A series of new deals involving customers from the Middle East and the Indian subcontinent have fattened Honeywell Aerospace’s already substantial order book. Here at the Dubai Airshow this week, the U.S. group (Stand A470) expects to announce some $500 million worth of new business, anchored by contracts involving some of Dubai’s closest neighbors.
Contracts with Oman Air, Bahrain Air, Kingfisher Airlines and Emirates Airline have reinforced Honeywell’s foothold in the region. Meanwhile, a $50 million contract with British Airways for the supply of wheels and brakes for 62 Boeing 767s and 777s proved noteworthy by virtue of its sheer size.
The Emirates contract involves Honeywell’s SmartLanding technology, which is a software enhancement to the enhanced ground proximity warning system. Worth some $1 million, the deal gives Honeywell’s newest runway safety system a high-profile platform from which to showcase its ability to reduce the risk of runway excursions. “Emirates has traditionally led the way in the Middle East in incorporating the latest Honeywell safety technologies,” said Honeywell Aerospace vice president of airlines Mike Madsen. “Emirates was one of the first to implement Honeywell’s runway awareness and advisory system two years ago.”
The system alerts pilots approaching a runway too high, too fast or with an improperly configured airplane. Emirates plans to incorporate SmartLanding into more than 110 existing aircraft, including Boeing 777-200/300s and Airbus A330s and A340s scheduled for delivery next year.
More Honeywell technology will find its way onto Oman Air’s A330 under a contract to supply MCS-7200 SwiftBroadBand satellite communications equipment. Oman’s A330 will become the first long-range airplane to incorporate Inmarsat SSB services, allowing passengers to access the Internet and use mobile telephones and personal digital assistants for text services. Scheduled to begin late this year, the service will eventually appear on future Airbus A330/A340 customer deliveries.
Yet another lucrative contract Honeywell logged with one of the region’s major airlines–Bahrain Air–calls for the provision and long-term maintenance of its 131-9A APUs on A319s and A320s. Worth $5.5 million, the deal covers 12 airplanes, the first of which arrived last year. Delivery schedules call for the final six purchased aircraft to arrive through 2012.
Another APU deal involved India’s Kingfisher Airlines, which also has increased an order for Honeywell’s safety and navigational avionics to up to 130 A320s and 20 A330s. Kingfisher concluded a long-term services agreement on the Honeywell 131-9A APU and has agreed to become the launch customer in the Indian subcontinent for the company’s LED navigational lighting. Honeywell’s LED nav lights represent the company’s newest A320 product offering and now come as standard equipment on all new A320s.
Meanwhile, the multimillion-dollar contract extends selection of avionics suites to 130 A320-family aircraft and 20 A330 deliveries through 2015. The contract extends APU service for the A320 to 2023.
Managing Airline Costs
According to Madsen, carriers confronting the challenges of the continuing economic downturn are showing more interest in innovative approaches to managing their costs and working capital. Honeywell is trying to help in this respect with its integrated service and support packages which deliver more predictable maintenance costs for carriers.
One advantage of these packages is that carriers don’t have to invest up front what would typically be up to $600,000 in spares because Honeywell covers the cost of the inventory until the equipment is actually needed. This way operators are assured that they will have the parts they need at short notice without having to cover the full logistics costs. There are now 27 airlines signed up for this option worldwide, including five new contracts this year, and Honeywell is seeing growing interest from operators in the Middle East.
“We sit down with airlines and develop a plan because each one is a little different in terms of their spares needs and their ability to remove and replace the parts at different stations,” explained Madsen. “We have modeling capability [to predict operators’ spares requirements] and we know product reliability rates globally.”
Honeywell data shows flight-hour growth among airlines in the Middle East increasing at a rate of 5 percent, while passenger growth is currently at 7 percent. The U.S. company is in talks with prospective product support partners in the region, where two major carriers are preparing to develop capability to meet their own maintenance needs, which should be in place within six to nine months, and another company wants to offer third-party support capability.