Wednesday, 18 April 2012

What business benefits have aircraft operators/airlines derived from remote real time data collected/analysed from embedded sensors in aircraft systems/components? What other business benefits may be derived for operators in the future, will there be changes to the airline business model as a result of step changes in the use of new technology, will OEMs be required to cooperate more with one another to produce a better integrated platform and less conflicting information; when will we see a change to aircraft/engine maintenance programmes? Will there, as a result of this, be an ever increasing demand for new aircraft?


By: Alison Wilds

The use of embedded sensors in the complex systems and sub-systems in modern aircraft have and will continue to provide a number of significant benefits to aircraft operators.  Hitherto, the maintenance of assets involved effecting a repair or replacement once a part or parts had failed together with the application of preventative tasks to keep the equipment from failing.  This regime could not predict unscheduled maintenance events precipitated by failures in complex pieces of machinery which were wholly random in nature.
Embedded sensors in modern aircraft systems and sub-systems and the processing of remote real time data derived from those sensors is able to provide condition based monitoring, the detection and diagnosis of current and developing failures and a prognosis of when a system or component will fail.

The knowledge which OEMs have gained from the collection and analysis of an ever growing bank of data from operators of their equipment has, through their enhanced knowledge of the product, led them to develop through life service products, pursuant to which the OEM takes responsibility for the maintenance, repair and overhaul of the equipment in return for the payment by the aircraft operator of a monthly fee.  In turn through operators using these through life products, the OEM is able acquire more knowledge about that product's through life performance and the different wear out characteristics of different components with a view to continuing to improve its through life offering.  

The benefits to the operator of remote real time monitoring of aircraft and engines by the transmission of information from the embedded sensors on the aircraft and engines have been real and tangible in an industry which operates often on very thin profit margins or in the recent troubled economic times at a loss. Hence, any cost saving measure should be welcomed by airlines. 

Amongst the tangible benefits which airlines are experiencing from this new technology are:

Ÿ          there are less incidents of unplanned maintenance thus reducing cancellation and/or delays in departure/arrival times of the operator's aircraft with the consequent passenger disruption.  This improved readiness enhances the operator's brand and reputation;
Ÿ          the operator can predict the cause of the fault faster and with more accuracy, thus reducing man hours and costs spent trying to find the problem.  Maintenance actions are minimised - it can potentially avoid the "no fault found" scenario – again a cost saving to the operator;
Ÿ          the ability to plan unscheduled maintenance, which in theory should give the operator the time to locate the necessary parts, manpower and allocate the space required to rectify the fault.  As the operator is able to predict when the fault will occur in this should lead to cost savings as work can be performed during normal working hours;
Ÿ          it increases the safety of the equipment; and
Ÿ          the operator can allocate costly resources elsewhere – the airline may not need to maintain a large inventory of parts, particularly where the airline has signed up to a through life care agreement with an OEM.

So what of the future – what will we see as shaping this part of the aviation sector if step changes continue as regards condition-based monitoring, detection and diagnosis of current and developing failures?
Here are a few observations:
Ÿ          Will the number of engineers employed by operators be reduced thus producing further cost saving for airlines on the basis that these new systems will detect the fault more quickly?  New or different business models may need to be developed to keep in line with the rapid pace of technology.  It is highly likely there will be an increasing requirement for IT literate aeronautical engineers with the ability to diagnose and analyse data being fed to them.
Ÿ          Will there be a lower cost to operators of the through life product offering by OEMs, or will the pricing stay more or less the same increasing in line with inflation.  Will the OEM's profit margin increase as their investment in the development of the through life product starts to repay itself or will we see some of those cost savings being passed back to the operator with a lower priced product offering?
Ÿ          The period at the end of a lease when the airline takes the aircraft out of service for inspection/examination of the aircraft records will shorten.  In the next generation of aircraft all information will be readily available and it is anticipated that the period of handover between lessees will be very short, maybe one day and the engine boroscope examination could then be a thing of the past.  Hence, the airline lessee will be able to use its leased aircraft for revenue generating traffic for much longer. 

