Branching out

admin
By admin April 25, 2016 19:46

Branching out

When considering the eternal question of aftermarket control in the engine market, will the US and EU authorities rule against the original equipment manufacturers (OEMs) and in the event force the OEMs to transfer ownership of engines to a third party? Think about all of this differently for a moment: There is a set process for following spare parts. Officially a manufacturer is asked to issue a document for each spare part, it then sells these to companies listed on what is called a CAP (capability) list, serial numbers of destination planes for these spare parts are checked, while parts are also coming into the market from teardown. The underlying process is supposed to be secure and, aside from fake parts turning up now and again, it is but it leads to enormous amounts of paper and process costs. In fact, it is impossible for OEMs to track what part is going into which aircraft all of the time as third parties store parts and keep their own records, lessors sometimes cannot get paperwork from airlines that may have gone out of business and therefore from time to time the chain falls apart.

But what if all stakeholders in the industry came together to form a blockchain? All stakeholders in the spare parts process: OEMs, lessors, operators, MROs, traders and spare parts specialists, authorities, and others, could come together to build a separate blockchain, where each would hold a vault as well as storage facilities. The manufacturer generates a new part by making a transaction including its serial number, whenever the new part is moved via another transaction, this is recorded in the blockchain, which can be accessed by any of the stakeholders, including the technicians, the issuer and the receiver of the aircraft. This would create a secure and transparent parts database for the entire industry massively reducing process costs and increase traceability with complete transparency. Although the technology is available now, could we ever see this in the aviation sector? This would require an industry-wide effort as it requires the buy-in of all of the stakeholders. Maybe it is time to start lobbying engine OEMs on the benefits of an open industrywide blockchain for parts management. The OEMs would benefit greatly as they would know at any given time almost live exactly what was going into what engine and where, which of course is what the OEMs profess to be their ultimate wish in any case.

Meanwhile, Bombardier has seen its name across the press over the weekend where it is muted that it is in discussions to start an airline in Iran. The news reports stated that officials from Iran’s Qeshm Free Zone held talks in Tehran with Pierre Beaudoin, executive chairman of Bombardier’s board, on a project to set up an airline in the southern Qeshm island, which is located in the Persian Gulf. Qeshm Free Zone officials have actually held talks with three separate manufacturers of late and the simple fact is that this is another story out of Iran that has simply been lost in translation. What we do now know for sure is that the Iranians are trying to start a new airline in the region and they are evaluating aircraft options. Given that this is a start-up, we can argue point blank that in this low oil price environment second hand aircraft would provide the very best economics over the medium term – and delivery dates would be far sooner. Of course I for one would expect the Iranian authorities to have a reasonable grasp over what oil prices might do over the next five to ten years……..given that they will be driving prices.

Interestingly in the European market the major airlines are beginning to look alike. All of the flag carriers have transitioned, or are in the final phases of transitioning, into low-cost base airlines, while the low-cost airlines have come from the other direction to transition into airlines that are no longer point to point but who offer transfers and therefore connectivity. I’m talking about Ryanair accepting transfers through its largest hubs such as London Stansted, which will allow it to compete far more readily with other airlines. Ryanair is joining the dots and if Norwegian is successful on its transatlantic venture then one wonders if the likes of Ryanair would wish to purchase that airline.

admin
By admin April 25, 2016 19:46