The AOG Market and How AOGsmart Can Help

We all know the implications of an aircraft sitting on the ground and not making money – AOG, AOG, AOG! Those three dreaded letters means strife, pressure and pain to aircraft operators. Welcome to AOGsmart’s very first blog post – we are eager to share with you why we wanted to make the AOGsmart app, but first some facts on why we embarked on the mission to really make a difference when an AOG occurs.

AOG Facts

  • Over 27,000 aircraft in service
  • Over 40% of the serviceable aircraft are between 7-10 yrs old
  • Ave of 1-2 AOGs per month per aircraft
  • Ave cost of an AOG to an airline $10,000 but can exceed $100,000 per day
  • Ave length of delay due to an AOG is 12.5 hours
  • Cost of AOG prevention: $40bn in stock piles
  • AOGs cost an average size airline over $8m per year
  • 8% increase on AOGs expected year on year

The story told from the facts above is that AOGs are here to stay , and as air transportation takes over more far flung parts of the world, AOGs are on the rise. Before we embarked on producing a solution to handle the aviation industry’s AOG issues, we had to think outside of the box whilst maintaining a pragmatic view. We started by analysing the full impact AOGs have on airlines and MROs, and designed an application that tackles and mitigates these impacts.

Below are some of the AOG pains we analysed and helped forge a new and painless approach to managing and mitigating the loss and disruption caused by an AOG:

  1. Overspend on an AOG
  2. Reducing cost & time of AOGs and critical part requirements
  3. Maintrol Expenditure Management
  4. Level of competitive procurement across the Approved Suppliers List
  5. Competitive global and localised logistics support and procurement

The AOGsmart app is chiefly aimed at making it easier for AOG desk operatives to carry out their tasks more quickly and painlessly. A bi-product from delving deeper into understanding AOGs triggered a new way to not only manage multiple AOGs, but also to create revenue possibilities from stored parts and resources stocked ready for the inevitable AOG.  Our findings from consulting with airlines worldwide supports their interest in achieving favourable ROI on stockedpiled parts and underutilized resources.

Over the coming months, our team will be providing tips & guides on how the AOGsmart app operates and how to get the best results. Our blog posts will provide a learning plan that will help you quickly gain confidence in using the AOGsmart app, and to help you along we’ll be using examples of the various pains AOGs present to airlines so you can easily recognise and see how the app works through solutions. We will show you how the app makes your AOG desk so much easier to manage whist handling multiple AOGs.

Written by Frederick Ilouno

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The Sharing Economy – What Is It and How Can it Benefit the AOG World?

Firstly, however sceptical of new trends or technology, I’m willing to bet most of us have made some use of the sharing economy at some stage during the past few years. Uber, Airbnb, Ebay, anyone?

While these are the poster children of the sharing economy trend, alongside them is a growing economy, facilitating €28bn worth of transactions in 2015 alone. And that was just in Europe. Price Waterhouse estimates that by 2025 this will have grown to €570bn annually.

By definition, the sharing economy is another term for collaborative consumption, or simply a sharing of resources or goods to mutually benefit users. For example, owners rent out something they are not using, such as a car, a room or office space, using peer-to-peer platforms that efficiently link everyone together by what they actually require. The owner generates some extra income, the user gets a better deal or service, and the platform takes a small commission. It’s a win-win – everyone is happy.

While it has led to efficiencies and disruption in other markets, in our world of aircraft parts, the competitive and highly regulated nature of the industry means there has been very little historic collaboration. Sure,  some parts pooling, consignment stocks, loans and exchanges take place , but nothing like other industries such as logistics or employment.

Consider how many parts you have sitting on shelves at different locations, certified and ready for use. Are they always where you actually need them in an AOG situation? Of course not. Unless you can have every component in every location, any inventory is merely an intelligently planned insurance to hopefully cover what may be needed.

