that there are a number of key activities and additional capabilities that OEMs will need to develop to orientate their business models to an increasingly profitable and customer-driven model. These include the following:
Develop a competitive advantage and build suites of unique and differentiated capabilities by offering exceptional service delivery that responds to airlines expectations. Four dimensions need to be considered, Quality, cost, spread of services and reactivity.
Build capabilities to offer end-to-end services that apply to entire fleets. The survey results show that airlines are almost ready to dedicate their entire fleet to third-party in-services providers.
Build ad-hoc product capabilities to ensure real-time service offerings. This needs a special focus on developing internal know-how and includes building external networks to spread suites of services anywhere, anytime and for any products.
Reconfigure and optimize service supply chain to respond to the globalized changing customer requirements. While OEMs have to build up an agile supply chain, they have also to speed up the setting of a new international network environment, driven by strong partnership logic with suppliers and business partners.
Develop and deliver services package that associate service level with price level across diverse customer segments requirements.
February 14, 2013
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