Traditional aviation companies face an existential threat, as tech-focused innovators like Microsoft, Amazon, and Google carve fresh paths into aviation digitization. The change is inevitable, with PwC predicting an advanced level of A&D digitization will increase from 32% today to 76% by 2020.
Whereas major tech players benefit from a diverse revenue base from multiple target verticals, traditional A&D fixtures are held back by tighter margins and depreciating assets. Even startups entering the A&D industry fresh have state-of-the-art machinery outfitted with the most advanced digital technology from inception. Their late entrance enables a competitive advantage — with traditional firms burdened by older machinery that is ill-equipped (and economically inviable) for a technological overhaul.
We believe the optimal solution lies in strategic collaboration between traditional A&D powerhouses and early-stage startups. We work with incumbent aviation companies with decades of manufacturing expertise to target strategic, complementary ventures that solve technology challenges in air-to-ground connectivity, overall aircraft digitization, operations, and customer experience.
GE Aviation acquired cloud-based digital records management company Critical Technologies Inc., branded as AirVault and companies like Airbus have begun hiring their first digital transformation officer. Various established A&D industry leaders have also heard the call to action, focusing on data analytics as a key driver.
Data analytics will allow A&D organizations increased efficiency in predictive maintenance, vehicle and performance tracking, weather forecasting, and route planning. It also enables increased reliability through improved arrival times (on-time percentages) and streamlined and automated processes. For instance, Southwest just invested $500 million in a new reservation system. Ultimately, the technology aims to mitigate unanticipated costs wherever possible.
Additive manufacturing will also be a central tenet — implementing 3-D printing technology to streamline the creation of parts and equipment, which previously required teams of welders and engineers to build. Greg Morris, the additive manufacturing leader for GE Aviation, predicts an uptick in additive manufacturing in the next several years from $3 billion to more than $100 billion, demonstrating the materiality of even one facet of new technology.
Airbus has already listed 450 initiatives geared toward digitization. Features such as their “Scheduled Maintenance Optimizer” technology significantly aids long-term cost planning, allowing MRO to be both anticipated and accounted for well in advance of its need. More than 200 airlines have already adapted its “Smarter Fleet” technology.
However, retrofitting planes (oftentimes already 10 to 15 years old) can prove onerous and costly. But traditional companies can hedge their innovation costs through strategic partnerships. Next-stage incubators are pivotal to providing A&D companies with Industrial Internet expertise to ensure smoother improvements.
In PwC’s Industry 4.0 August report, they found that 55% of A&D employee respondents claim a need for greater emphasis on digital culture and training. Recruiting top talent isn’t the only solution — traditional companies must ensure they embed digital emphasis into their firm’s foundation.
TechNexus makes that transition seamless. In today’s competitive A&D environment, we know that enterprise companies’ long-term success depends on venture collaboration with tech startups specializing in the IoT stratosphere, catapulting these partnerships to far greater heights within aviation digitization than could ever be achieved independently.
Special collaboration must be fostered, where one firm’s expertise can be complemented by the other’s. TechNexus therefore translates each side’s inherent (and potential) value to the other, bridging the gap between leading enterprises and startup entrepreneurs.
Terry Howerton is founder, CEO and managing partner of the TechNexus venture collaborative. He meets each week with dozens of entrepreneurs and corporate business partners, mentoring and helping to connect resources within the ecosystem.