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Collins Aerospace Aftermarket Services Well Positioned for Growth: Gail Baker

: Feb 12, 2020 - : 5:30 am

The Asia Pacific region is a key focus for Collins Aerospace and the company will continue to not only invest in local facilities and talent, but also collaborate with partners as part of its attempt to facilitate the growth of the aerospace industry, says Gail Baker, Vice President of Aftermarket Services.

Baker is confident that Collins Aerospace, which has more than 75 MRO facilities worldwide, would be able to face whatever challenges the aftermarket services market throws up in future. “You’ll continue to see competition around the current trend of innovation as the aftermarket segment remains a focus area for many companies in the industry,” she tells Arun Sivasankaran in an interview. “The aftermarket segment continues to expand, driven by fleet growth and the increase in global air travel. The customers in this market are sophisticated and looking for innovative solutions. To continue serving these customers in the future, we’ll continue evolving our offerings to solve their problems and add value. Changing business models and new entrants to the markets are challenges we have a long history of addressing – and we’re confident we’ll continue to do so in the future.”

Read on:

It has been a little more than a year since the company was founded. How satisfied are you with the growth of the company in general and the aftermarket services segment in particular?

Over the last year we’ve seen great synergies from the formation of Collins Aerospace. We continue to support customers with one of the most comprehensive aftermarket networks in the industry, and are well positioned for growth:

• Large installed base will fuel our aftermarket — more than 500,000 active part numbers to serve our industry.

• Modifications and upgrades are a strong area of growth for us.

• Phenomenal opportunities in the aftermarket with more digital and connected strategies.

What are some of the new opportunities that have come about due to the coming together of two major suppliers and their capabilities? Looking ahead, do you think there is a lot of potential for growth?

I don’t have any new specifics to announce here today other than what was mentioned on our latest earnings call. However, we’re excited about continually finding opportunities for new products and service offerings that bring value to the customer. For example, we are always looking at more digital and connected offerings, such as prognostics and health management (PHM) and how we bring our joint capabilities together to add value for our customers.

The company has a portfolio that is broader than most others in the industry. How much of an advantage is that in providing customized solutions to customers?

Being the original equipment manufacturer (OEM) allows us to develop solutions that meet unique requirements. We have the technical expertise on component functionality and maintenance – which guides us in making comprehensive recommendations to our customers. We also have one of the largest MRO networks in the industry to serve our customers.

How important a segment is aftermarket services for Collins Aerospace? How big a revenue earner is it?

The aftermarket segment is, and has always been, an important part of the Collins Aerospace portfolio. It makes up approximately 40% of our revenue.

The industry is seeing a major shift with OEMs actively trying to increase their share of aftermarket services. What is your take on an increasingly competitive aftermarket and what is Collins Aerospace doing to hold on or even improve on its share of the market?

There’s a long history of changes in the marketplace that bring with them new challenges and increased competition. That is why Collins remains focused on continued innovation and value creation for our customers. Many of our products are highly technical and require years of development, with significant upfront and ongoing investment to be market leading. We’ll continue to make investments in our products and services to ensure we are the aerospace provider of choice.

Our relationships with OEMs are complementary. Each party brings different capabilities to the mix – both products and services – to build and support the most advanced aircraft. It’s our ability to drive aerospace technical innovation, provide world-class aftermarket support and maintain relationships with our mutual airline customers that makes us a valuable partner to OEMs.

Has the company’s military aftermarket business succeeded in matching the pace of growth on the commercial aviation aftermarket services market? What is the company’s current commercial/military split? Do you expect that to change over the next decade?

We’ve seen strong growth in defense over the past couple of years as the U.S. and international governments have focused on increasing readiness. We’re focused on mods and upgrades for various platform portfolios, and delivering more complete sustainment support of our military customers to drive that readiness. In fact, we’ve outpaced the market in the growth rates for the industry due to our broad portfolio of products and services, as well as value creation.

Collins Aerospace is approximately 75% commercial and 25% military. We’re focused on serving all of our customers and growing both our commercial and defense businesses, so I don’t expect the mix to change drastically over time.

Tell us more about FlightSense and Ascentia? How warmly has it been received by the industry?

FlightSense is a flexible, integrated maintenance service offering with customized solutions to meet the unique needs of each of our customers. There are three primary service options available:

• FlightSense Available: a maintenance and asset management dollar-per-hour offering with guaranteed asset availability and minimal upfront investment

• FlightSense Predictable: a maintenance dollar-per-hour service with predictable costs

• FlightSense Repair: a pay-as-you-go repair option

Ascentia is our prognostics and health management (PHM) platform that uses physics-based modeling, statistical analysis and machine learning to improve aircraft availability.

