The Material Value Chain Services in Commercial Aviation

Abstract

Material services are of fundamental importance in commercial aviation. While airlines acquire an aircraft as an input factor for their network operations only once, they will need spare parts over the full operational life cycle of an aircraft for decades—to keep it flying as seamlessly as possible with a minimum of interruptions caused by missing parts. Accordingly, the availability of the right spare part—to immediately replace the defective part at the right place—at the airport or maintenance base where the aircraft is waiting to go back into operation is crucial. Material services companies have the ambition to serve both material suppliers and airline customers with an efficient value adding global network and integrated performance based services, efficiently connecting both ends of the market. In order to reduce the significant transaction costs in this highly complex value chain, innovative airlines, as well as Maintenance, Repair and Overhaul (MRO) organisations, seek integrated material solutions, where a strategic partner organizes the full material value chain towards suppliers and provides a comprehensive part number range to the airline customers. In a consolidating market, leading material integrators—like Satair Group—will continue to grow and integrate the customer platform, the supplier interface, the value chain processes, and the digitalization-driven data management systems realizing functional and global economies of scale, scope, and density in combination with significant transaction cost reductions. New market segments such as used parts and additive manufacturing/3D printing will contribute to more opportunities along the material value chain. The strategies of the market players in combination with the market and innovation trends will reinforce each other, leading to a high integrative market dynamic for the years to come.