Viewpoint: What Comes Next In The Aviation Aftermarket

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Ten years ago, with a global recession fresh in memory, researchers asked a question: What distinguishes companies that flourish after a downturn?  The results, published in the Harvard Business Review, were telling. Looking back across the Great Recession and the recessions of 1990 and 1980, they found the most successful strategy was “optimization,” a parallel focus on efficiency in their core business and strategic investments in the capabilities that would differentiate them in what came next.  As we look toward the indeterminate future of the commercial aviation aftermarket, there are very few things of which we can be certain. What we do know is the companies that emerge stronger will be those that can look past retrenchment to prepare for what comes next.

Perhaps the only thing of which we can be certain in predicting the future of the aftermarket is its volatility and the diminished relevance of recent experience. Uncertainty at scale will strain the current model of on-site field representatives, experience-driven forecasting and monthly planning cycles.  Aftermarket providers that emerge as leaders will be more predictive, agile, and closer to their customers and employees that ever before. If these traits sound familiar, they are. They are at the heart of many companies’ future digital aftermarket strategies. For aftermarket providers to win post-crisis, the future needs to happen now.

In the months preceding the great disruption, aftermarket investments were converging on three themes. First, how might data be used at scale to rapidly optimize maintenance decisions? Second, how might services be dynamically tailored to meet specific operator needs? Third, how might providers reimagine how they deliver services and build the skills to do so? This data-driven, predictive, agile, customer-centered aftermarket was a path to maximize aircraft and customer value, while limiting the effort and capital needed to do so. The future aftermarket would keep aircraft flying more, reduce shop visits and build incremental revenue through digital products and services. Yet progress has been sporadic. To date, service offerings have combined disconnected systems with high levels of human decision making, hampering responsiveness, market intelligence and customer satisfaction.

That future may eventually arrive. For now, aircraft operations and utilization will be sporadic and operator requirements will vary greatly across regions and routes. Still, there are opportunities for those aftermarket providers that can quickly pivot people, partners and technology, to deliver tailored programs and services to customers with limited cash at hand. They must optimize new, used and rotable parts with greater frequency and intelligence to shrink working capital while meeting new demand patterns. They must augment or replace human representatives with personalized digital experiences that help customers get their jobs done at the lower cost and risk to their health. Lastly, they must get closer to the performance, configuration and operational data of individual aircraft to drive maintenance decisions in an era of limited operations. None of these concepts are novel and many were tagged as future investments. Now they are necessary to address a very different future.

What might this present future look like? Aftermarket providers may develop agile delivery processes that address specific operator use cases with foundational solutions in matter of weeks. Artificial intelligence (AI)-powered solutions in areas like repair-replace decision optimization could immediately address working capital challenges, while supporting a foundation of future services that support re-entry into service. A shift to an agile, digitally focused approach also serves other ends. Agile releases of digital aftermarket solutions also can create customer value while minimizing their outlays of cash and capital. Lastly, increasing the pairing of AI and machine learning-driven automation with humans can help all players in the aftermarket manage variability at scale without the expense of scaling themselves. Data-led efforts to optimize operations amidst current volatility can ultimately differentiate aftermarket providers post-crisis.

The return of the aftermarket will hinge upon how medical progress, economic growth and government decisions combine to influence airline solvency, flight operations and passenger confidence. Aftermarket providers that emerge as leaders will be those that can strategically invest in processes and tools that help them to be more agile, data-driven and relentlessly relevant to their customers. Many aftermarket providers already had these characteristics outlined in their future visions of themselves.

What they did not know is that the capabilities they saw as necessary to thrive in a future of rapid aviation growth were those they needed to weather the present and emerge as leaders in what may come next.

Craig Gottlieb is the managing director in Accenture’s aerospace and defense practice, focused on innovation in aftermarket services