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Thales adopts ‘proactive’ approach to service

 - November 6, 2007, 7:04 AM

Thales Aerospace hopes a proactive approach to customer services will help it both win repeat business for its avionics and in-flight entertainment (IFE) systems and sustain the investment needed to develop new products.

In 2004 the aerospace division of the Paris-based electronics group consolidated its customer services in a new unit, Aerospace Services Worldwide (ASW), which employs 1,300 people and has more than two dozen repair and support centers around the world. “They are close to customers, with local people to support them and completely dedicated to operators,” according to Daniel Malka, ASW vice president and general manager.

Malka, who became head of ASW earlier this year, said that the big change in the last two years has been the appointment of account managers. Their role is to tailor services and agree to an implementation plan that matches customers’ needs. With technical, logistical and commercial support, they set up a plan specifying the services to be provided “proactively, instead of responding to customer requests.”

The big challenge, Malka said, is to “improve customers’ satisfaction so they buy our products in the future. It was a big investment, but it is paying off now.” The company has had several recent wins with its IFE line, and it reckons that last year
it won between 60 and 70 percent of the buyer-furnished equipment (BFE) avionics contracts for which it competed.

As well as the basic services of repairs, spares, training and documentation, ASW aims to develop more complete integrated services, with repair contracts based on fleet rates to cover the full Thales product range. “The avionics-by-the-hour [ABTH] concept means airlines don’t need to invest in spares and repair capability,” he said. “We guarantee the availability of spares when the airline needs them at the aircraft.”

Airlines usually do their own line maintenance of traditional avionics, but are willing to subcontract the line maintenance of in-flight entertainment (IFE) systems, Malka said. “They don’t want to do it themselves, so we can agree on a turnkey service that includes line maintenance, with somebody at each airport who will replace LRUs [line replaceable units], make sure the system is working and return the spares for repair.”

Thales will also provide spares and logistics support for operators who want to do their own repairs and line maintenance.

Another innovation is the ABTH++ service developed to support a clutch of small low-cost airlines flying single-aisle Airbus aircraft in Turkey. “Every time they had a failure they would go to an MRO for repairs. Very few of the units were coming back to us, so we set up ABTH++ to support all the small airlines in the country,” explained Malka. “They sign a contract and they get full support provided by a local organization.” Thales is looking at developing a similar service in Italy.

For the Airbus A380 airliner, Thales has formed OEM services with Diehl Avionik Systeme, Liebherr Aerospace and Zodiac. “Airlines with small fleets will not be able to invest in inventory at all their line stations,” Malka said, “so we propose to share the cost of providing full support for specific part numbers at all locations.” Airlines would pay a fee per flight hour.

Since the delay in A380 service entry, the group has looked at providing the same service for other aircraft models. “We have done two contracts covering A320s,” he said. “We are trying to extend that to other operators, mainly customers who don’t have the ability to negotiate with several vendors.”

Brett Wells, ASW director of strategy and business development, said its support for helicopters is Web-based, since the fleet is so widely dispersed. “It lets the operator see the service offering, where components are and the purchase or repair order status. It is updated every 24 hours, so as long as you have access to the Internet and a telephone, you can get the job done.”

Thales is also building the supply chain systems it needs to become a Tier 1 supplier, Malka said. A continuous improvement program includes benchmarking of best practices both at its own locations and among competitors. And a new airline operations center in Seattle enables staff to monitor what is happening in real time and relocate spares to other regions if needed, he said. Additional operations centers are expected to follow in both Europe and Asia by the end of the year.

On the IFE side, Wells said, an airline operations center at the manufacturing and support center in Irvine, California, will provide equipment status and fault information for every flight carrying Thales IFE systems. “We need some specific business tools to be able to track aircraft on an hourly basis,” he explained.

The center will handle issues such as deferred replacements. “If there is no spare at a station, we need to be aware when the aircraft takes off that it will need a spare at its destination in five hours’ time. That’s a step beyond what we’re doing in avionics. We’re doing it first in IFE, then we will extend it to avionics.” Thales is also setting up partnerships with other OEMs covering Europe and the U.S.

After-sales revenue accounts for around 20 percent of global sales, Malka said, though the figure is not stable as it depends on the installed base and the warranty period. “IFE is different from avionics; it’s BFE, so we give longer warranties and it doesn’t stay as long on the aircraft,” he explained.

Better products with higher reliability have the potential to reduce life-cycle revenues, Wells added. “That’s why we’re looking at extended services,” he said. “Everybody has [complained] that over time it’s the life-cycle revenue that keeps you in business and lets you invest in new technology so you can continue to bring new products to market.”

While Thales competes with the likes of Honeywell and Rockwell Collins for avionics sales, Malka said, competition on the service side comes from the airlines and other maintenance providers. “Any airline or MRO can buy automatic test equipment and do level-one or -two repairs on avionics, so if we don’t offer good service and turnaround time, airlines will look elsewhere.”

Repairing avionics requires a huge investment in test benches, skills, documentation, training and spares, he said. “It’s a big cost, and for a fleet of up to 50 aircraft, it’s cheaper to throw out the board than to repair it,” he said. Lufthansa Technik, for example, does a lot of internal repairs, “but a few years ago, with Thales, they decided to stop doing level-three repairs,” he continued. “Instead they exchange the board in the LRU and send the boards, which are shop replaceable units [SRUs], back to us.”

The barrier to involvement is changing, Wells said. “The integrated avionics on the A380 use common modules, with functionality provided by the software. That’s why we formed OEM services; there are new levels of technology involved and we don’t see people who have ordered the aircraft doing repairs internally; it has to be
a business proposition. When a computer has six or seven boards with 70,000-hour reliability, you would need a fleet of 100 aircraft to see the same board coming
in twice, so it would be impractical to maintain the capability to repair it.”

The new IFE operations center in Toulouse was set up last November to handle repairs and the distribution of piece parts, SRUs and LRUs in Europe, the Middle East and Africa. The staff of 25 is expected to grow to 30 by the end of this year and increase to 40 in 2008 as the number of units handled grows from 3,000 this year to a planned 4,000 next year.

TopBench automatic test benches developed by EADS Test & Services support quick test and diagnosis so parts can be repaired quickly. Passenger control units and video displays account for more than half the quarterly turnover of around 750 units.