Post-COVID19 era to open new vistas in the defence sector

Published: June 5, 2020 12:21 PM

Globally the approach seems to be the best suited for all the parties involved, as it is cost-effective provides long term perspective where customer and vendor could really prepare themselves for some innovations and can plan and execute it in a gradual manner.

Survival, Sustenance, and Sailing through these tough times is the need of the hour. (Representational image: Reuters)

By Ajay Bedi

No one ever thought that we would need to realign our lives, leave aside the businesses and trade during the twenty-first century. COVID has impacted each one of us so badly that we are forced to think of our priorities again. COVID causalities are everywhere. Aviation and Aerospace are amongst the worst affected. After the internet and its connectivity, the aviation was considered to be the sector, which is transcending the boundaries, bringing world closure by its seamless connectivity. The size of the industry is colossal. But the impact of the tiny virus is such that, a couple of passenger airlines have filed bankruptcy and some are following the suit. The cargo side is also facing serious consequences. Overall COVID jeopardized the entire aviation industry, hovering uncertainty is killing this industry, even the ancillaries are also deeply impacted.

Survival, Sustenance and Sailing through these tough times is the need of the hour. The aviation and Aerospace industry require innovative ways to mitigate the damages and uplift the momentum of this sector. Lots of revamping, restructuring and realignment required to keep this industry afloat in the midst and after this crisis.

Lockdown has a cascading effect on all the maintenance and repair activities. No flying hence no maintenance, simple “demand & supply” equation. The aviation& aerospace comprises of two components, Commercial and Defence. The commercial side is deeply affected by the pandemic, need the stimulus of ideas to remain a profit-making venture, whereas, despite the budget cuts and other curtailments of activities, the defence activities are going on. Defence activities cannot come to standstill due to obvious reasons, however, the priorities are redefined, and more emphasis is given on surviving and sustenance during the pandemic and ensures military preparedness, aviation is one of the major and important aspects of defence preparedness.

Besides CoVID, the geopolitical development has kept the defence sector slightly more active in comparison to the other sectors. The need-based activities happening in “Defence Aviation” is helping the aviation industry worldwide at this tumultuous time. This Pandemic aftermath would drastically change the business scenario in all the sectors and industry.

The defence aerospace & aviation is no exception, it also requires revamping the old ways of doing business, for capital procurement the customer would be looking forward to get maximum returns on their investments and they would also need a better approach for repair Maintenance of the inventory. The support package must be cost-effective, prompt and effective.

The repair and maintenance agencies need to strategies and come up with long-term cost-effective maintenance programs. To achieve the best outcome, it is recommended that they need to provide the “Specific Platform” based solution. For example, providing a complete package to cater C-130J, a “Tip to Tail” maintenance approach, with a firm price on an hourly basis. The approach would differ for each platform, due to size, role and age of fleet etc.., besides these basics, we need to take into account the Country specific requirements, as it varies for each customer. All of the above would help in determining the “Cost Per Flight Hour- CPFH”. The cost to the customer would be the key element of the agreement.

The factors consist of ascertaining the CPFH, are as follows: –

Firm Cost

· The cost of the Maintenance Shed at Base (designated Area)

· Manpower cost (Maintenance Staff not Administrative or strategic)

· Tooling etc…

Variable Cost

· ATF (For Projected Flying Hour)

· Routine Spares

· Depreciation / Aging cost (Though it doesn’t directly contribute to Operational Cost)

The Basic formula would apply (Cost divided by Flight Hours), thereafter many factors come into consideration, depending on which factor of the cost we like to evaluate.

The above would help us in reaching a basic per hour cost, which is helpful in defining the basic agreement, but the commercial agreement required to be explicit and detailed, covering all the aspects like cost and deliverables, responsibilities of Vendor and Customers, work beyond this agreement, Cost evaluation of that work etc. Some crucial elements are Training of the maintenance staff, creation or up-gradation of a maintenance facility with the customer.

The CPFH the approach would help the entire industry and long-term plans would provide stability to the sector, it also provides an opportunity for the customer to look for cost-effective measures to maintain their fleet. The CPFH for the along-term period is an approach which creates a win-win situation for the vendor and the customers, as both are aware of their explicit roles. A well-defined agreement is key to the success of this approach. A tailor-made agreement catering to the specific needs of the customer would yield desired results. It will help the countries like India, which are opening up their defence sector and are looking forward to being self-reliant not only in production but in maintenance as well.

For India, this approach in Maintenance could yield significant results towards achieving our make in India dream. This would help us a great deal by infusing the energy in the MSME’s sector of Indian Defence industry, they would get a chance to manufacture some intermediate parts and components, which may gradually lead to supply at the global level, some components are already being manufactured by the OEM’s here in India, and also by some Indian enterprises.

Globally the approach seems to be the best suited for all the parties involved, as it is cost-effective provides long term perspective where customer and vendor could really prepare themselves for some innovations and can plan and execute it in a gradual manner.

Post-COVID this approach might see the light of the day sooner, than before.

(The author is an Independent Defence Industry Consultant. Views expressed are personal.)

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