Developing the aftermarket
The development of TotalCare packages in civil aerospace is
representative of the focus on aftermarket development across the
Group. In particular, we are developing a comprehensive and
integrated support capability, from data collection and analysis to
repair and overhaul. Similar aftermarket offerings are being
introduced in all of our business sectors: Mission Ready Management
Solutions (MRMS) in the defence sector; and Long-Term Service
Agreements in the marine and energy sectors.
TotalCare is a generic name for an integrated menu of aftermarket
services offered to our civil aerospace customers. We offer a
long-term rate per hour engine maintenance service and take full
responsibility for the provision of aftermarket services. The
service is tailored for each operator and might include logistics,
spare engines, accessories and powerplant and engineering support.
Our growing installed base of civil engines has created an embedded
value in the form of future spare parts sales which is worth
US$28.5 billion, based on the fleet size at the end of 2003. In
addition, there is an opportunity in the form of aftermarket
services, a significant proportion of which is being secured in the
form of TotalCare packages. These now cover 35 per cent of the
flying hours of the existing Rolls-Royce fleet and 45
per cent of new engines delivered. To date, TotalCare business
worth US$15 billion has been contracted for.
These long-term agreements average 12 years and represent secure
Their market acceptance is widespread and growing. In the airlines
sector they cover 2,800 engines, with a high proportion in the
latest generation of engines. In the corporate sector (where our
service name is CorporateCare) they cover 660 engines, a 50 per
cent increase over the past year.
These contracts provide a long-term revenue stream to
Rolls-Royce, based upon hours flown. They strengthen
our relationship with customers, who have been delighted with the
results and predictability of TotalCare. Our product knowledge and
experience mean that the risk we assume is lower than the risk we
remove from the operator. The opportunities for us to provide
additional services are significant.
Data and knowledge management are at the heart of our TotalCare
offerings. We have invested in software called Service Data Manager
which allows us to monitor the fleet and capture data on a real
time basis. We have more operational data about the behaviour of
our products in service than anyone else and this enables us to
offer our customers lower cost solutions which keep engines flying
longer. It also enables us to take a pro-active and predictive
approach to maintenance.
aeromanager.com is our web portal, with 268 airline and overhaul
shop customers around the world. In Aeromanager, customers can look
at repair status; view technical reports on line; book repair and
overhaul slots; determine work scope; view the state of the engine
to make component scrap/repair decisions; see any applicable engine
upgrades; and order lease engines and consumables.
To develop the tools, processes and services to complement the
TotalCare offering, we established Data Systems & Solutions in
1999. This 50/50 joint venture between Rolls-Royce and
Science Applications International Corporation developed the
software for the Service Data Manager system; built and maintains
Aeromanager; and monitors 3,000 engines in real time in support of
the civil business.
Investment in engine health monitoring technology avoids unplanned
events and provides real benefit for the customer in terms of
maintaining schedules. For Rolls-Royce an unplanned
engine removal can be a significant logistics cost.
We have also enhanced our diagnostic tools, making interpretation
easier as data is transformed to actionable information. We have
increased efficiency through automation. One performance engineer
can now manage over 250 engines – a fivefold improvement in five
We set out to develop our repair and overhaul network in the mid
1990s. At that time we overhauled less than 25 per cent of the
Rolls-Royce civil fleet. Today that figure stands at
over 60 per cent and it is still growing.
Our investments in capability and the integrated way we have
approached our service offering have enabled us to optimise value
both for ourselves and for our customers. As a result the TotalCare
business is growing rapidly.
The trends within the civil market are evident in all our other
business sectors and we are able to share best practice across the
Group to further exploit our capability.
|The installed base of 10,450 civil engines creates a spare parts aftermarket revenue opportunity of US$28.5 billion.
A growing proportion of aftermarket is being secured by TotalCare packages.