The commercial aerospace companies have to emphasis on several areas like the structure, cost curve etc. This industry is confident enough to grow significantly. It is expected that the demand for air transport will increase 4% in the coming ten years. In the business sector, the decreasing stock of utilized airplane and expanded rate of utilization are taken as consoling signs. In order to maximize the market value in the coming years and to gain a competitive advantage over the others, the businesses have to focus on certain key areas.
Key areas that the commercial leaders have to focus on:
The industry players need to focus on a number of priorities in order to enhance their market value.
- Manage the structure of the evolving industry– For the past 20 years, the major structure in the aerospace companies have provided a lot of benefits- stability, reduced revelation to cyclicality and a big production backlog. For example, in the commercial aircrafts like that of Russia and China are challenging the present duopoly. This shift is also visible in small aircraft momentum, in-flight entertainment as well as business jet avionics. All these shifts have been possible because of joining of the other players from different segments and joint ventures. Also, certain changes can be introduced in the sector by organic or inorganic perpendicular integration.
- Break the cost curve development– Over the past few years, the system development and the new airplane costs have multiplied in general terms. Nearly 70% of the total development cost constitutes of airframe design and engineering, and labor manufacturing. The rising complexity in the aerospace companies has led to a higher development cost to surpass production gains from technological advances and labor. This incorrect arrangement could turn into huge delay advancement and it will also prevent admission of new products. The business case for new programs becomes highly challenging because of high development costs. Therefore, there is a need to develop a proper structure and a modular approach by reducing the complexities and reusing the already existing systems and parts.
- The supply chain needs to be digitalized– Though efforts have been made to streamline the suppliers, there has been a rise in supply complexities. This is because the global networks have been expanded, high rate of production and various configurations.
These are some of the things that the commercial aerospace companies should place their emphasis on. The industry will be affected by both internal and external factors but the long term success will depend only on how the players put their focus on these priorities.