Taking Flight: How Logistics Software Can Help Aviation Enterprises Soar to New Heights

Planes belong in the air. This fact is evident in its very category name: aircraft. Unfortunately, many aviation and aerospace companies have to deal with a harsh reality: Their aircraft will be frequently grounded due to extenuating circumstances. In other words, the aircraft is not onboarding cargo or passengers, offloading, or taxing on the runway, but suffering from some predicament that is keeping it from the skies.

Summary

• The article addresses the financial and operational challenges of Aircraft on Ground (AOG) situations for aviation enterprises, which often stem from poor supply chain management and communication issues.
• Regular and mandatory inspections may ground aircraft, but a specialized Transportation Management System (TMS), like Cargobase, can expedite sourcing and replacement of parts, even major components, thereby reducing downtime.
• AOG costs are heightened due to common leasing business models in aviation, but Cargobase can streamline the quotation process for logistics services, potentially saving significant time and costs for aviation companies.
• Effective communication, visibility into parts supply, and meticulous documentation management are crucial to mitigating AOG periods, all of which are facilitated by using logistics software such as a TMS.
• Amid the current economic crisis, logistics software can be a strategic tool to minimize AOG, making aviation companies more operationally prudent and helping them focus on their main objective: keeping aircraft in the skies.

Aircraft on Ground (AOG) can be viewed as an opportunity cost. When planes are grounded for maintenance, repair, and overhaul (MRO), they are not ferrying passengers between destinations. They are not delivering packages from point A to point B. Instead, AOG are simply incurring financial, operational, and reputational costs on the aviation or aerospace company. While AOG costs may vary between planes, Boeing estimated that a single AOG occurence can cost the airline from US$10,000 to US$150,000.

Given that AOG is so expensive, companies owe it to themselves to explore the reasons that their aircraft are not in the skies. Apart from regularly scheduled maintenance, most AOG situations result from a poor supply chain. For example, they may be waiting for a critical component that is late for delivery, stuck in an unknown location, or still with the supplier due to a cost-prohibitive quote from a logistics service provider.

While aviation and aerospace companies may have an AOG desk, this is only one pillar of exceptional logistics. Enterprises in this space must also pair their AOG desk with an equally strong and agile logistics software such as a Transportation Management System (TMS). One such example is Cargobase, where we help multiple companies, including those in aviation, #GetShipDone. We can, in short, get your planes back to the skies where they belong.

Prepare for any possibility with a TMS

Government agencies require regular inspections of aircraft. In the United States for example, the Federal Aviation Agency (FAA) requires inspections based on flight time (400 to 600 hours) as well as calendar time (6 to 8 months). There is an abundance of caution with any inspection: The smallest issue, such as even a faulty sensor, will require grounding of an airplane.

Most of these issues are easily rectified. Replacing the faulty sensor can be sourced from the supplier and then rushed to the aircraft via car, truck, boat, or another plane. In these cases, a plane can return to service relatively quickly. But aviation companies should not build their business continuity strategy for their fleet around these minor issues - they should do so around the large issues that can result in prolonged grounding.

These large issues usually involve major components of an aircraft, such as the cabin, engine, or airframe. These are of course difficult to transport. Depending on the size or the sensitivity of the part, they may not be supported by the freight mode of a particular logistics service provider, for example.

A specialized TMS can help with these major components that commonly lead to extended AOG situations. First, the Cargobase network of over 1,200 logistics service providers supports all logistics flows for major components and parts globally.

This ensures that enterprises can find the right partner in the quickest possible manner, so that they can get their plane restored to flight-ready. This reduces the unscheduled downtime and minimizes the turnaround time to get aircraft back into operation.

Minimize the financial impact of AOG

Estimates on the cost of AOG vary, but they all have one thing in common: They show that this problem is a very expensive one.