By leveraging and analyzing thousands of parameters of data, our team of technical experts can intelligently apply the analytics and provide the customer value through pro-active fleet monitoring and enhanced maintenance support.

At the Paris Air Show last year, the company announced aftermarket services contract worth over US$1.5 billion. Have you been able to sustain the momentum into 2020? What, in your opinion, would be a realistic 5-year goal?

I can’t speculate about the future, although we have seen continued momentum since our announcement at the Paris Air Show in 2019 and are excited for the future.

What is the company’s original equipment-aftermarket business mix currently? Do you see that changing in the future?

We generally are 60% OEM sales and 40% aftermarket. This has been the mix for some time now and we don’t see it changing.

Do you think the MRO industry is doing enough to effectively use the amount of data generated by new generation aircraft? How far away in the future is a truly efficient digital aftermarket ecosystem?

The adoption of prognostics and health management (PHM) and analytics has been happening for a long time. The technology has been around and in development for many years, and there is much optimism around the potential value of PHM and analytics. As more data becomes available, recent technological advancements have helped enable analysis which leads to a recommendation for predictive maintenance in lieu of an on-condition failure.

Ultimately solutions need to provide value to the airlines, so operators will play an integral role in defining how technical solutions and value propositions mature.  I can’t speculate about the future, however, I do believe we’re on the right path to a truly efficient digital aftermarket ecosystem.

How much of an impact, in your opinion, will predictive maintenance have on the aviation industry in general? How effectively is Collins Aerospace using PM? How common is the use of technologies such as digital twins, additive manufacturing and AI in the company’s operations?

Predictive maintenance (PM) will have a huge impact on the aviation industry. Early adopters of our PM solution have seen a ~30% reduction in delays and cancellations as well as a ~20% reduction in unscheduled maintenance for targeted line repair units.

Collins Aerospace has the differentiated capabilities to analyze aircraft data and drive intelligence to deliver enhanced aftermarket services. Our goal is to move high-impact Collins aircraft systems from on-condition to prognostics-based maintenance, reducing unscheduled maintenance and delays and cancellations for our customers.

Our deep product expertise enables us to lead with the physics behind our equipment, and in many cases, demonstrate how the equipment interacts with other systems on the aircraft. This allows more focused ‘smart data’ approaches to assess equipment performance and health. These deep methods are also complemented by data science approaches such as machine learning and statistical analysis to maximize results.

While predictive models are one part of the overall equation, the other is better customer support. We focus on a closed-loop, end-to-end integrated service offering through our FlightSense program, where parts are positioned proactively based on fleet needs and proactive removals are validated in our shops.

More broadly, this data enables us to learn more from the operation of our products in the field vs. their intended design. In many instances, our engineers are leveraging this data and intelligence to drive product improvements and develop modifications and upgrades. This results in improvements to overall reliability, enhanced connectivity and operational efficiency of the customer’s fleet.

The company is collaborating with Airbus, Emirates Airlines, GE Aviation and Thales for Aviation X Lab. Will we see Collins Aerospace be a part of more such joint initiatives in the future?

We’re committed to investing in initiatives where we see opportunity and value for our customers and the local communities in which we operate. Our strategy is to continue investing locally, helping to build a regional aerospace industry. And, in line with the regional policies for economic diversification, developing new partnerships and training local talent to strengthen our presence. Our vision is to redefine aerospace and it’s in our culture to partner with key regional stakeholders to tackle challenges our customers are facing.

Operators focus on customer satisfaction and invest in connected aircraft, but your offering – GlobalConnect managed digital service – offers more than that. Can you provide more details? How has the industry responded to GlobalConnect?

As new “smart aircraft” – equipped with servers, aircraft interface devices and other technology – become more prevalent, GlobalConnect provides a way to efficiently and effectively manage the transfer of data flows. Collins is the provider of several of these systems, including FOMAX for the Airbus A320 and A330 fleets, FlySmart for the A350, and InteliSight, which is an aftermarket offering for the Boeing fleet. We’ve seen increasing interest from airlines around the globe and have deployed these solutions to several airlines.

GlobalConnect is a software service that enables highly secure, bidirectional exchange of data between the aircraft and ground operations, including aircraft maintenance and performance data. The main advantage of this software service is that it can manage multiple communications media, including legacy aircraft communications addressing and reporting system (very high frequency, high frequency, satellite communication) all the way to the new IP-based communications. This service optimizes the transfer of these messages so they are routed over the most efficient and appropriate media depending on priority, cost and quality of service.

Additionally, GlobalConnect provides a platform to host applications used by flight crews and airline back offices. These include efficiency applications such as weather, flight planning, logbooks, maintenance and performance calculators – all of which bring new levels of productivity and value to airline operations.


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