Two years ago we saw US$204 billion change hands at the Farnborough International Airshow, but with air passenger numbers continually on the rise set to double over the next 20 years – the commercial aerospace industry is soaring, Boeing’s and Airbus’ build rates are at record levels, and this year’s show could be set to be even bigger. Buoyed by this confidence and spurred on by a rising battle between airlines to retrofit dated aircraft, the interiors market is growing at an impressive rate. In fact, it is one of the most dynamic sectors in aerospace and will certainly be a dominant voice at the airshow.
In response to high customer expectations and demands for continuous innovation, the interiors industry has evolved considerably in recent years and we’re starting to see new product groups emerge. At the same time, however, there are signs that manufacturers are struggling with the ability to balance the thirst for production with the drive for product innovation.
In the first of this three-part series in the run up to Farnborough, I want to explore how the major players in the market must address this if they’re to reap the benefits of a segment that’s performing so well.
Rate increases on aircraft production
The global surge in aircraft production rates and Airbus’ record delivery number for 2015 has had a dramatic impact on the interiors market as it scrambles to meet demands. Equally, external pressures, such as fuel prices and increased safety measures, have created a need for more lightweight materials and intuitive space-saving solutions.
In the European market, the effects of such pressure are going to be felt particularly heavily, as a direct result of airlines’ incorporation into the European Union Emission Trading System. This system involves new financial penalties for airlines that are tied to the amount of CO2 emissions produced, and could result in an increase in European airlines’ retrofit and fleet exchange programs, as they look to cut fuel consumption. It will also drive increased demand for new cabin interiors made from advanced, lightweight materials that can reduce fuel consumption and the CO2 emissions per passenger.?The interiors marketplace is therefore faced with a rise in aircraft cabin interior spending through retrofits, and a subsequently exciting drive for product innovation. But is there such thing as too much opportunity?
The perfect storm of diverse demand versus competition
The main cabin segment is being hit by a growing demand for new materials that both reduce aircraft weight and allow each passenger extra personal and luggage space. But with a wide range of aircraft operators with very diverse needs ranging from cheaper short-haul carriers to the decadence of long-haul first class cabins catering to this demand is a big challenge for this sector. Equally, manufacturers and suppliers need to be able to maintain flexibility under these time-pressured conditions. If last-minute alterations are requested, they must be able to accommodate these within the original timescale, as the rest of the production line continues to march at the original pace. Expectations of this level of performance have become commonplace.
While new aircraft programs bring new opportunities for manufacturers to increase their market share and present new technologies, the level of competition is also expected to increase, as aircraft OEMs look to diversify their supply chain. In fact, this has already attracted several new entrants to the aircraft interiors market over the past few years a sign of things to come. For example, Counterpoint has identified that there are now 21 companies offering commercial airline seats, compared with just eight companies 10 years ago yet Airbus and Boeing plan to decrease their number of cabin interior suppliers.
Getting the balancing act right
We are seeing somewhat of a perfect storm for the interiors market as manufacturers face a constant juggling act with an increase in orders, a concurrent rise in competition, and a need to innovate. In addition to this, the market is having to contend with very high certification requirements, which make new product development and innovation a long and expensive process.
However, we also see the supply chain struggling to keep up with this higher demand cycle, and some suppliers have fallen short recently and been unable to meet targets. Effective management of the supply chain is crucial. There is a limit to how far it can be pushed, and at current levels we risk tipping the balance and stretching it beyond its means.
It will certainly be an interesting space to watch at Farnborough as companies battle for a vital edge over the competition and position themselves to ensure supply chain stability.
About Tom Edwards
Tom Edwards is president of North America operations and aerospace at Cyient. He joined Cyient (then Infotech) in 2010, assuming responsibility for sales and relationships at its largest customer, United Technologies Corporation. In 2013, Edwards was named president of Cyient North America, where he maintains responsibility for UTC and for Cyient’s North American operations.
Prior to Cyient, Edwards had a 26-year sales career at IBM, where he rose to global channel sales leader in the system technology division, responsible for innovative programs designed to accelerate the sale of complex data storage systems through IBM’s industry resellers.
Edwards graduated from Clarkson University in Potsdam, NY, with degrees in management and marketing. He now serves on the Town of New Fairfield Board of Finance an elected position in New Fairfield, Connecticut.