Companies across the aerospace sector are developing digital capabilities in order to grow revenue by taking advantage of data analytics and the resultant customer insights.
AJW Group is no exception. At its headquarters in the leafy countryside near London Gatwick airport, the privately owned spare-parts specialist is plotting what its president, Christopher Whiteside, describes as an "Amazon-ifaction" of its business.
It is in the process of developing an online customer platform that should enable it to sell not only its own but also competitors' inventory in "exactly the same way as Amazon does", says Whiteside.
He sees the aircraft spares market as having a "rinky-dink" supplier structure – comprising manufacturers, traders, stockists (including airlines), repair shops, and logistics providers – which use "a very manual exchange of information", and believes that this constrains business.
Whiteside acknowledges that the reluctance of parts traders to publish prices for used material or requirements for supplier accreditation is an obstacle to realising his vision. But he believes that such issues will be "pretty simple to work out" for a limited yet lucrative range of rotable components, which account for a large proportion of the total value of spares deliveries.
Out of the huge number of components that make up an aircraft – engines aside, as their support represents a market in its own right – some "1,000 [line replaceable units] run the world" in the commercial aviation spares sector, says Whiteside.
Using the proposed trading tool could boost AJW's business beyond growth projections based on equipment that is owned or at least controlled by the company.
Rather than relying on gradual growth of AJW's existing activities, Whiteside says he is "much more interested in taking a few percent from the global commercial aviation parts market... by basically having that tool [and] selling other people's products".
Today, AJW generates group-wide annual revenue of "broadly" $800 million, he notes.
Testing of the online platform is scheduled to begin during second quarter 2020, and the project is part of a wider effort to develop AJW's digital capabilities. In 2017, the company recruited its first chief information officer, Han-Ley Tang, who previously served as technology director at Swiss bank UBS.
Whiteside says that "AJW's move into harvesting data [is] now well under way".
Over the past two years, it has established a digital infrastructure to store and analyse data emanating from customers, partners and its own operations.
Development of predictive maintenance capabilities is a "major function" of AJW's digital transformation, it notes on its website.
INDEPENDENTS' ROLE
Whiteside recognises that aircraft, engine and equipment manufacturers are making efforts to grow their aftermarket activities and intend to play much larger roles in the MRO sector than in the past.
He sees a role for AJW as a partner for OEMs to deliver services that the manufacturers might not be able to provide on their own – and sees a particular opportunity in "standing beside" multiple OEMs.
"The joy of being independent and of our size is that I can partner with Airbus and/or Boeing, I can partner with Collins [Aerospace], Honeywell and Thales," he says. "My job is to exploit that opportunity."
In 2018, AJW disclosed an 11-year contract with Bombardier to manage the supply of rotable spares for business jets on the Canadian manufacturer's behalf.
Whiteside values that deal at $1.2 billion over the contract period.
AJW has also partnered with Thales and Zodiac Aerospace – before the interiors supplier was acquired by Safran – as part of its own component support deal with EasyJet.
Whiteside believes that as AJW's business is entirely concentrated on the supply of spares and related services, the company is in a better position to deliver that support than a manufacturer.
"There is a difference between making something and looking after it," he says.
Whiteside shows no concern about the prospect that component MRO will become a matter of predictive maintenance and of airlines relying on real-time technical and operational data analysis to manage their maintenance operations, rather than on past experience of equipment's in-service performance.
Airbus, Boeing and other OEMs have built up digital capabilities and services in order to win MRO contracts and thereby increase their aftermarket share.
Questions of data access and ownership have become contentious among aftermarket players – especially third-party maintenance providers – as the ability to analyse data is seen as essential to competing for support contracts.
Whiteside acknowledges that management of aircraft maintenance processes will gravitate toward service providers that are in control of relevant data and can analyse it. But he argues "we are a long way off" a situation where an aircraft's entire MRO requirements will be handled through predictive maintenance schemes.
One reason he cites is that diagnostic data is not available for every component. "You can only measure components that are wear-sensitive," he says.
Last year, Airbus disclosed a target to eliminate AOG disruptions completely by 2025 through predictive maintenance.
But despite Airbus and Boeing's effort to boosts their aftermarket activities through big-data services, Whiteside believes it is "going to take decades" before most newly delivered aircraft are maintained via an airframer's support programme. "We will get there... but not in my working life," he suggests.
Meanwhile, he sees opportunities for AJW to grow its business through co-operation with partners – and scope to expand into serving military operators of commercial aircraft types, business jets and helicopters.
"I am not here to make predictions [what happens] in 30 years' time," says Whiteside. "I am planning the business on three to five years, and in certain instances up to 10-year cycles."
He adds: "We have a growing role to play in the next years... Changes create disruption, and disruption creates opportunity."
