Airframe manufacturers face an uphill climb to capture consistent revenues from the aftermarket, but hold several advantages over traditional maintenance suppliers that—if leveraged correctly—could lead to market-share gains, a PriceWaterhouseCoopers (PWC) analysis concludes.

While engine makers are succeeding in securing aftermarket business through exclusive long-term deals, airframe manufacturers have struggled to win customers with all-in-one services, such as power-by-the-hour. A PWC analysis of Aviation Week MRO Prospector data shows that less than 3.5% of the global airline fleet—or about 900 aircraft—is under an airframe manufacturer’s power-by-the-hour contract. 

A PWC survey finds several reasons for airline hesitance, including doubt that manufacturers know the aftermarket as well as airlines or maintenance providers, and the fear that a long-term materials contract will rob the carrier of a chance to lower costs down the line.

Competing with traditional providers by offering “low-margin repair labor” is the wrong way for manufacturers to go, PWC argues. Instead, harnessing inherent advantages, such as engineering knowledge and opportunities to bundles services into aircraft sales contracts, is where manufacturers have the most to gain.

Still, further progress will require shifting some strategies, PWC notes.

“With their engineering legacy, manufacturers know how to handle large amounts of data and provide value to the operators, but important questions around business models and incentives, as well as diverging data standards and immaturity of airline data systems, remain unanswered,” PWC says.

Another key shift that is changing the aftermarket landscape is the increased supplier risk-sharing participation in new programs. Often, these deals include rights for suppliers to monetize their investments through aftermarket support of their products, PWC notes. “In turn, [suppliers] will attempt to protect their [intellectual property] aggressively and be involved in the downstream service to a larger degree, having identified the aftermarket as a clear source of revenue.”

Some risk-sharing partners struggle to form the global presence that efficient aftermarket service demands. One PWC study showed that just 14 of 92 suppliers had the ability to build an “in-region” support network in places they were not already established, even if demand for their products merited the support. Here, PWC says, manufacturers have opportunities to use their well-established global networks to partner with suppliers and support their common customers.

The PWC report should not surprise Airbus or Boeing, both of which have struggled to land customers for nose-to-tail maintenance services. 

On Boeing’s third-quarter earnings call last week, CEO James McNerney told analysts that both the 737 MAX and 777X are being developed with an eye toward bolstering in-house aftermarket offerings, eventually growing them at the same rate as Boeing’s overall commercial programs, or about 10-15% annually.