Blockchain For The Aftermarket: Not Dead Yet
Airlines typically spend around $50 billion annually on material inventories, so any tool that helps them to know about, find and procure parts more efficiently can save major sums compared with current manual, paper-based and somewhat blind processes. That has been the obvious attraction of building a blockchain for the aftermarket.
But a fragmented and fragile aftermarket has been reluctant to invest in a blockchain, or distributed ledger, that would contain all relevant technical data on available parts. The benefits cannot be realized until a critical mass of companies invests.
Nevertheless, limited aftermarket blockchain projects have been developed, are imminent or planned.
In 2020, Honeywell launched a blockchain ledger to digitize aircraft parts and services for its customers. However, the staff that managed this innovation have left the company and, though the tool is still live, Honeywell is not developing it further.
Block Aero Technologies, meanwhile, has an aerospace aftermarket blockchain platform and plans to launch another in early 2023, according to founder Todd Siena. The 22-person company is providing a distributed ledger, called MRO Manager, for JALUX and its customers to store repair data. Siena expects more than 20 companies to participate in this system by the end of this year. MRO Manager enables participants to create digital twins of their aircraft assets. A more ambitious version, which would support back-to-birth records, is under development.
The company also is working with logistics provider Kuehne+Nagel on a blockchain platform for tracking and characterizing engine stands. Many of these stands are idle or underutilized because their location and condition is not known. The new platform will create a global virtual pool of these assets, with GPS location data and sensor data on variables such as humidity and temperature matched with each stand. This distributed ledger should go live in the first quarter of 2023. “We are working with early adopters and have interest from big players in the U.S. and Europe, chiefly airlines and OEMs,” Siena explains.
Block Aero’s repair solution can transfer data according to Spec 2000 standards, and Siena says it could inter-operate with other blockchains. “SITA would be great to partner with,” he adds.
Siena says the main hurdles to expanding the distributed ledger approach include linking up with existing enterprise resource management or MRO IT systems as well as persuading all aftermarket companies to manage their data digitally and to share more technical data. Blockchain can protect confidential commercial data, but its value depends on aftermarket companies sharing technical data so they can collaborate more effectively.
In five years, Siena hopes Block Aero “will provide a simple way for OEMs and lessors to check the status of any [life-limited part] back to birth and end the madness of part traceability.”
At the end of September, data network provider SkyThread launched its blockchain-enabled part tracker and tracer. With 32 full-time workers, the company is working on contracts with Air France-KLM, Parker-Hannifin, other U.S. and European OEMs, major airlines and a Canadian and European MRO, according to Chief Strategy Officer Chuck Marx.
SkyThread wants to embed its product with a major MRO IT application. “Then [users] would just have to turn it on,” Marx observes.
The new tool would be interoperable with other aftermarket blockchains in what Marx characterizes as “a chain of chains.” It will start with data on about 35 Boeing 787 parts operated by one carrier, then extend to 787s supported by that carrier’s MRO provider before moving toward covering all 787s. Next, SkyThread plans to support Airbus A350s, eventually moving into narrowbodies. Marx expects to be supporting about two-dozen airlines within a year.
And the larger vision of an aftermarket blockchain? “It’s going to happen; we’re not alone,” Marx says. He adds that individual blockchains must converge, not diverge, for this to happen.
The 10-person team at Aerotrax Technologies is piloting a cloud-based, distributed-ledger maintenance management and operations system with Triumph Group, Bamboo Airways and Pacific Airlines. The pilot project prompted a major software revision designated Version 22, which CEO David Bettenhausen hopes to launch with the wider market soon.
Aerotrax focuses first on component and part orders and workflows, appending technical data to parts. It plans to move into engines and aircraft. The software is built on Amazon Web Services, and Bettenhausen says distributed architecture will enable quick onboarding and guarantees that records are immutable.
Aerotrax will be able to interoperate with other similar blockchain-based platforms. Bettenhausen anticipates several platforms in different regions with varying approaches.
“It’s not dead yet,” asserts Jennifer Torlone, vice president of information technology at Willis Lease Finance, which has been working with technology provider SITA in the MRO Blockchain Alliance. The seven alliance members have been meeting regularly to develop and promote the solution.
Torlone says the COVID-19 cash crunch slowed down aviation investment in IT. “Paying salaries has been more important,” she says. Torlone predicts implementing full blockchain for the aftermarket will take 8-10 years, comparing it with the rollout of e-tickets and e-cargo: “You need a couple of big players to require it,” she notes.
But with airlines and major OEMs already having tough problems managing their supply chains, now is not exactly an ideal time for big players to impose additional requirements on their suppliers. That also raises the larger question: How realistic are developers’ hopes of building a block-chain, or a collection of blockchains, that would cover a substantial part of the aftermarket within this decade?
Craig Gottlieb, managing director of aerospace and defense at Accenture, says SkyThread and other developers are building products that exploit the best capabilities of blockchain: “creating traceability and lineage, and providing unique identity in tamper--evident solutions.”
Gottlieb sees these capabilities as only a part of the wider goal of building a virtual world that will parallel the physical world of aviation. He says some significant blockchain capabilities are doable today, but others will take much longer to add, such as storing entire back-to-birth technical data. “Maintenance is very fragmented, technical cycles are long, and standards for interoperability are hindering adoption at scale,” Gottlieb says.
Potential adopters have mixed views. An Accenture survey of aircraft operators found a clear majority see value in sharing technical data, but only a minority are willing to share their own. Technical feasibility, cost and confidence in data security are still concerns.
Konstantinos Varsos, partner at Oliver Wyman and head of its MRO practice for the Americas, is more skeptical about blockchain prospects. If blockchain is to cover a major part of the aftermarket in this decade, Varsos says we should be seeing more progress now.
He argues that the reason for sluggish progress is priorities. “Airlines have bigger fish to fry: modernization and other innovation efforts,” Varsos says. “Suppliers may be thinking about it a little more.”
Varsos says he has not seen any really significant progress to date toward an aftermarket blockchain, and he thinks it unlikely that aviation will be an early adopter of the technology. He predicts other industries will solve some of the technical difficulties first, easing aviation’s transition to blockchain.
Varsos agrees with Gottlieb that aviation is headed toward more digitalization, but he does not believe those digital priorities will include blockchain. Instead, he expects that the industry will focus on innovations such as modernizing MRO IT systems, tracking rotables internally, RFID barcoding and electronic technical logs.
Tech Experts Remain Doubtful
Attendees at Aviation Week’s Aerospace IT conference in Chicago Oct. 5-6 had serious doubts about blockchain’s adoption in the aftermarket.
In an audience poll about which technologies are most important for aerospace, blockchain received zero votes among the choices of it, predictive analytics, paperless options, artificial intelligence, digital twins and mobility—even though audience members could choose up to two options.
Another audience poll found that 72% of respondents expect blockchain to take nine or more years to become commonplace in aviation.
Panelists during a session about software modernization in aerospace also expressed heavy skepticism. One executive said it has been overhyped and another projected that a common blockchain system will never happen in aviation. Comments from audience members echoed these views.