Sean McGovern: Operators Will Move Away From "A La Carte" Services

An executive for BAE says airline operators will soon begin to demand total support solutions from outside suppliers for their regional aircraft, rather than the "a la carte" service that currently prevails.

Speaking at the Speednews 15th Annual Regional and Business Aviation Industry Conference in Scottsdale, Arizona, Mr Sean McGovern, Business Director Support for BAE Systems Regional Aircraft also predicted that there will be an increase in demand for cost per hour/landing support contracts to help simplify and predict operator support costs. Mr McGovern also believes there will be an increase in MRO (Maintenance, Repair, Overhaul) spend in the coming years which brings with it market opportunities for the fleet-of-foot, experienced and proven support provider.

Mr McGovern stated that BAE Systems currently delivers a range of aviation products and solutions to a rapidly changing customer community. He added: "At the moment our business is primarily focused on providing through life support for our regional aircraft products globally and also third party engineering opportunities. We aim to sustain and grow our support business through offering a one-stop shop for spares, repairs and modifications."

Outlining the rationale for the changes he foresees, Mr McGovern stated that historically, regional aircraft support services have been available from a number of different sources. The Original Equipment Manufacturer (OEM) provides services such as technical expertise, modifications and spares supply. MRO companies offer maintenance and conversions, while operators themselves often have in-house capabilities. In addition, major vendors cover areas such as engines and landing gears, while there are also a range of smaller, localised third party support providers.

With the challenges of the global financial market and emerging global networks providing new competition, the support picture is changing. He said: "We see OEMs looking to develop additional revenue streams as part of the product lifecycle, and MROs are expanding their capabilities to offer additional services. Meanwhile, operators are evaluating the cost/competitiveness of providing in-house solutions and are looking to transfer risk and buy in services. At the same time the major vendors are focused on the latest emerging programmes and new services are being offered by additional third party companies."

Mr McGovern stated that operators want defined costs of ownership, quality and cycle times. They need innovative cost per flying hour/landing solutions and they seek flexible and responsive services with long term partnerships. They are also looking for both operational and support savings and efficiencies and also they wish to have a Total Support offering providing an overall managed service as they want to transfer the risk to the most appropriate area to manage it.

Mr McGovern added: "There are challenges of course - airlines are all different and one size does not fit all. So the support provider needs to understand fleet size, aircraft types and operational scenarios such as high or low utilization. He also needs to understand and work around the expectation level of the operator in terms of his in-house capabilities. The supporter has to be mindful of geographical variations - primary or secondary markets for example, maybe with limited support infrastructure in some areas. He also has to confront emerging or legacy aircraft platform issues and legacy aircraft may introduce ageing aircraft support issues including escalating maintenance costs.

"In this somewhat confused marketplace, the operator can pick and choose their preferred service providers and there will be room for the experienced and proven service providers to excel."

Mr. McGovern believes that the providers who succeed in this new market will be those who offer a Total Support solution with a one-stop shop offering a menu of managed services. Only the more experienced providers will be able to develop the strategic relationships and managed supply chain across the globe. And from this will come a network of flexible tailored services for individual operators.

FMI: www.bae.com