I was at the Singapore Airshow last week and enjoyed meeting with media and industry colleagues and, of course, talking about the commercial aviation market. As always, there was a lot of discussion about airplanes. But there was quite a bit of interest in the services business as well.
I have to tell you the services market is sometimes overlooked, but there are trillions of reasons why we shouldn’t. While we forecast a demand for $6.1 trillion worth of new airplanes over the next 20 years, the forecast for the services is $8.5 trillion over that same span.
Today, there are more than 23,000 commercial airplanes flying around the world and each of those jets requires services such as fleet engineering, maintenance and spare parts.
This is a big growth market for our industry. It’s why Boeing Global Services (BGS) was created last year, a new business unit that brings together our services business from the commercial and defense groups. The Global Services team is led by my friend and colleague, Stan Deal. And I asked him to share a guest blog post about this growing business.
An article by guest blogger Stan Deal, President and CEO, Boeing Global Services
Boeing Global Services’ success in the marketplace took center stage during the Singapore Airshow, where we announced nearly $1 billion of new and previously unidentified firm orders and agreements. Our big announcement was a compilation of services, products and multi-year part distribution offerings that address the challenges our customers face through the aviation lifecycle. We earn their trust by delivering superior products and services across our diverse capability offerings.
Our team has worked hard to execute on our commitments over the last six months since the standup of Global Services. Our customers have noticed and are trusting us to add value to their businesses.
We are growing and redefining the services segment of the aerospace business in a simple way – by listening. Our customers tell us about the challenges they face and the capabilities they want from Boeing. We’re investing in innovative, tailored ways to tackle their challenges.
As a result, and as exciting as that $1 billion number is, it will be dwarfed by the total value of those services to our customers.
For example, our digital Flight Planning offering can reduce fleet fuel consumption levels between 2% and 3%, tackling a huge cost driver head-on. Large carriers who use our FliteDeck Pro applications can see upwards of $1 million in savings per year by optimizing navigation and flight operations. And Airplane Health Management, powered by Boeing AnalytX, helps customers avoid unplanned delays or negative schedule events that drive significant cost, including the effect upon paying passengers.
Those are just a few of the digital solutions Global Services offers our customers. They are products and services that pay for themselves many times over, often starting on day one of implementation.
We’re also partnering with airline customers in their supply chain to help increase their operational efficiency. Component Services Programs (CSP) are reaping significant savings for airlines. Biman Bangladesh Air has already been benefiting from CSP on their 737 and 777 fleets, and at the Singapore Air Show we announced that they’ve added their 787 fleet to Component Services. Biman, like our other CSP customers, wants to extend the unique value of OEM expertise in handling exchange and repair services.
Through CSP, Boeing helps airline customers reduce in-house inventory investment and its variability, streamline logistics, and simplify communication. It is a tailored, cost effective and turn-key way for our customers to improve their inventory and flow time, which are key drivers of business success.
Airlines are seizing the value of Boeing’s lifecycle expertise. From acquisition, to operation, to asset reallocation, Global Services is providing solutions and experience that no other company can offer.
We are proud of headlines about Global Services’ growth because it means that our customers are growing and thriving too. There will be more wins for us in 2018, and when you read about them you can be sure that our airline customers are winning too.