Ÿ          Will there be a change to the traditional aircraft leasing model maintained by aircraft lessors?  With the increasing speed of the implementation of new technology, will that lead to more airlines demanding newer leased aircraft to take advantage of the latest and most technologically advanced aircraft model, particularly if that leads to substantive cost savings for their operation?  That, in turn, could lead to a different type of leasing model from the current model where a lessor's aircraft acquisition cost is amortised over a period of up to the first 12 years of its life; the later years of its life (averaging 25 years) being profit for the lessor.  Currently 75% of aircraft are still in service at the age of 20 years, although since the 2008 financial crisis a growing number of aircraft younger than 20 years have been "parted out".  Will further step changes in aircraft technology lead to aircraft having shorter lives and lease rental increasing to amortise more quickly a lessor's acquisition cost?
Ÿ          There is likely to be a substantial change to the prescribed maintenance programmes for each aircraft type and their engines, but when will we see that?.  The life of many parts is likely to be extended over and above their prescribed current lives if data analysed by the OEMs shows that under the current regime the equipment does not need to be maintained as frequently as is currently mandated.  The increasing use of composites in the manufacture of aircraft will also have an impact on the timing and types of maintenance carried out.  On the assumption that aircraft and parts do not need to be maintained as often, there is no reason to suppose that we will not see an "on condition" airframe in the future and new maintenance standards established.  In any event, less time should be spent carrying out "heavy" checks because much of that maintenance will have already been carried out in routine maintenance identified from the data derived from aircraft systems.  This should lead to further cost savings for airlines in an industry which often operates on very thin profit margins or none at all, particularly in times of recession.  The changing pattern in any maintenance regime will require approval by regulators, insurers and ultimately changes to documentation which govern the use of aircraft, for instance, aircraft leases – all of which may not happen quickly and will be reliant on the regulators and others getting comfortable and being confident that safety will not be compromised. 
Ÿ          There will be the need for a more integrated product offering between the manufacturers of equipment whose equipment and/or components form part of the aircraft so that any information/data which an operator receives from embedded sensors from these products does not conflict with information being received by the operator about other components or systems on the aircraft.  This then should produce more reliable prognostics for the operator.  To achieve this each manufacturer of each of the different products will need to break down barriers to work together, share knowledge, so that data is synchronised from multiple sub-systems to detect accurately a potential adverse event; the aim being to produce a more integrated platform to feed back that information to the operator so that it obtains an accurate diagnosis of the problem.  This may be difficult to achieve as cultural and commercial barriers will need to be broken down, OEMs have invested time, effort and money in their product, their shareholders will want to see a return on that investment.  To break down these barriers this could require a sharing of commercial sensitive information considered crucial to that OEMs product and which is regarded as important by them as offering them a commercial competitive advantage to them or better solution to the end user than others in the same market.  All this will take time!
Ÿ          Safety will be improved – the analysis of data should allow for further development of inbuilt safety resources as part of the design of the equipment/component.
Ÿ          The rate of data transfer from aircraft to ground will need to be improved to allow all data from the operation of civil aircraft to be quickly transmitted, examined and compared.  The current bandwidth for data transfer is too limited which means that current methods of transfer, i.e. via satellite, is too expensive to be used for regular data transfer, ACARS is also too slow.
Ÿ          Finally, will we see aircraft operators using information which is generated by these embedded sensors as a means of making money out of that information?  Often the ownership of information produced by the operation of the aircraft/engine is inadequately dealt with in through life product agreements.  There is value in this information.  Will we see more complex intellectual property provisions emerge?

Wednesday, 14 March 2012

The UK government needs to understand the importance of UK aviation to the UK economy – support the Aviation Foundation


By Alison Wilds

UK Aviation Policy is currently under review.  If you support and champion the importance of air travel to you or your organisation, look at the Aviation Foundation: http://www.aviation-foundation.org.  This is a joint initiative by Virgin Atlantic with British Airways, BAA and Manchester Airports Group, set up to counter what the UK's aviation industry players perceive as a somewhat anti-UK aviation stance which the UK government is currently adopting. 
Visit: http://www.aviation-foundation.org and, if you are interested in supporting the UK aviation industry, sign the pledge.

Singapore Changi Airport / LHR Third Runway

By Michael Offer

Interesting that whilst Singapore faces a pressing need to open its third runway, currently available only to military aircraft, this pressure, particularly from LCC Operations, has a certain parallel with the problems at Heathrow.  Fortunately, Singapore does not have the close competition that Heathrow suffers. 

