Commercial aircraft production has soared to all-time high and shows no sign of abating as Airbus and Boeing prepare to increase output of their respective narrowbody workhorses, the A320 and 737, Airbus begins assembly of its new-design A350 XWB widebody, and Boeing tries to play catch-up on deliveries of its delayed 787 Dreamliner.
Re-engined successors of the A320 and 737, which are scheduled to make their debut around the middle of this decade, are also proving wildly successful, and have injected much excitement into the marketplace. To wit, Airbus recently wished the Twitterverse a “Happy neo’versary” to celebrate the fact that one year after launching the A320neo (new engine option), the twinjet has become “the fastest selling aircraft to date with 26 customers committed to 1,450 aircraft”.
With so much production activity in the pipeline, trusted manufacturers of aircraft seats, galleys, lavatories, overhead bins, lighting systems, interior components, cabin management systems, and in-flight entertainment and connectivity systems are well placed to capture big business for years to come.
“Every five years, the airlines are modifying the full cabin. The world fleet will double [in the next 20 years]. Of course, the old aircraft will not leave the world fleet before 15–20 years so in their remaining time of life, they will be modified at least three times. So the market is huge, huge, huge,” says Stephane Bollon, sales director at Aeroconseil, which handles engineering and certification of connectivity systems, and recently merged with French group AKKA Technologies.
But even though some firms are consolidating to build critical mass, a growing number of industry stakeholders have begun to question whether the already constrained supply chain can possibly keep pace with demand.
“When you look at it, you have these three massive interiors companies, B/E Aerospace, Diehl and Zodiac, and they should be able to handle the majority of the present workload by operating, as they are now, at or near capacity. But in order to meet demand driven by Airbus and Boeing’s planned rate increases, they’ll have to invest in infrastructure to ramp up, which is risky because they don’t get paid until the aircraft goes into service,” notes a long-time industry insider.
“Then what happens when you load on the A350 XWB, you start building the new Boeing 777, and add the new Sukhoi SuperJet, Bombardier CSeries, Comac C919, Mitsubishi Regional Jet and re-engined E-Jets into the mix, not to mention the A320neo and the re-engined 737Max? There is just not enough capacity out there to supply all of these programmes.”
Aircraft interiors expert and independent consultant Vern Alg last year was one of the first individuals to publically sound the alarm that a bottleneck in the interiors space is making the aftermarket sourcing of aircraft seats and galleys difficult for leasing companies and airlines.
But the problem “has moved from the aftermarket, and today it is impacting new deliveries,” he tells the Airline Passenger Experience magazine. “The supply chain is constrained and it’s only going to get worse.”
B/E Aerospace is seeing a definite “uptick” in demand, says company VP and general manager seating products Tom Plant. “The OEMs have increased rates and we’re getting ready for that. We don’t have any concern [about] that.”
But Plant has “certainly heard a number of things this year that the airframers Airbus and Boeing have been struggling in some of their deliveries with some [other] of their suppliers. We’re actually not on the forefront of that. Some of it we hear from hearsay. Our on-time delivery has been 100 per cent and it has been for a long time now.”
The sheer volume of work facing interiors suppliers, and the amount of risk they’ll need to assume to ramp up operations, is just consideration to grapple with. Suppliers must also balance what are often conflicting interests from airframers that want to offer more standardised cabin solutions, and airlines that are seeking to differentiate their cabins.
After the highly customised Airbus A380 programme suffered significant delays, Boeing and Airbus each crafted their own version of Supplier Furnished Equipment (SFE) catalogues for the 787 and A350, respectively, in a bid to slash lead times for Buyer Furnished Equipment (BFE), most especially economy class seats, galleys and embedded IFE.
For example, Airbus selected B/E Aerospace to be the sole supplier of next generation modular galley systems for the A350, while three suppliers – B/E, Zodiac and Ipeco – will provide galley inserts. Should a customer want a different galley system, the onus is on them to arrange and pay for post-delivery ‘green field’ retrofits after the airliners roll off the production line.
This approach is similar to the SFE models employed by regional aircraft manufacturers, which for the most part have offered a limited choice of interiors since their aircraft were conceived.
“It’s more and more frequent that manufacturers push airlines to take standard cabin solutions. Sometimes, this may bring savings. We strongly believe in customisation, aiming [to] create a sort of family feeling in colours, materials and design,” says Alitalia director ancillary revenue, IFE and cabin layout Aureliano Cicala says,
Indeed, the move to SFE catalogues for the 787 and the A350 customers has proven controversial.
Some airlines and lessors have quietly voiced their frustrations that 787 and A350 catalogue SFE limits customisation, flexibility and competitiveness. As one 787 customer noted, Boeing’s approach means that the carrier cannot offer the same product across its entire fleet, as seats installed on its current aircraft are not offerable in the 787 catalogue.