So if everyone has parts sitting on shelves all over the world, it stands to reason that someone is going to have what you need closer to where you have your actual AOG requirement. The problem is, you won’t know – and probably by the time you find out you have already made another arrangement or sent your own part. Everyone has their network of approved suppliers, sourcing websites and friendly airlines, but the method of contacting them probably hasn’t changed much. Phone calls or a generic RFQ email fired out will probably net a bunch of AOG quotes from Singapore to Miami – but that won’t help much if it takes 15hrs to ship to the required location.

This is where the sharing economy can help. A platform like Airbnb knows that if you are looking for apartment rentals in New York, you won’t be interested in apartments in London or Paris, so the results and choices are focused on exactly what you specify; in other words, it’s an intelligent collaboration.

This is the same for AOGs, in fact more so – since you need to make the best decision in real time, and cost is probably not the primary concern. If you can only use a part with FAA8130 certification for example, why waste time sifting through numerous quotes. Or if your aircraft is grounded in Sydney, a quote from Paris isn’t going to help much, regardless of how cheap it is. But that part could be sitting in the MRO hangar next door, owned by someone you’ve never spoken to before but who is willing to help you out because they’re wondering what to do with it anyway. They make money, you get your aircraft back in service. Win-Win!

By using technology to drill down and focus on intelligent collaboration, solutions that are relevant and live can be achieved, and that really can bring efficiencies to the world of AOG procurement.

Featured post

One Stop OEM Shopping?

The aviation aftermarket is getting jolted by some bold moves from OEMs that could challenge conventional business models — or is this simply part of the next wave of consolidation?

Inside MRO takes a look at the OEMs expanding their offerings to aim for more aftermarket revenue. Read the full article on MRO-Network.com.

ADS-B_waypoints-RockwellCollins 2

 

Photo credit: Rockwell Collins

Print me an AOG!

Your aircraft is grounded thousands of miles away. You’ve tried all your contacts and no-one can help out, so you’re hoping the ridiculously complicated plan you’ve come up with just to get your fragile part there is going to work out.

Sound familiar? How about this scenario instead: what if you could just manufacture your own replacement part right there, on demand and on time?

Welcome to the world of additive manufacturing (AM), or 3D printing. It’s real, it’s out there and eventually it’s going to revolutionise the commercial aviation parts aftermarket.

Like many game changing innovations, the technology has been around for a while, quietly improving itself under Moore’s Law (the concept that technology roughly doubles in capabilities every two years) while other innovations such as the internet and smart phones have grabbed the headlines. But depending on who you listen to, 3D printing is just as important, and certainly has the potential to disrupt global supply chains in every industry. Why would you spend time, money and shrinking resources making and transporting products halfway around the globe when you could simply make them on demand at the point of consumption? No waste, no stale inventory and no long lead times.

In aviation, we are now at the stage where industry leaders are heavily investing and including 3D printing in their future manufacturing strategies.

GE are early adopters, each CFM LEAP engine contain 19 ‘printed’ fuel nozzles and they predict 100,000 of these type of parts will be manufactured this way by 2020.

In four years, Airbus has progressed from printing a single titanium bracket to 1000 AM produced parts for the A350-XWB production. The Company has heavily invested in ULTEM 9085, a thermoplastic resin with high strength-to-weight ratio ideal for use in the aviation industry.

So, going back to the original scenario, how can we benefit from this technology in an AOG situation? Before we get too excited and order one on Amazon for every Engineering location, let’s consider some facts:

  • It’s complicated – at its current stage of development, 3D printing can successfully produce single parts made from one material. But a complex flight deck computer or an APU? That’s still many years away.
  • Airworthiness – how would a freshly made part be inspected and tested to the manufacturers standard at a remote location?
  • Copyright laws – someone owns the intellectual property
  • Trade laws – by making an expensive product within a country, what trade laws are being broken?

So while there is no doubt the industry will see an impact from AM in the near future, in an AOG situation you’re still going to need your suppliers and friendly airline contacts for a good few years yet!

 

 

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