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The Aerospace & Defense Forum Los Angeles Chapter May 19, 2017 1
Airline Supply Chains. Strategies to Win
May 19, 2017
Airline Supply Chains. Strategies to Win May 19, 2017 CONTENTS - - PDF document
Airline Supply Chains. Strategies to Win May 19, 2017 CONTENTS - - PDF document
The Aerospace & Defense Forum Los Angeles Chapter May 19, 2017 Airline Supply Chains. Strategies to Win May 19, 2017 CONTENTS About ATBD Airlines - big picture Airline requirements Examples of success Pitfalls to avoid
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The Aerospace & Defense Forum Los Angeles Chapter May 19, 2017 3 20+ start-up airlines 50+ smaller/mid-size airlines 100+ Aircraft transactions 80+ Aircraft mod. programs. 25+ other programs 52+ countries, 7 languages spoken 60+ FAA qualifications 40,000+ air transport pilot flight hours COO, SVP, VP, Director, chief pilot levels
ATBD People experience by the numbers Airline Supply Chain – The big picture
Fast-paced 24/7 environment High aircraft utlization 2,500-5,000 hours/yr 15-35 year useful aircraft life High-performance products, services
- Safety. Sched. airlines safest transportation
- Reliability. 98.5%+ is industry standard
- Efficiency. Ruthlessly competitive industry
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Airline Supply Chain Requirements
Safety/Reliability/Efficiency Supplier integrity, support and longevity OEM one-stop support to a la carte Once above satisfied, commercial deal Quantitative and qualitative best deals
Examples of Success
Owning the supply chain, cradle to grave. Less hassle airlines, more OEM profit using: Spare parts and repairs Training Product upgrades PBH (Power By the Hour) Product disposition Works with engines/galleys/seats/avionics
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Examples of Pitfalls
Underestimating: product support required product integrity in airline world unknown/unknowns Not: thoroughly testing in-house using friendly launch customers responding quickly to problems
There are different airlines types Different airlines types – mean different supplier selling strategies:
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Different Types of Airlines:
- 1. Major Network Carriers
- 2. International Carriers
- 3. Low Cost Airlines
- 4. Regional Airlines
Major Network Carriers:
- Examples: United, American, Delta.
- Business Model: Full service, fully integrated, leveraged
frequent flyer programs and alliances
- Route Network: Mostly hub and spoke. Some point to
point
- Fleets: Many aircraft types serving small short-haul to
large long-haul markets
- Supplier Issues: These airlines need customized products.
High, volume, higher risk, higher rewards.
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International Carriers:
- Examples: British Airways, Singapore, Lufthansa
- Business Model: International Flag carriers, full service,
fully integrated, alliances are important
- Route Network: International point to point, regional
service sometimes done by subsidiaries
- Fleets: Many aircraft types serving small short-haul to
large long-haul markets
- Supplier Issues: Foreign exchange rates and long
shipping lines. Ditto Major Network Carriers.
- Low Cost Airlines:
- Examples: Southwest, Ryan Air, Allegiant
- Business Model: Low cost and low price, serving leisure
markets.
- Route Network: point to point
- Fleets: One fleet type for all routes for low cost.
- Supplier Issues: Low cost means low margins. However,
simplified supply chain.
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Regional Airlines:
- Examples: Skywest, Mesa, Republic, Trans States
- Business Model: Connect small markets for network
carrier, Independent operators – dependent on network carriers for revenue
- Route Network: feed large hubs with regional traffic
- Fleets: Regional aircraft – less than 110 seats
- Supplier Issues: BFE (Buyer Furnished Equipment) v. SFE
(Seller Furnished Equipment). Opportunity to test market/products /services in lower risk environment.
Summary
- 1. Knowing airline customer in-depth pays off.
- 2. Healthy dose of paranoia helps.
- 3. Flexibility and willingness to change helps.
- 4. Experience/new sales methods invaluable mix.
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