Tuesday, 21 February 2012

Disabled airline passengers cannot claim damages for injury to feelings - UK and EU Disability Regulations not applicable where Montreal convention provides exclusive remedy

By Alison Wilds

In two recent unrelated cases[1] brought against two UK airlines by or on behalf of two disabled passengers under the Civil Aviation (Access to Air Travel for Disabled Persons and Persons with Reduced Mobility) Regulations 2007 SI/2001/1895 ("UK Disability Regulations"), each disabled passenger claimed they were given seating which failed to meet their specific needs as disabled travelling passengers and, as a result of which, they were entitled to claim damages for injury to their feelings under the UK Disability Regulations.  These regulations (which incorporate EC Regulation 1107/2006 into English law) provide that an air carrier (a) shall provide assistance without additional charge to a disabled person or one with reduced mobility departing from, arriving at or transiting through an airport which is subject to these regulations; and (b) will make all reasonable efforts to arrange seating to meet the needs of individuals with disabilities; the paramount objective of these regulations being that opportunities for air travel should be open to people suffering from reduced mobility, whether caused by disability, age or some other factor.
Each of the airlines contended that the claimants' sole remedy was under the EC Regulation 2027/97 on Air Carrier Liability in the Event of Accident as amended by EC Regulation 889/2002 (the "Montreal Regulation") by which the Montreal Convention for the Unification of certain rules for International Air Travel by Air dated 28 May 1999 was incorporated into EU law.  The Montreal Convention replaced the Warsaw Convention of 1929 and includes, among other things, restrictions and limitations on liability for events which occur from boarding of the aircraft, disembarkation or whilst on board the aircraft.  It was accepted that the Montreal Convention was an integral part of European law and neither the UK nor EC Disability Regulations overrode that.  As regards the claims of each of the passengers for injury to their feelings, the event which caused that injury occurred whilst each passenger was on board the aircraft.  Hence, the provisions of the Montreal Regulation were applicable to the exclusion of any other remedy which the passengers had.  Where loss or damage occurs before boarding and after disembarkation (i.e. before and after carriage by air), the Montreal Regulation is not applicable and, accordingly, a claim for damages can, in principle, be made. 

As a result of the finding in this case, the location of the occurrence of each event causing loss or damage under the UK Disability Regulations will need to be examined on a case by case basis to establish what remedy (if any) a disabled passenger or one with reduced mobility may have.  On that basis are we likely to see an increase in claims that the damage occurred before boarding or after disembarkation?  Is it fair that events which occur before the disabled passenger boards the aircraft but which crystallise once that passenger is on board fall outside the EU and UK Disability Regulations?


[1]     (1) Christopher Stott (Appellant) v Thomas Cook Tour Operations Limited (Respondent).
      (2) Tony Hook (by his litigation friend Gillian Hook) (Appellant) and British Airways Plc (Respondent) and Secretary of State for Transport (Intervener) [2012] EWCA Civ 66 – 7 February 2012.

Friday, 16 December 2011

Prognostic Health Management

By Oliver Ross

Prognostic Health Management will reduce maintenance costs on commercial jet aircraft. This bold claim is made by the equipment manufacturers who are using sophisticated data collection devices backed by complex algorithms to determine when their machines are going to fail thus cutting down on scheduled maintenance costs.  The Japanese pioneered “just in time” manufacturing, but how will “just in time’ maintenance play with the safety driven regulators who have always operated within the culture of maintenance intervals and who have no commercial interest in prolonging those intervals?

Friday, 9 December 2011

Bribery Act

By Alison Wilds

The first prosecution has taken place under this Act. Are you doing business in the UK? Did you know that a commercial organisation can be prosecuted under the Act for failure to prevent bribery by an "associated person" anywhere in the world – your suppliers, agents, or employees! Your business should, by now, have implemented procedures to protect it.
What are they? Read part 2 of our note on "The UK Bribery Act – Is your business ready for it? What procedures should your business have implemented to protect it?".

Thursday, 8 December 2011

Air Passenger Duty

By Oliver Ross

HM Treasury, in its paper “Reform of Air Passenger Duty” (“APD”) published in March 2011, stated very clearly that the Governments’ overriding priority was to focus on economic growth, yet David Osborne has chosen this moment to ramp up an already massive tax on UK travel.  As if that is not enough he is seeking to extend this to business jets.  The only other European countries imposing APD are Germany (currently reviewing its position) and Austria, but in both cases their APD is one third to one half of the UK duty.  And for those like David Osborne who believe that this tax will slip in under the radar to be lost in the overall costs of travel, they should know that in the last five years, as a result of this, 30m passengers have deserted the UK passenger queues and British jobs are being lost.  In Europe, in the same period, passengers have increased by 66m.  How difficult is it for the Government to see that this extraordinary tax is stifling growth in the UK travel sector?  The breathtaking irony of all of this is that the Government will be making considerably more out of the transport of passengers in and from the UK than the airlines themselves!