{"id":24976,"date":"2017-11-15T19:05:22","date_gmt":"2017-11-16T00:05:22","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/easyjet-in-the-battle-of-digitalization-of-maintenance\/"},"modified":"2017-11-15T19:05:22","modified_gmt":"2017-11-16T00:05:22","slug":"easyjet-entering-the-battle-of-maintenance-digitalization","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/easyjet-entering-the-battle-of-maintenance-digitalization\/","title":{"rendered":"EasyJet entering the battle of maintenance digitalization"},"content":{"rendered":"

Digitalization will be a major cost leverage in the intense competition of the airline industry<\/u><\/strong><\/p>\n

The airline industry is growing at an average annual rate of 5%, yet it lost $16.7 billions annually over the 2007-2014 period (exhibit 1, [1]). The oligopoly of the aircraft manufacturers manages to catch most of the value while airlines, subjected to fierce competition – are accountable for $19.4 billions losses. Remarkably, EasyJet, a low-cost European carrier, managed to make a \u00a3495 millions profit before tax in 2016 [2].<\/p>\n

\"\"<\/a>Exhibit 1: average yearly economic profit, 2007-14, $ billion<\/em><\/p>\n

EasyJet was able to perform well mainly through a drastic cost control policy and, among all expenses faced by the airline industry, EasyJet performed particularly well in the operation of its aircrafts. This sector represented more than 16% of EasyJet cost advantage compared to legacy carriers [3], which makes it a major differentiator for the company.<\/p>\n

Due to the complexity of aircraft operations, various specialized players are part of the aircraft lifecycle, including manufacturers and Maintenance and Repair Operation (MRO) specialists (exhibit 2). EasyJet is a pure airline player and its maintenance is realized by MRO specialists. Interacting with all these players must be planned and controlled carefully to restrict costs.<\/p>\n

\"\"<\/a>Exhibit 2: Aircraft lifecycle<\/em><\/p>\n

Digitalization in aircraft operation consists in data collection and management throughout the whole lifecycle. This can result in the creation of an integrated data driven sequence of activities at any time of the lifecycle especially in the maintenance supply chain. In other words, digitalization in the maintenance supply chain allows airlines to improve the responsiveness of their maintenance to reduce operation cost. In that effect, digitalization in maintenance and operation can be seen as the new battlefield for cost reduction and loosing that battle could put even the most efficient airline at risk [4].<\/p>\n

EasyJet intends to play a major role in this revolution<\/u><\/strong><\/p>\n

On the short term, <\/strong>EasyJet is digitalizing all its paperwork in maintenance and flight operation [5], meaning that the crews have a quick access to the most up to date version of their action\/checking list. In addition, EasyJet is creating a new data management system, AMOS [6] that centralized information from all IT systems in one place (exhibit 3). Thanks to paperless work and to AMOS, EasyJet and its suppliers reduces the maintenance time and improves quality of operations.<\/p>\n

\"\"<\/a>Exhibit 3: The AMOS centralised IT system<\/em><\/p>\n

Additionally, EasyJet wants to use drones instead of operators to improve reactivity and to shorten inspection time (exhibit 4). Drones can also gather more data than an operator thanks to different embedded sensors [7].<\/p>\n

\"\"<\/a>Exhibit 4: Drone inspection<\/em><\/p>\n

On the medium term<\/strong>, EasyJet aims at requiring all its suppliers to use AMOS to enable the whole supply chain to better communicate and share information. A direct access to information should let all players to be more proactive. This could even lead to an innovative preventive maintenance system and avoid on the spot repairs (exhibit 5) or unexpected aircraft unavailability. However such level of data sharing requires a strong level of trust between all partner.<\/p>\n

\"\"<\/a>Exhibit 5: On the spot repair<\/em><\/p>\n

Could EasyJet take other steps to keep its advantage<\/u><\/strong>?<\/strong><\/p>\n

Data management: share it or keep it to yourself?<\/strong><\/p>\n

Data is key on digitalization and its value will grow with its importance. Actors performing several activities in the aircraft lifecycle can have a larger grasp on data management. In that context, digitalization may advantage more vertically integrated players such as airlines [8] and manufacturers [9] [10] that are already very active in the field. Via sharing its information with suppliers, EasyJet might not only allow them to catch the digitalization value, but it can also serve its competitors as the suppliers serve other airlines. In order to address it, EasyJet should consider either enforcing drastic controls over its suppliers or consider vertical integration to perform maintenance itself.<\/p>\n

Discussions with regulatory agencies to allow more fine-tuned repairs<\/strong><\/p>\n

