Aviation Week’s aftermarket editors gather in Dallas to discuss what they saw at MRO Americas and how it is reshaping the way they think about the industry.
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Rush transcript
Lee Ann Shay:
Hi, I'm Lee Ann Shay, executive editor of MRO and business aviation for Aviation Week, and I am here in Dallas, at MRO Americas with my editorial colleagues, James Pozzi, the MRO editor for EMEA and Sean Broderick, who is the senior safety editor. There's been lots of really great energy, great attendance and so many things to talk about. What are your takes on how this show has been so far?
Sean Broderick:
Yeah, I think that, first of all, great observation, the energy, the number of people that are here and the number of people participating. It was good to see the sessions basically full and I was on the trade show floor several times, have been so far, it's not closed yet, as we speak, traffic was always good. In terms of takeaways, my biggest one, I think, is a reframing of both the breadth and depth of the supply chain challenges that are growing.
No secret in this business before the pandemic, we had supply chain issues because of, I don't want to say over capacity, but demand that was outstripping the ability to get engines turned in a certain amount of time. For instance, pandemic hits, airplanes go down, staffs go down. Now we're trying to get back and we're adding in material challenges, we're adding in staffing, is now, I consider that a broader part of supply chain, because if you don't have enough people not only fixing airplanes, but moving boxes in and out of warehouses, that's also a supply chain issue as well. Over and over we heard, at least I did, that the biggest concern with a keep what a steady ramp up, is supply chain consistency.
Lee Ann Shay:
I would agree. Supply chain and workforce labor is coming up in every session, whether it be geopolitical concerns or sustainability engines, you name it. Those are the two big issues. James, do you agree?
James Pozzi:
Absolutely. Yeah. I hosted the supply chain panel yesterday morning, which addressed some of the main challenges in that segment and myself and my panel came up with five main challenges right now. And they don't seem like they're going to be going away soon, some of them may even become more challenging over time. But yeah, as was mentioned, consistent source of supply was the biggest challenge and several reasons, or solutions, were suggested by the panel as to how they could work that out. Everything from closer partnerships to better utilizing things like data monitoring, for example, was suggested. And labor came into that too. That was voted actually the second biggest challenge currently facing the supply chain. But interestingly, not so much attracting labor into the market, for example, and having the right numbers, but more to do with keeping people in supply chain roles.
It's mostly [inaudible 00:03:19] it's a very big competitive market and a successful aviation professional could easily go to another industry and be very well paid for that and maybe see the opportunities there long term. There seems to be a lot of conversations at the moment about maybe better planning over the course of a person's career, maybe even in areas like succession planning and just maybe give them a good career path to keep them in the aviation industry, because they can, the belief seems to be that money alone and just raising someone's salary, say four to six per cent this year, as generous as that is, that's not going to keep someone there alone. There needs to be a new approach to that. Very interesting times there and yeah, unfortunately, probably not something that is going to go anytime soon, not to be a downer on things, because I do share both your beliefs that there is certainly a very positive atmosphere here at the moment and people are optimistic.
Lee Ann Shay:
I agree. You know, I heard an interesting fact that some companies are offering $15,000 signing bonuses for AMTs. You know, that's a nice, hefty chunk.
Sean Broderick:
We, I think as an industry we had a conscious focus on the certified personnel, the pilots, the mechanics, but what really, what really hit home for me here is the challenges like in supply chain, for example, I was in James's panel and it's not just the supplier side, but the ones that are doing the work say on the airline side, on the operator side, they're having a hard time keeping the staff that they need.
I know one airline that talked said, even if we could get all the inventory we needed exactly when we needed it, and that includes a little bit of padding, I don't want to say restocking, but more of a re-envisioning of how they're going to do it, so getting some more inventory. Even if they could have all that released to them when they needed it, they wouldn't have the people to take it in, to process it, and then to still be doing the bidding, the ordering, to make sure that kept going. They just didn't have that kind of manpower in house. So it's funny because it doesn't, in some ways it doesn't change. We talk about the aviation as being a cool industry and that should be enough to get people in and keep them in, but we're realizing more and more that it's not. Working from home is a big deal. A lot of, there was one session, one airline talked about the challenge of legalizing marijuana and how that prevents certain-
Lee Ann Shay:
Drug testing.
Sean Broderick:
Right?
Lee Ann Shay:
Yeah.
Sean Broderick:
It prevents people from doing jobs that they maybe otherwise could do.
James Pozzi:
A thing you never thought you'd hear discussed at an MRO conference.
Sean Broderick:
Right.
James Pozzi:
But it is an issue.
Sean Broderick:
Right. It puts the aviation industry in a certain bucket. And so again, I think it's what really hit home and there are attempts to changing, you talked about modeling, the dynamic modeling was one of the things that I picked up on. Two, that airlines, at least some, are trying to provide more updates on their planning more often so instead of looking down the road six months or 12 months, they're talking three months or whatever it is trying to keep their supply chain more informed and they're asking their supply chain to be more ready for things beyond AOG situations.
