|BlueSky Business Aviation News|
So, I’ve been wondering. What is our biggest problem in aviation? What is our next big hill to climb? Is it safety? Compliance? Public acceptance? Cost? Regulation? Marketing? Greening? What?
First, I wanted to think about this as an exercise in Creative Problem Solving, and the first thing is to determine the goal, gather some data, and identify the problems that need to be solved in order to achieve the goal. All very straightforward, really.
It’s challenging to try to pin down one single goal. There are so many to choose from and there are so many really cool projects out there. But if I were king, if I were to take ten percent of the money currently spent on militaristic stuff that generates zero downstream value and were instead to invest it in aviation, where would I put that money? For that, I think I need to have a goal in mind, a direction of goodness as we used to say at the Old Boeing.
How do we re-energize the aviation industry?
I will accept that as a working goal until I find something better. I do so love processes, though I’m always a little suspicious of those simplistic linear ones. Like this one.
So, really, where does “re-energizing” come from? How do you get it?
My first thought is people. Get enough of the right people and things get re-energized all by themselves as particular problems are addressed by people who seize upon those problems as opportunities, solve the problem in such a way that it forms a business, which has the energy flow (and cash flow) to sustain itself in our world. It is especially powerful if those same people talk to one another, cross-fertilizing and inspiring one another, which is one of the reasons I support Commander Bud’s BA-Meet Up.
For us to get more people, talented people, even brilliant people, we need some mojo, some buzz, some growth, something happening. We also need jobs for them and money to pay them with. Which means to get mo’ better people, we need a mo’ better industry, something larger than today, something that is growing, evolving, expanding, continuing to add value in new and unexpected ways. To do that, I think we need a bigger market base.
My thought here is that if we do what we are currently doing, only making it better around the margins, then our industry will grow at the same rate as our current customer base. While I’m sure many people are perfectly OK with this situation (it makes future growth predictions quite easy, a bonus if you happen to be a consultant), I am not. See above. My goal is to re-energize the industry and to do that I need more money and to get more money I have to have a bigger, more profitable industry in order to hire and pay for the creative breakthroughs that will form the foundation for the next generation of aviation.
So, I’m sitting and thinking. Maybe I have a beer in my hand. Worse things have happened. Maybe I can get a two-fer here. “Two-fer” is American for “two for one.” Engineers are fundamentally lazy; I’m an engineer; getting two results for a single effort appeals to me. Let me explain a bit.
First, is everyone familiar with the marketing pyramid? Essentially, it is a triangular figure with the vertex pointing up. At the very peak of the pyramid, in theory, sits Bill Gates. If your product or service is so expensive that Bill Gates is the only person who can afford it, then you are at the top of the pyramid. If everyone can afford it, then you are at the base of the pyramid. Moving down the pyramid from the peak, i.e., reducing the price of our product, increases the number of people who can afford it, increasing the number of potential customers. Simple, right? Business aviation is not quite at the very peak, obviously, but it is much closer to the peak than to the base. Another clue is that we already serve almost everyone in the upper part of the pyramid. To broaden our customer base we have to move down the pyramid a notch; we have to reduce costs so that more customers can afford our product. This one paragraph alone justifies my MBA, I think.
Second, it’s not like we are entirely bereft of smart, talented people right now, you know. Perhaps a nudge here and there might push us towards a virtuous cycle of innovation and cost reduction, which would allow us to bring in more smart, talented people who could create something else that reduces cost, broadening our base, increasing our industry cash flows, attracting still more smart, talented people, bootstrapping into a veritable aviation Renaissance.
So, cost. I think our biggest single issue is cost. Not where I thought I’d end up, really (I’m an airplane designer, not an economist). Be that as it may, lets follow this train of thought and see where it goes.
What does it mean to say that costs need to come down? There are a LOT of costs. I struggled through financial statement analysis, so I know. There are seven different kinds of drag (form, skin friction, interference, wave, leakage, excrescence, and induced), but probably thousands of different kinds of cost. OK, hundreds. I could probably name a dozen or so myself off the top of my head. There are design costs, certification costs, material costs, labor costs, maintenance costs, and overhead costs, to name a few.
I will argue that it costs WAY too much to design, certify, build, operate, and maintain heavy jet transports. Cost has to come out, and not by nibbling around the edge. We need integer multiple reductions. We have to find better ways of designing, certifying, etc, new airplanes. Much as I admire Gulfstream, I cannot believe that the G650 is the pinnacle of aviation development (or the 787, for that matter). Let me break some bad news. The spacers are eating our lunch. There are what? Ten new spacecraft under private development? Cost of launching to LEO will drop at least one order of magnitude, maybe two, possibly three. What are we in business aviation doing? Polishing decimal points. Yes, there are a lot of really good reasons we have the cost structure we have. That doesn't mean we can't find other really good reasons to have a different, lower cost structure.
Terry Drinkard is a Contract Structural Engineer based in Jacksonville, Florida whose interests and desire are being involved in cool developments around airplanes and in the aviation industry. He has held senior positions with Boeing and Gulfstream Aerospace and has years of experience at MROs designing structural repairs. Terry’s areas of specialty are aircraft design, development, manufacturing, maintenance, and modification; lean manufacturing; Six-sigma; worker-directed teams; project management; organization development and start-ups.
Terry welcomes your comments, questions or feedback. You may contact him via email@example.com