Rolls Royce: Internet of Things in Aviation

When you’re thinking of Rolls Royce, an aircraft and ship engine manufacturer is probably not the one you had in mind. Yet, the British manufacturer, which was spun off from its automobile parent in 1971, is one of the leaders in big data. Investing in analytics was transformational for Rolls Royce and made a loss-making aircraft manufacturer become number two player in the aircraft engine industry. ³

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Value creation

An aircraft engine used to be just one of many parts and slowly became a commodity. To counter that trend, Rolls Royce packed its engines with sensors allowing for real-time data analytics to improve performance and safety. The company launched “Engine Condition Monitoring” that sends real-time engine performance metrics when the plane is mid-air to one of the company’s R&D centers. The data can be analyzed instantly and any concerns will be communicated to an airline before the plane reaches its destination.² The company operates hundreds of terabytes of data allowing it to compare engine performance across different flights, leading to more efficient solutions. For instance, Rolls Royce Trent 7000 engine allows Airbus’s A330 to be 14% more fuel efficient. ⁶

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Rolls Royce also makes flights safer and more predictable. Traditionally, any irregularities in engine performance during a flight would trigger a full inspection upon landing, leading to delays. With data analytics, Rolls Royce can assess in real-time if a plane is safe for another journey or if it needs to undergo maintenance. It can also predict which maintenance actions need to be taken ahead of time to limit travel disruptions.⁴ Finally, comparing data across journeys allows to capture early-warning signs, decreasing potential risks.

Value capture

Data analytics changed the way Rolls Royce is capturing the value. Previously Rolls Royce would compete on price with other suppliers and profit mostly from engine sales. The demand is highly tied to aircraft sales and depends on limited set of buyers (e.g. in commercial on Airbus and Boeing). Now thanks to data analytics the company captures more value. Rolls Royce can monitor every engine, charging customers for engine usage, repairs, parts and additional services. In fact, the company has moved to leasing its engines in the monthly subscription model, with a promise that its data analytics can improve airline’s efficiency, in particular for fuel consumption that accounts on average for 40 percent of all cost.¹ Rolls Royce however is not alone. Its main competitor and number one player in the airline engine market – the GE Aviation – has also launched live monitoring and is investing heavily in R&D.²

Operating model

The data-driven approached has been changing the company’s business model from traditional manufacturing to industrial Internet of Things.⁷ Rolls Royce deploys big data in three key functions: design, manufacturing and maintenance. In design, it uses terabytes of data to simulate how its products would perform in any conditions. In manufacturing, data analytics are deployed for each engine component produced.³ After products are sold, their performance is monitored, assessed and sold as a service. Increasingly, all three parts network and communicate with each other.

The new business model allowed Rolls Royce to emerge from financial struggle. Last year data analytics and maintenance contributed half of company’s revenue of £14.6bn.¹ A good example is the 5-year deal Rolls Royce singed with Singapore Airlines this year. The deal aims at decreasing fuel consumption across 137 aircrafts that use Rolls Royce Trent engine.¹

The future

Although data analytics brought a lot of value for the aviation industry, it allowed aircraft manufacturers to capture bulk of it. Traditionally in commercial aviation every plane would be available with two engine options.⁵ Increasingly, exclusive deals are struck, partly because it is hard to achieve similar fuel efficiency when switching engines. For instance, Airbus’s A350 can be purchased with a Rolls Royce engine only, while GE worked exclusively on Boeing 777-300ER.⁶ Since aircraft manufacturers get to choose between suppliers they are likely to capture cost savings generated by new engine designs. Nevertheless, Rolls Royce has still a lot offer. And the company is innovating further, recently on cargo ship technologies together with the VVT Technical Research Center of Finland to create an autonomous cargo ship.

1. Murphy, M. 2015. “Singapore Airlines inks 5-year deal with Rolls Royce for fuel efficiency data analytics.” http://www.computerworlduk.com/news/data/rolls-royce-provide-airlines-with-fuel-efficiency-data-analytics-3618027/. Posted on June 30, 2015. Accessed on November 21^st, 2015.
2. The Telegraph. 2010. “Live monitoring helps engine manufacturers track performance.” http://www.telegraph.co.uk/travel/travelnews/8111075/Live-monitoring-helps-engine-manufacturers-track-performance.html. Posted on November 4^th, 2010. Accessed on November 21^st, 2015.
3. Marr, B. 2015a. “How Big Data Drives Success at Rolls-Royce.” forbes.com. Posted on June 1^st, 2015. Accessed on November 21^st, 2015.
4. Marr, B. 2015b. Big Data: Using SMART Big Data, Analytics and Metrics To Make Better. Wiley Publishers.
5. Rudd, K. 2011. “Large Civil Aircraft Engines.” http://www.trade.gov/static/aero_rpt_flight_plan_2011_engines.pdf. Accessed on November 21^st, 2015.
6. Jones, R. 2014. “Airbus’s larger jets most often use engines made by Rolls-Royce Holdings, while Boeing is paired mainly with General Electric engines.” http://www.wsj.com/articles/aircraft-makers-narrow-engine-options-1405457174. Posted on July 15, 2014. Accessed on November 21^st, 2015.
7. Marr, B. 2015c. “How Big Data Drives Sucess at Rolls Royce”. https://powermore.dell.com/business/how-big-data-drives-success-at-rolls-royce/. Accessed on November 21^st, 2015.