Lee Ann Shay:
You know, I totally agree. And I think an interesting part of this whole supply chain discussion is then you put in, add the sustainability layer. And we're not there yet, but as there's more pressure to monitor the scope three supply chain and missions, you don't want, right now, there's so many companies who are trying to get more inventory on their shelves just so, because of the supply chain issues. But then when you put in the sustainability piece, you don't want to add too much material, too much inventory. So there's an interesting dynamic there.
Sean Broderick:
A lot of change at once. And maybe it's good that there's so much disruption happening because sustainability is a shift in and of itself. So maybe some of the new processes feed into a different way of thinking, or maybe it just further complicates things and gives us more to talk about in future shows.
Lee Ann Shay:
Yeah, and also the sustainability piece beyond supply chain and being good for the environment, like just ESG, environmental, social and governance. It goes back to the workforce too. Companies who have strong sustainable ESG cultures have a better potential to usually attract the younger workforce so there's multiple aspects to this.
Sean Broderick:
This one panelist put it, you have to give people a vision, prospective employees and employees you want to keep. You don't just give them the salary bump as James said, but you have to give them a vision, put them, put them in a place, this is where I want to be in two years, five years, 10 years.
Lee Ann Shay:
Yeah. You know, and I would also, I don't know if surprised is the right word? But in previous MROs, it almost felt like digital was a little bit of a separate beast. We talked about it, whereas this is the first MRO, at least to me, that it looks, it feels like all the implementations and, what word am I looking for? The acceleration, all the accelerated digital efforts that happened during the pandemic, it just feels like it's been woven into operations in the aftermarket in a different way. Would you agree?
Sean Broderick:
Yeah, I would. It's becoming more part and parcel now with doing business. I mean, I moderated the OEM panel and they said--they've talked their digital book for several years now, but it's starting to pay off. Airbus, GE [Digital] and Delta Tech Ops with their digital alliance announced the first customer for a product developed by that digital alliance. Most people think of it as Skywise, Skywise, as part of that alliance.
That's one example of these things coming to fruition. I mean, I think Skywise was launched back in 2017 or something, I think, at the Paris Air Show that year and now here we are, they have a couple of partners and they have a vision to provide platform agnostic tools and SAS as customer number one and it wouldn't surprise me to see more right behind them.
Lee Ann Shay:
I agree. James, any other things we should be thinking about?
James Pozzi:
Well, the topic that was very much of interest to me and it's quite often over the last couple of days has been obviously the issue of geopolitics, but not how I would've expected. So of course the Russian invasion of Ukraine has dominated global news for the past two months, but this hasn't concern the market too much over here and what's interesting is, actually China and how much of the concern related to geopolitics lies there certainly more so than what is going on in Ukraine and what Russia are up to as well.
Of course, China's one of the world's largest MRO markets. It's got a huge commercial fleet, obviously a lot of MRO activity there. And we've started seeing lockdown over the last month again in Shanghai and around that region and this has obviously led to operators grounding aircraft and reducing flights. And some of the maintenance work has dropped off as well as a result. Of course, the flowing of this work has seen carriers delaying things and that said, led to issues as well, like logistics and getting into these regions is problematic as well as the delay of that work.
This is seen by some here as an overreaction on the behalf of the Chinese carriers and the regulator and what not there. But it is a concern and the concern really lies in, from what I gather, is maybe lockdown spreading around to other the past of the country. I think someone said yesterday, you can imagine, this is the impact from Shanghai, but could you imagine if Beijing hypothetically speaking, went to lockdown as well, if you had two of those major cities of China in a lockdown where things have slowed with huge aviation interests as well, then that could be very problematic.
That's obviously a worst-case scenario, but that is a concern and that's maybe something to watch over the next few weeks. And I think the industry will certainly be hoping that the China, the domestic market returns there and bounces back and people were putting it into comparison with where we are now in the USA. And they believe that America's actually showing the way in terms of getting things back to normal, out of lockdown and reopening operations and we're seeing that now with the very buoyant domestic market, which is driving things forward at present.
Lee Ann Shay:
You know, I totally agree with you on China. I moderated the geopolitical panel yesterday and we pointed out that countries representing half the world's population are staying neutral on the Russia-Ukraine war, and part of that is they want to remain independent, but also there's a little bit of a concern of a potential new cold war, but it wouldn't be just Russia versus the U.S. China is a big factor. So you know how this all plays out there's a lot of levels of concern. We started out on a very buoyant happy note, and I guess we've gone full circle here.
Sean Broderick:
I can end with a happy note. So the most, one of the interesting facts that I learned this week that I didn't know, Boeing of course, had a big presence in both Russia and Ukraine before the war. They two, they have design centers in Moscow and Kyiv. Obviously, their Moscow operations are, have ceased, all their product support has ceased. But in Kyiv, they are still doing some of the work. So the work that was being done there is still being done there and the Boeing executive on my panel just pointed it out, both before the panel and then during, to the audience. And he said as a tremendous testament to the dedication to the company, is what he said, but I think it even goes beyond that it shows the character of the people there.
Lee Ann Shay:
Good note to end on. And that is a positive one. So, hey gentlemen, thank you. And to all of our listeners, thank you for listening to this Aviation Week MRO podcast. Don't miss a single episode, subscribe to it on Apple podcast, Google podcast, Stitcher and Spotify. Thank you.
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