According to the December 2011 issue of MRO Management magazine (p. 56), Boeing plans to exploit their service and parts data and use it as a profit driver. Not surprisingly, Boeing is trying to position this as a good thing for the airlines. Let’s see if we can decipher what Boeing actually said. 

“One of the criticisms of GoldCare was that Boeing was trying to lock in the aftermarket services traditionally competed for by third-party MROs. Joe Brummitt, Director, Material Management Services [at Boeing], has two responses to this. First, he says, the airframe OEMs have increasingly decided to go to a single source for components, as multiple suppliers inevitably lead to higher aircraft purchase prices.”

In other words, when Boeing created GoldCare they limited access to technical information unless you were a GoldCare customer. In response, lots of airlines and MROs complained because it seemed to make Boeing the only player capable of working on Boeing aircraft, forcing others out of the maintenance business. When asked about monopolizing maintenance data and services, Boeing changes the topic to say that they’ve switched to single sourcing components. They claim this will decrease the cost of aircraft but what will it do to the cost of spare parts and inventory?

“[Brummitt] adds that a lot of OEMs have failed to recognise the commercial value of their intellectual property rights and have let them ‘leak out’ to be exploited by other people – a situation that is now changing."

In this one sentence, Boeing is clearly stating their intent to maximize profits by limiting access to aircraft service and parts information. (I.e., when it comes to maintenance data Boeing will prevent it from “leaking out,” which might harm Boeing’s commercial value.) Since restricting maintenance information will seriously impact the airlines, Boeing must have a good reason for doing this but nothing compelling comes out in the article. The most obvious reason is to make it too difficult and expensive for airlines and MROs to perform their own maintenance, so only Boeing can fix the airplanes. This may be one of the ways that Boeing plans to ‘exploit’ that so-called intellectual property. 

According to MRO Management magazine, “The argument also goes that no one knows the aircraft better than the OEM does, significantly reducing the risk of new aircraft introduction surprises. The OEM is also the only source of new aircraft technical information and is best placed to apply lessons learnt supporting the entire world fleet. Being involved in revisions to an airline’s maintenance programme further reduces risk by ensuring regulatory authority acceptance.”

The airlines we talk to claim they know their aircraft much better than Boeing does. Boeing builds them, but the airlines are operating them all day (and night). That’s why airlines hold the operating certificate. That’s why airlines are responsible for safety. That’s why airlines hold the profit-loss of flight operations, aircraft maintenance and parts inventory. That’s why airlines are the ones who must answer to the FAA, their shareholders, their employees and the general public for how well they meet those responsibilities. And the airlines we talk to believe they get the greatest value when they have choices about who, where, when and how their aircraft get serviced.

The article goes on to talk about Boeing’s resistance to PMA, “not from a wish to diminish a free market,” Brummitt says. The idea that Boeing would expect us to believe that statement is ridiculous. The article also describes Boeing’s ability to improve spare parts pooling, and how they have developed IT systems that can fix the airline’s inventory. “[Brummit] notes that airlines with larger purchasing departments, especially in the US, are far more reluctant to move to these newer business models with the result that many are holding too much inventory at a considerable cost to their companies.” This looks like a second way for Boeing to ‘exploit’ that so-called intellectual property. They plan to kill PMA and own the parts channel by restricting critical service and parts information. Combine that with single source parts, and their real objectives become clear: increased parts revenue and skyrocketing profits for Boeing.

The opening sentence on a Boeing web page says the following, “Boeing Commercial Airplanes, a business unit of The Boeing Company, is committed to being the leader in commercial aviation by offering airplanes and services that deliver superior design, efficiency and value to customers around the world.” I understand the meaning of superior design, Boeing does build nice airplanes, but it’s the airlines that determine if they’re receiving efficiency and value (not Boeing). And while most companies exist to make profits, how those profits are made says a lot about a company.

Since Boeing admits that airlines aren’t buying into their schemes, especially with regard to inventory, maybe the airlines understand that the short-term savings that have been promised will quickly turn into long-term costs once Boeing restricts access to technical information.

Maybe I’m wrong. Maybe Boeing really is a good partner to their airline customers, as well as the MROs and other third party vendors that help keep Boeing airplanes flying safely. But if so, I’m left wondering what else Boeing might mean when they threaten to “recognise the commercial value of their intellectual property rights.” Whatever it means, it doesn’t sound very profitable for the airlines does it?