POSITION & HOLD
Aftersale service—part of the purchase package
Customers expect and require the utmost in product support.
By Dean Roberts
Dir Market Analysis, Civil Small & Medium Engines, Rolls-Royce
A service engineer inspects a Rolls-Royce AE 3007. This year the company celebrates 50 years of providing power-by-the-hour contracts—a concept which has evolved into the CorporateCare service offering.
When aspiring companies consider entering the business jet aviation market, they often underappreciate the importance of service to their potential customers. Business aviation is unique in that, above all else, time is the important deliverable of the aircraft. In this article we will explore the importance of time, discuss industry entry barriers and make the connection as to why service is so crucial.
Business aviation customers
There are 2 types of business aviation customer, and outside observers often confuse them. For the sake of simplicity, in this article we will call them the user and the operator. The user is the person who uses the aircraft (sometimes termed "the person sitting in the back").
This could be the operations management team visiting outlying facilities that are distant from major airport hubs, or the commercial team flying out of the country to negotiate a deal with a new customer.
Occasionally it will be a company CEO visiting several places in one day to optimize his/her time. (See chart on left)
We can define the operator as the team that flies and maintains the aircraft. In many cases this will be a handful of individuals, and they will be responsible for a multimillion-dollar aircraft asset.
As "fleets" of 1 aircraft are the norm in business aviation, having a vast support team is simply not feasible, so the support infrastructure for these operators is minimal. As a result, they are more dependent on the OEM, or on a third-party service provider.
The aircraft as time machine
The 2 business aviation customers may have different perspectives, but they are united in 1 belief—that the aircraft is a time machine. The user wants to arrive at his/her destination as fast as possible.
This is the utility value of the aircraft. (See chart) The aircraft is not usually a revenue earner, but it is a profit or relationship enabler. In short, the aircraft is a productivity investment and the metric of value is time.
For the business jet operator the requirements are straightforward—exceptional levels of aircraft reliability and outstanding levels of service. Reliability is required because, with limited resources, the operator's role is to get the user to his/her destination on time.
Outstanding service is required by the operator when—very occasionally—things go wrong. So, in essence, reliability and service are discriminators that define leading aerospace companies that "get" business aviation.
So how does all the foregoing fit into the idea of industry entry barriers? Well, the problem with much of the economic and management theory on industry entry barriers is that it does not capture the importance of intangibles such as service. Much academic work concentrates on economies of scale, government regulation, level of R&D, intellectual property and switching costs.
These factors are easy to assess, and the connection to them being an entry barrier is easily observed. However, the influence of service is more subtle and therefore difficult to explain in terms of how it adds value.
In business aviation, the need for service is not a regular event. If, for example, the aircraft needs to go in for a D check or the engine experiences some FOD, the nonavailability of an aircraft far outweighs the cost of the service activity, given that time is the metric of value in business aviation.
Inexperienced companies tend to concentrate on the quantifiable rather than the more abstract. So they focus on whether they have the technology, facilities and financing in place rather than whether they have a professional service network deployed. Some see their service operation as an annoying cost.
However, successful companies see their service networks not as cost centers but rather as investments in goodwill and customer loyalty. It is these companies that garner the high customer satisfaction ratings, and their operator communities actually become advocates for them.
Recognizing a company that takes service seriously
Many readers will be in a position of influence or authority over the service provision for an aircraft. Most aircraft today are incredibly reliable and from year to year you may not need to use an aircraft or engine service organization. However, when you need service and set about choosing a provider, you should consider the following 4 factors.
Asset valuation of service. One of the most telling indicators of an excellent service provider is whether their service program can be reflected in the aircraft asset value. Some OEM maintenance-by-the hour service programs actually enhance the value of the aircraft.
This is the free market's assessment of the worth of the service and is a significant positive endorsement.
Resources fit for purpose. Some service companies claim international reach but may not be able to deliver in a timely manner. For example, if you operate globally, consider whether your service provider can get spare engines into far-flung countries—and do it quickly.