But airframers are showing no signs of changing course, and indeed narrowbodies seem to be the next target for SFE. Airbus took its first step in this direction when in April 2011 it announced that Zodiac unit Driessen-Zodiac Aerospace will progressively introduce galleys as SFE on the now mature A320 programme as “the selected vendor” beginning in mid-2012.
Explaining its decision at the time, Airbus said the new supply model will “improve the robustness of the supply chain by developing a close partnership with one strong supplier”.
It notes: “Historically galleys have been buyer furnished equipment on the A320 family, with customers themselves responsible for on-time, on-quality delivery of equipment to the Airbus final assembly lines. The new SFE approach moves the programme management responsibility to Airbus.”
Airlines have not been as receptive to the single galley concept as hoped, claims a source. Nonetheless, Airbus is now understood to be eyeing more standard seating options for the A320.
Speaking from “a purely operational standpoint”, B/E Aerospace’s Plant says he understands why airframers want to award bigger work packages to fewer and fewer players. “The thing that concerns me and the thing that is missing in that is that it doesn’t tend to lead to a greater variety of choices or greater innovation or greater product differentiation. At the end of the day, if they push out a bunch of airplanes that are essentially the same, I’m not sure they’ll sell as many of them. I think that is something they have to watch and balance. We’re watching it closely,” he says.
Doria De Chiara, business development manager for seat maker Geven, warns that most airlines will not accept standard seats “unless they get something out of it; unless it’s cheap and can get it tomorrow. Otherwise they won’t. So it could be that they [airframers] adopt an approach like car manufacturers that have a special series with a designer interior – something to make it appealing. Otherwise, what’s the benefit?”
Even as airframers press airlines to adhere to more limited SFE catalogues, airlines are pushing back with demands for greater choice, and the ability to have potentially disruptive technology – including new in-flight connectivity systems, wireless IFE or integrated IFE/seats – installed linefit at the factory.
One need look no further than carriers like Virgin America or flydubai to see that the whole cabin interior of single-aisle aircraft is becoming more and more competitive, and that the level of differentiation being demanded today is where long-range aircraft used to be 10 years ago.
It’s “generally more challenging” to bring new equipment to the A320 or 737 because airframers “are so sensitive to do anything that taxes the [production] rates”, says Panasonic Avionics CEO Paul Margis.
Consequently, the pace of change for industrial design is outpacing the supply chain. “The IFE experience is sill far from what passengers are used to on the ground,” notes Alitalita’s Cicala.
Alan Pellegrini, managing director of the Thales in-flight entertainment business, believes that the capacity constraints in the industry appear to affect the seat suppliers more than they do IFE
“Because of the added integration with seat suppliers that our competition [Panasonic] now has and we have with our AVANT IFE product, it makes it very challenging on them [seat makers]. This is by no means a criticism of B/E, Recaro or [Zodiac’s] Weber unit, which by the way work very closely with us and have been very good. That said, they have enormous work on their plate. It’s easier for them to not introduce new things to keep their own supply chain smooth,” says Pellegrini.
“We get pushed by our customers to introduce new technology on a regular basis. So we have to find a balancing act with our seat suppliers. Our relationship with ‘the big three’ is very strong. I believe they want to do more, but find they are constrained by capacity. But at the same time, our customers are pushing us and we need to push them [the seat suppliers] to get it as quickly as possible. I think in the end we will be able to accommodate many or the majority of requests our customers having, but there are going to be some cases where there are constraints on the seat supplier that might not accommodate the exact combination of IFE and seats the customer wants.”
But some players point to IFE – specifically the vast array of new products and companies in the sector – as part of the problem. “The biggest question in my humble opinion is what the IFE suppliers do. Seat manufacturers are consolidating, this is not happening with IFE. There are more and more players; this actually generates more work for the seat supplier, which takes away from capacity,” says aircraft seat consultant Kosta Gianakopoulos.
For years, relations between seat suppliers and IFE manufacturers were chilly at best. But demand for integrated IFE/seats for economy class paved the way for a sea change in the industry whereby all parties work together on standard solutions before an airline places its order. Nonetheless, the deployment of a new IFE system with a new seat is still “bloody”, notes a source. “It’s messy. There is a lot of cursing. There are still tense times. Depending on the individual you ask, some in the industry will say relations are better; some will say they are worse.”
Also putting pressure on the supply chain is the lack of skilled aerospace engineers with necessary cabin experience. So, even in instances where a company is an approved supplier to the aircraft manufacturer, the question becomes – will that company be able to actually support the supply chain?
“The airframers are worried about it because there are a number of famous cases where airframers had to acquire suppliers to get them back under control. You can just see this kind of consolidation by big external groups buying up the smaller players, taking on their product range and contracts but also getting the skilled resources as well,” says a source.
“They are at the outer limit of being in control, and something has to give.”