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Preparing for Take Off: Why the Aviation Industry is Revamping its Workforce Systems

 
December 6, 2016

Increasing consumer demand is pushing airline operators and original equipment manufacturers (OEMs) to rethink their approach and make customer centricity their lynchpin for present and future business strategies. On one hand, operators are revamping their capacity and bolstering demand by offering progressively reduced airfares to attract the customers. On the other hand, OEMs are implementing advanced systems that incorporate fuel efficiency, improved avionics, noise reduction capabilities, and superior cabin designs to complement various initiatives taken by the Airline Operators.

Historically, the high cost of fuel has had a dampening effect on demand in the airline industry. However, the price of oil has halved between June 2014 and April 2015a drop which is expected to become a long-term trend. Reduced fuel prices have so far been instrumental in enabling industry operators to radically experiment with flight schedules and fleet sizesa strategic move to reacquire the competitions customer base. This reduced fuel prices coupled with factors like positive trend in Global economy, growing number of Aviation Mega cities, and constant increase in the consumers disposable income are increasing the propensity of Air Travel. This meteoric rise in customer demand is not only impacting the airline operators but also the entire supply chain of Airline Industry.

Pressure on Supply: Need for Agile Processes and Efficient Workforce

Boeings Current Market Outlook reports that the next 20 years will see a need for 38,050 airplanes valued at more than $5.6 trillion. With this, the global fleet size is expected to grow from 21,600 to 43,560more than a 100% increase. As the industry prepares for this transition, all the stake holders in this Airline Industry are going to face new opportunities and challenges across the value chain.

OEMs aiming to clear Backlogs: Low fuel prices combined with cost control has increased Profit margins for majority of the airlines globally and given them higher affordability to make capital investments in the form of New Aircraft orders. The aviation manufacturing industry already facing a huge backlog of new aircraft ordersa record-breaking figure of 13,467 units in 2015, is further going to grow faster. To overcome these backlogs and ensure profitable/sustainable operations, the aircraft OEMs/Manufacturers continue to invest on latest manufacturing technologies, connected aircraft, advanced composite materials etc.,

Independent MROs trying to Sustain: Airlines and fleet operators are now pushing for next generation, fuel-efficient, technologically-advanced aircrafts to replace their aging fleet. According to Boeings report, out of the 36,770 new planes that will be deployed over the next 20 years, 42% of them will be replacing older aircrafts. Given that, the average age for retiring an aircraft has gone up from 17 years in the 1970s to approximately 25 years today, the demand for MRO providers is likely to hit very badly. Further to improve their margins, OEMs are actively attempting to capture a larger share of After Market Services and changing the nature of competition. This forces the independent MROs to reevaluate their Business models, Processes, Workforce etc., to sustain in the market.

Airlines trying to be a Tech Savvy: Airlines are the pioneers in adopting any new technologies to improve their customer service and, in turn the bottom line. Though the modern aircraft offers high reliability, the latest approaches like the health monitoring and shift towards Predictive maintenance also increases the complexity of the Maintenance and forcing the Airlines to deploy efficient systems, processes and skilled resources to make them self-reliant.

In such scenario, Boeings latest forecast indicates that there is a need for more than 2.1 million work force in terms of new commercial airline pilots, new maintenance technicians, and new cabin crew to fly and maintain the world fleet over the next 20 years. This means, globally the industry has to hire an average of 100,000 resources with 35,000 Aircraft Maintenance Technicians/Engineers each year for next 20 years. This indicates that beyond the above challenges like Technology, Competition etc., the major challenge for the Airline Industry is going to be acquiring and managing the Talent Workforce. Hence, current strategies and processes need to be rethought with the aim to overcome this new challenge of Talent acquisition along with other prevailing issues to meet current and future demands of the Aircraft Maintenance.

How Ready is the Industry for this Evolution?

Agility is the key to survival for all the stake holders in Airline Industry. Hence, existing Maintenance operations need to be significantly improved by incorporating new methodologies and by deploying additional workforce. Since, recruiting an entire staff with deep domain knowledge may not be completely feasible, an alternate ways of managing these challenges needs to be thought of.

Airline Operators/OEMs/MROs will need to evolve their best practices and bring-in certain disruptions, especially in their Aircraft Maintenance and staff performance. While Augmented/Virtual Reality will help in improving the efficacy of the Training programs, Transformation in terms of process automation, near shoring, optimized Maintenance/Inventory planning etc., will help in implementing the Agile Business Processes.

Is your organization ready for such transformation?

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Suresh Subramanian is a MRO Process Lead in the Travel, Transportation and Hospitality (TTH) group, within the Business Process Services (BPS) unit of TCS. A mechanical engineer and MBA, he has more than 18 years of experience across Aviation, IT, BPS, Railway, and Automotive industries.