The trend towards total care in civil aviation and performance-based contracts in the defense sector continues to account for an increasing share of global aftermarket revenue.
Many fleet operators see the business advantage of outsourcing their maintenance & engineering and inventory management functions. The benefits include cost stabilization with payment on a 'flight hour' basis, as well as the ability to focus resources entirely on their customers.
In the global defense sector, performance and availability contracting are becoming the preferred contracting vehicle for many defense departments. The through-life support of a defense asset is a significant element of the procurement budget.
Increasingly, defense departments are securing a long-term commitment to innovation and improved asset support from the defense primes and private industry. Aircraft primes and aftermarket service providers recognize the commercial opportunity that these contracts can offer. Stable, recurring long-term revenues can offset the usually cyclical nature of new aircraft sales, and given the length of time the asset is in operation, aftermarket services revenue usually proves to be greater than the initial sale.
These strategic developments pose a number of challenges for the strategic planner. The combined impact of contractual commitments and the long-tail nature of the aviation business, mean that future investments must be planned even more carefully and assessed for commercial risks.
The challenge is further compounded by the globalization of aftermarket services and fleet sustainment, and the increased rate of technological change – from integrated vehicle health monitoring to improved engineering performance addressing new environmental regulations. The strategic planner must understand the impact of these changes, both the evolving demands of the customer and the ability of the business to respond.
How Aerogility can help
Aerogility makes little distinction between operational/tactical decision support and longer term strategic planning – only the timeframes are different.
Using the holistic Aerogility model of the aftermarket business, the strategic planner can play out simulations over several decades. The strategic planner utilizes existing what-if scenarios of the 'as-is' business, constructed by the fleet management and planning teams, and runs simulations over a much longer timeframe. They can leverage the capability in Aerogility to introduce dynamic changes during the simulation, for example, a new entry-into-service program, or a new maintenance & engineering facility coming online in five years time. This enables the strategist to simulate the business from the current baseline, introduce different events and demand profiles in future, and see the impact on business-critical KPIs. For example:
- The impact of projected growth on the business over the next five to twenty-five years
- Maintenance & engineering capacity and capabilities required to meet this demand
- Optimal global locations of facilities and inventory storage for projected future growth
- Projected skilled resource requirements by skill and location
- Analysis of return-on-investment and cashflow
- Impact of significant risks on business performance
- Impact of significant resource constraints and cost increases
Each of these what-if scenarios can be fine-tuned with different assumptions and operating parameters to build up a comprehensive picture of potential developments in the business.
Each simulation will generate selected KPIs for side-by-side comparisons, and extensive data covering every significant event in the simulation period that can be utilized for in-depth post-run analysis.
The strategic planner can be confident that the starting point of their simulations – the current business – is verified by the operational teams as an accurate representation of the way the current business works.