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Berlin, Germany, JuLy 05, 2021

The State of Digitization in Aviation

Maximilian Sieben
Finance, Strategy
In both society and the economy, digital change is underway. This transition from the industrial age, which was shaped by analog technologies, to the age of knowledge and creativity, which is shaped by digital technologies and digital innovations, is referred to as digitization. There are apparent winners and leaders in digitization, as well as others that lag behind and struggle to catch up. Aviation has become an enormously data-rich industry, that benefits significantly from Internet technologies and data utilization and exploitation. Artificial intelligence, big data and analytics, blockchain, the internet of things, and other new technologies have emerged in recent years and deliver great results on this basis. And this is what we'd like to touch on in today's blog post and discuss the actual digitization progress in different areas of aviation giving examples for forward-looking digitization projects.
It is a priority for airlines
Airlines are pioneers in the field of digitization in aviation. In our daily lives, we can see how airlines and their customers are linked by a digital relationship. From online flight booking to check-in and the automated boarding process, to follow-up support via CRM programs, almost everything seems to be digitized. Airlines are not only boosting their efficiency this way, but they also greatly improve customer experience. In today's digitized and networked world, customers expect more than just a simple transport service from point A to point B. With digitally focused business models, airlines are securing their future and are jumping on the digitalization train.

In most cockpits, the pilot's black case, which contained manuals, checklists, and navigation maps, is no longer used. The so-called Electronic Flight Bag, or EFB for short, takes its place and stores all the information needed for the flight in digital form. This is often a tablet designed specifically for flight operations.

Smart solutions like automated luggage drop-off and the easy-pass system after arrival are already demonstrating how current infrastructure can be used smartly and efficiently, even as passenger numbers rise. Future digital services may provide travellers with convenient services throughout the entire travel chain. It starts with the booking, and continues with the train or car drive, parking, and check-in, as well as navigation and safe guidance at the terminal to the gate. Everything is integrated into a single platform, such as an app.

Online flight check-in, or the creation of a boarding pass independently via a website or app, has also become commonplace. Many low-cost airlines charge additional fees to customers who check in at the airport rather than online. Since 2008, the paper ticket has had its day among the airlines of the IATA, which includes almost all major airlines worldwide.

Modern techniques like dynamic pricing, or the dynamic adjustment of ticket prices, has been in use for quite some time. The airlines' IT adjusts ticket prices, for example, to certain times of day and days of the week, taking into account the usual cancellation rates and competitors' current prices. Holidays and trade shows are also considered for the dynamic pricing. Algorithms use a variety of parameters to determine the highest possible prices at the time of the price query. In this way it is possible that two price requests within a few minutes of one other, or a one-day delay in departure, will yield radically different results.
Production areas are lagging
Today's aircraft manufacturing and maintenance situation is vastly different than the highly digitized airliners business. In many companies, fragmented production processes with a high number of manual interfaces are the common practice. Antiquated data management models are used that lack the breadth and visibility needed to discover patterns or allow for early failure detection. This leads to unscheduled maintenance and AOG, both of which are highly expensive. This digitization gap in the manufacturing industry does not really have a negative impact on end customers yet, but this may change in the future. Therefore, a substantial advantage will be gained by the manufacturer who digitally coordinates the complete chain from initial production to client. Such company will be able to respond swiftly and flexibly to requirements at any time, increasing customer satisfaction all the way through to the end user.

However, the strictly regulated industry is currently focusing on creating and certifying innovative solutions and services based on expensive and time-consuming new technology. Predictive maintenance, for example, has become one of the most important topics in the aviation industry. It is defined as a maintenance process based on the analysis of process and machine data. To give you an idea, the most recent A350 has 250,000 sensors on board that can measure around 900,000 system parameters. This is supposed to greatly improve the aircraft's reliability. In some years, extraordinary aircraft on the ground and outside of maintenance schedules can be avoided because failure and maintenance will become predictable. In this context big data analytics and artificial intelligence combined with cloud solutions could be a game changer in the near future.
Greatest opportunity for supply chains
The supply chains are where the most significant improvements can be made. The application of standards like EDI frequently presents significant challenges for organizations. The overall data quality does not meet the requirements for taking automation to the next level. Almost no supplier has automated commissioning and utilization interfaces, despite the fact that they are well-established in other industries, such as the automotive sector.

A digitized supply chain provides a significant competitive advantage. This advantage increases as the supply chain becomes more complex and the environment conditions change. Therefore, supply chain automation and transparency are the most important goals and requirements when it comes to spare parts supply. It requires that companies understand what is going on upstream in the supply chain and communicate this information. The following example shows a future digital supply chain scenario and its role in predictive maintenance:

'An airline's forecasting system predicts the failure of a certain component within the next few weeks in two possible locations in Europe. The airline orders the required component from a distributor and ships it to the logistics company's central distribution center. When the expected failure occurs, the responsible sensor signals the incident to the board computer and the need for a replacement part is communicated automatically. Within a few minutes, the part is labeled and shipped through express air-cargo. To improve future prediction quality, all relevant data is saved in a single database.'

In aviation, the benefits of a digitized supply chain have long been recognized and several stakeholders are working on appropriate solutions. However, there are still many gaps in complex supply chains that can only be closed through digital transformation.
Aftermarket Engine Business is about to change
In 2021 we see the aftermarket domain in a pre-developed phase of digitization. Operators, MROs, Lessors and OEMs contact each other via phone or email, exchange tons of excel spreadsheets and initiate deals on conferences. This results in high management efforts and costs for everyone involved. In comparison, digital trends are grasped and implemented much later than in other industries. In many areas manufacturing-like conditions prevail. Fortunately work on digital solutions is already underway in many areas, for example, the supply of spare parts is being improved through e-commerce solutions and process automation, documents are being increasingly digitized, the flow of information across the supply chain is being streamlined, and internal systems are being improved and connected among each other. Aeroji does its part by developing a streamlined solution for engine leasing and sales and building effective tools to support the aftermarket activities. Our team is seeking to reduce the time, effort and resources it takes to find and offer, evaluate and transfer available engines by aggregating all stakeholders, their assets and required tools on a single platform.
Overall, we can see that the level of digitization differs greatly depending on the business area. In terms of digitization, the aviation industry's production units tend to lag behind, as do some commercial areas, such as the aftermarket, that is not very automated and relies significantly on interpersonal relations. However, there are exceptional future-oriented technological initiatives and digitalization approaches in aviation that, in our opinion, should be supported more intensively in order to align and strengthen the industry for the future, especially given the current challenging situation.
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