Currently, the maintenance requirements stated by the regulation agencies are very high as we used to have very little information on the product life. Thus, lot of \u201cover maintenance\u201d was required for conservative reasons. Now that digitalization enables to know how every equipment is used, we could imagine replacing or repairing an equipment only when necessary, based on its wear and not its age. This would require heavy negotiations will regulatory agencies but the savings can be significant.<\/p>\n

 <\/p>\n

Further thoughts\u2026<\/u><\/strong><\/p>\n

EasyJet is currently trying to tackle the challenge of digitalization. However, in order to take the most out of digitalization, data management and ownership are key. Does it mean the end of pure specialized players such as EasyJet? Will this new trend reinforce even more the strength of aircraft manufacturers or will it allow airlines to finally be profitable?<\/p>\n

Word count: 792<\/p>\n

 <\/p>\n

REFERENCES<\/strong><\/p>\n

[1] \u201cBuying and flying: Next-generation airline procurement\u201d by Alex Dichter, Andreas Juul S\u00f8rensen, and Steve Saxon, McKinsey&Company<\/em>. https:\/\/www.mckinsey.com\/industries\/travel-transport-and-logistics\/our-insights\/buying-and-flying-next-generation-airline-procurement (accessed November 2017)<\/p>\n

[2] \u201cFY 2016 Analyst & investor presentation\u201d, Easyjet<\/em> http:\/\/corporate.easyjet.com\/~\/media\/Files\/E\/Easyjet\/pdf\/investors\/presentations\/fy-2016-results-presentation.pdf<\/a> (accessed November 2017)<\/p>\n

[3] \u201cAirline Cost Performance\u201d by Mark Smyth and Brian Pearce, IATA<\/em> https:\/\/www.iata.org\/whatwedo\/Documents\/economics\/airline_cost_performance.pdf<\/a> (accessed November 2017)<\/p>\n

[4] \u201dAirline Economic Analysis\u201c by Tom Stalnaker, Khalid Usman, Aaron Taylor, Oliver Wyman<\/em>. http:\/\/www.oliverwyman.com\/content\/dam\/oliver-wyman\/global\/en\/2016\/jan\/oliver-wyman-airline-economic-analysis-2015-2016.pdf<\/a> (accessed November 2017)<\/p>\n

[5] \u201cinnovating our way to lower maintenance costs\u201d by Swaran Sidhu, EasyJet<\/em> https:\/\/www.iata.org\/whatwedo\/workgroups\/Documents\/MCC-2014-ATH\/D2\/1050-1130-our-way-to-lower-mtce-costs-easyJet.pdf<\/a> (accessed November 2017)<\/p>\n

[6] \u201cEasyJet\u2019s Next Steps Toward A Paperless Maintenance Environment\u201d by Hannah Davies<\/a>, MRO-Network<\/em> http:\/\/www.mro-network.com\/maintenance-repair-overhaul\/easyjet-s-next-steps-toward-paperless-maintenance-environment<\/a> (accessed November 2017)<\/p>\n

[7] \u201cInnovations in Aircraft Maintenance at EasyJet\u201d by Gareth Thomas, easyJet https:\/\/www.swiss-as.com\/files\/news\/easyjet_AMOS.pdf<\/a> (accessed November 2017)<\/p>\n

[8] \u00ab\u00a0Totally digital\u00a0\u00bb, Lufthansa technic<\/em> https:\/\/www.lufthansa-technik.com\/predictive-mtc<\/a> (accessed November 2017)<\/p>\n

[9] \u201cAirbus Wants to Continue Digital Effort\u201d by Woodrow Bellamy, Aviation today<\/em> http:\/\/www.aviationtoday.com\/2017\/02\/22\/airbus-wants-continue-digital-efforts\/<\/a> (accessed November 2017)<\/p>\n

[10] \u201cAirbus Selects Unabiz to Advance Research in Digitalization of Aircraft Maintenance Operations\u201d Unabiz press release<\/em> http:\/\/markets.businessinsider.com\/news\/stocks\/Airbus-Selects-Unabiz-to-Advance-Research-in-Digitalization-of-Aircraft-Maintenance-Operations-1001876136<\/a> (accessed November 2017)<\/p>\n","protected":false},"excerpt":{"rendered":"

EasyJet is currently embracing maintenance digitalization by acquiring as much data as possible and sharing it with its entire supply chain: death wish or wise move?<\/p>\n","protected":false},"author":9618,"featured_media":25025,"comment_status":"open","ping_status":"closed","template":"","categories":[285,2123,3893],"class_list":["post-24976","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-aerospace","category-digitalization","category-easyjet","hck-taxonomy-organization-easyjet","hck-taxonomy-industry-aerospace","hck-taxonomy-country-united-kingdom"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nEasyJet entering the battle of maintenance digitalization - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/easyjet-entering-the-battle-of-maintenance-digitalization\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"EasyJet entering the battle of maintenance digitalization - 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