Aerospace Companies Struggling to Reduce Costs and Improve
Customer Satisfaction to Deliver Quality In-Service Support
NEW YORK; July 9, 2012 – New Accenture (NYSE: ACN) research has found that manufacturers of commercial aircraft need to make several improvements in delivering aircraft in-service performance to airlines. The research, based on interviews with aerospace manufacturing and airline executives, revealed that 91 percent of manufacturers said they need to further reduce costs to provide these services; 78 percent said they need to increase customer satisfaction; and 69 percent cited a need for improved service quality.
These findings are reviewed and analyzed in a new Accenture report, Aerospace—Aircraft in-Service Support Survey: a Drive for the Full-Service Offering. The report investigates the growing movement towards “total fleet management,” in which airlines designate one or several manufacturers to service and maintain their entire commercially active (“in service”) fleets.
The study also found significant concerns related to skills management. When asked to rank the main challenges they’re facing, two-thirds (66 percent) of manufacturers cited having the “right skills where and when needed” as their top choice. The second-highest percentage, 50 percent, chose “ensuring on-going training to meet customer demand and technology require¬ments.” The third-highest percentage, 47 percent, cited a skills shortage.
The research further revealed a disconnect between manufacturers and airlines in their definitions of best-in-class, aircraft in-service offerings. Fifty-six percent of manufacturers defined these best-in-class offerings as delivering “high customer satisfaction and a retention enabler”; none of the airlines said so. In a similar vein, of those airlines who indicated their desire to move to total fleet support models, all of them expect those services to cover their entire product lines, new and old. By contrast, only 50 percent of manufacturers intend to provide across-the-board coverage.
“The race to become an end-to-end, in-service support provider has begun and it’s clear manufacturers have a long way to go to make this happen,” said Damien Lasou, managing director of Accenture’s Aerospace and Defense practice. “These research findings underscore the multi-layered challenge in meeting intensifying demands to reduce aircraft operational costs and downtimes as passengers’ on-time delivery expectations continue to rise.”
Area of alignment
Despite the numerous challenges, manufacturers and airlines provided consistent responses about priorities. Both groups were asked “What are the key challenges your company will face in the next two-to-three years to offer effective aircraft in-service?” Two-thirds (66 percent) of manufacturers and 79 percent of airlines selected “cost effectiveness” as “critical” and the number one challenge. Similarly, responses were comparable regarding the total fleet management trend. Approximately the same percentage of manufacturers and airlines (50 and 47 percent, respectively) are currently discussing, already moving, or planning to move in the next three years to total fleet management service offerings.
“Manufacturers need to improve on many levels, particularly lowering costs, upgrading services and developing and retaining skilled employees,” Lasou added. “They need to accelerate this process because airlines are more ready and willing than they are. Being first to market with the right services at the right cost will be a critical differentiator in the battle for market share. Airlines are further down this path than manufacturers and are waiting for them to deliver what they need.”
The research included interviews with 51 executives with manufacturers of commercial aircraft and airlines based in Canada, France, Germany, India, Italy, Singapore, Spain, United Arab Emirates, United Kingdom, and the United States. The telephone interviews were conducted in April and May 2012. Twenty-four percent of the respondents’ companies had revenues of more than $10 billion; 39 percent, $1 billion to $10 billion; and 37 percent, below $1 billion.
Accenture is a global management consulting, technology services and outsourcing company, with more than 249,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.
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