The cost of AOG is exacerbated by the most common business models in aviation. Airliners often do not own their aircraft, which would make an AOG situation more palatable. Instead, aviation companies commonly lease planes anywhere from US$60,000 to US$500,000 per month. Leasing places an emphasis on cost recovery: Aviation companies must earn more each month than the cost of a lease - which is threatened by any AOG situation. With a long enough AOG, an aviation company will lose money on a particular plane. Multiply this by enough planes and an airliner risks going into the red.

Cargobase has a notable feature that reduces the financial implications of AOG. Rather than requesting for an open-ended quote, wherein logistics service partners can submit a quote at any given time, Cargobase makes this process time-bound. Now interested partners will have to submit their quote within a given deadline. This small but important touch streamlines the often elongated quoting process, so that aviation companies can move on to choosing the right partner quicker.

Even with a time-sensitive deadline, aviation companies can enjoy an average of 3.2 quotes per request, which leads to a cost savings of up to 18%. For a single plane, an aviation company can save hundreds of hours in inefficient quoting. When this process is multiplied by all the planes in a fleet, the aviation company will save thousands of hours in procuring parts for their AOG.

Improve communication across the procurement process

When an aircraft is on the ground, the last thing an aviation company needs is poor communication and visibility. Unfortunately, this is far too common. In some cases, an aviation company may not know where a replacement part is in the supply chain. In other cases, partners may be uninformed about the special handling and packing requirements of a major component, resulting in unnecessary damage - damage which may render it unfit for use and thus extend the AOG period.

A TMS like Cargobase has features to improve communication and visibility during this time-critical period. First, there is a given field for any special processing requirements, so that this key information is automatically communicated to all partners, rather than expressed manually, or worse, forgotten or neglected. This ensures that major parts are packaged and handled in the way that they should be, so that they arrive in pristine condition, ready for deployment.

In addition, aviation companies have real-time visibility into the parts that they sourced. This level of granular detail enables enterprises to better plan around their AOG. By knowing when the needed part will arrive, aviation companies can estimate when the plane will get back into action. Having a greater understanding of the block hours will enable companies to maximize revenue across all their aircraft.

Effective documentation management

A TMS, like Cargobase, not only fosters better communication and visibility but also serves as a pivotal tool for handling documentation with precision and effectiveness. In the throbbing heartbeat of aviation logistics, a misplaced document or a delay in sharing critical information can be the difference between a plane taking flight or staying grounded. Documentation, from supply chain inventories to special handling instructions, need to be managed meticulously, ensuring that the right information reaches the right hands at the right time.

Cargobase helps in elevating this aspect of communication by integrating all essential documentation within the system. It ensures that key paperwork is immediately accessible, updated in real-time, and automatically shared with all relevant parties. This reduces the chance of miscommunication, delays, or errors that can lead to unnecessary AOG situations. In turn, this allows aviation companies to efficiently manage their logistics, ensuring a swift turnaround for grounded planes, and as a result, maximizing their operational and financial efficiency. In short, proper documentation handling through a TMS like Cargobase, helps aviation enterprises keep their aircraft sky-bound, rather than being shackled by avoidable paperwork errors.

Consequently, aviation enterprises can focus on their primary goal: keeping their aircraft in the skies.

Breaking new ground

With the current economic crisis, aviation companies will likely suffer. Consumers will travel less and send fewer parcels, and businesses will also have reduced cargo. In this kind of environment, aviation companies need to be even more financially and operationally prudent in order to survive. One of the lowest-hanging fruits in this regard is their AOG. Although some aviation companies may take AOG as a fact-of-life - every piece of machinery will need repair, after all - there are major efficiencies to be gained here. The best way to do so is through a TMS like Cargobase, which can complement your existing AOG desk.

With a TMS, aviation companies can easily send any of the major parts that most commonly result in prolonged AOG. They can also minimize the financial impact of AOG by accelerating the quoting process through time-bound requests for proposals. Finally, they can improve visibility and communication, so that parts arrive on time and intact. Through a TMS, aviation companies can soar above the once-beleaguering problem of AOG.