CorporateCare Enhanced, Technology and Digital Advancements from Rolls-Royce

Tony Kioussis (01:02):

Joining me today to discuss the company’s CorporateCare Hourly Cost Maintenance Program among other topics is Andy Robinson, senior vice president services and customer support for Rolls-Royce, North America. Welcome Andy, and let’s start by discussing the importance of an engine program. What do you see as the true value of CorporateCare?

Andy Robinson (01:25):

In terms of the importance of CorporateCare, I would say not many people consider CorporateCare and these aftermarket programs as a way to have predictability of budget. You know what the hourly rate is, and so you can plan accordingly. And also many people focus on the increased asset value, which CorporateCare bills bring. What we’ve done in Rolls-Royce is we’ve talked to a lot of customers and we’ve talked to a lot of OEMs and asked, “Why do people buy business jets?” And understanding that has helped us develop a service that is tailored for business aviation.

Andy Robinson (02:00):

So, the answer typically is, business jets are a time machine and that people buy them to be more productive themselves. Speed is very important and speed of response is important. So over and above the budget protection, and the asset value benefits, we’ve developed in Rolls-Royce a global network of teams and capability that is focused purely on responding as quickly as possible to our customers, if they should have any problems so that they truly have a time machine.

Andy Robinson (02:32):

We are purely focused on responding quickly, so that we can get our customers in the air, and to meet their flights. And to do that over the past few years, we’ve put in place a network of authorized service centers that can work on our behalf. We have over 75 physical sites around the world that can work on Rolls-Royce products for us. We have spare parts located in nine stores around the world. We have over 150 lease engines that are located around the world. And we have some specialists technicians, we call them On-Wing Services, and we have over 50 On-Wing Services technicians located around the world. So, we coordinate all of that through our 24/7 operations room, we call it Availability Center, because it is focused on aircraft availability and our targets are extremely ambitious, but we’re looking to rescue an aircraft within 24 hours, and have an averted miss trip performance of a hundred percent.

Andy Robinson (03:34):

And what that means is, if a customer has a problem with their aircraft, we will always be able 100% of the time to get that aircraft ready for its next plan trip. So it’s a very ambitious target, 100% is very difficult to achieve. We are very close to it right now. I think it’s industry leading performance is over 98%, 99%. So we’re very close and we are clearing any AOG within 24 hours. So to me, having that as a backstop to the program, and a program that we reduces and provides predictable costs, increases aircraft asset value, has the ability to rescue your aircraft anywhere in the world, having a program that’s fully transferable at the time of aircraft sale. So you actually do realize additional value with it. It can transform onto the next customer, we think is a big advantage of CorporateCare.

Andy Robinson (04:27):

And I guess the other advantage with our program is we don’t have any caps to our exposure. We don’t have any areas that are excluded. So we cover corrosion, we cover erosion. If you’ve paid in for example, $500,000 into the program, and you have a $1 million event, Rolls-Royce covers the entire $1 million event. There’s no top-up, there’s no increasing rates. So it’s very predictable, much of the risk, in fact all of the risk basically for engine maintenance cost transfers to Rolls-Royce. There’s lots of benefits in the programs obviously.

Tony Kioussis (05:00):

What led Rolls-Royce to upgrade CorporateCare to CorporateCare Enhanced?

Andy Robinson (05:07):

We have what’s called a Corporate Customer Council, we call it C3, it’s how it’s known in the industry. That Corporate Customer Council meets twice a year, and we have some very well-respected customers that join us in those meetings. So there’s around 25 to 30 customers at each meeting, and we spend a number of days together brainstorming what Rolls-Royce could do to improve the customer’s experience. What services do they want, what capabilities do they want?

Andy Robinson (05:37):

And at one of those events, the customers turn to us and said that, “CorporateCare is great, but no one looks after the nacelle. Now the nacelle is an expensive… I think it’s around $5 million worth of equipment that bolts onto the outside of an engine. It’s a thrust reverser, it’s the inlet, it’s the towels and it’s the apron. That’s basically the outside of the engine as you see it, when you look on the aircraft.

Andy Robinson (06:01):

The customers told us that no one covers that, and it does cause them significant cost, and it does cause them significant aircraft downtime when there are issues with those components. So we were also told that… And it was true, I was told this when I first came into business aviation, that CorporateCare powers different levels of coverage depending on the aircraft type. So what we decided to do was to basically make CorporateCare the same for every engine program, and to fill in any gaps in our coverage, such that you truly only had one bill for the engine and where we do provide the nacelle and we don’t provide the nacelle on all aircraft types, but where we do, then we also cover them this out and we provide the same level of coverage for the nacelle as we do for the engine.

Andy Robinson (06:49):

So we got that message loud and clear from our customers, and it’s effectively Rolls-Royce provided, Rolls-Royce will cover it. And that was the project that we put in place. And I have a service development team that works these type of issues and capabilities. And then we worked, it probably took us two years to do, because there was a lot of engineering work that needed to be done to make sure all the nacelle components is favorable and available to get those components in our global stalls so that we can provide the same level of support. And we tested the market with our customers again at C3, in terms of pricing. We have had an overwhelming response. As of today, we are closing in on our 510th contract, which given that we only launched the program January, 2019, is an excellent effort.

Andy Robinson (07:40):

And it shows that it is what the market wanted. I can give a good example of the benefits of CorporateCare and CorporateCare Enhanced. I saw today a customer who just had his thrust reversers repaired and it was just North of $900,000. If it had been on CorporateCare Enhanced, that would have been covered by us. And while the thrust reversers were in maintenance, we have thrust reversers, we could have installed as lease unit. So, there was clear benefit right there. The aircraft could have been available for it to fly, the cost would have been born by Rolls-Royce.

Tony Kioussis (08:13):

The thing I find interesting about Hourly Cost Maintenance Programs and something people sometimes forget is that in addition to the programs direct impact to the assets value, is the value CorporateCare provides directly to the aircraft owner in terms of reduced days on market and resale and even more advantageous financing terms at times. Let’s talk a bit about technology and digital advancements made by Rolls-Royce in 2020, and what the industry should expect to see in 2021. Let’s discuss electronic Engine Health Monitoring, specifically how it works and why is it important?

Andy Robinson (08:54):

Engine Health Monitoring is extremely important. Rolls-Royce has got a long history, not only in business aviation, but in the airline world. And we’ve pioneered Engine Health Monitoring in the airline world done actually on nuclear submarines, [inaudible 00:09:08] the control systems for nuclear submarines use a similar Engine Health Monitoring capability. So we’ve got many, many years in this space and it’s extremely important, particularly if we can get the data in a timely manner. So we can track engine speeds, temperatures, pressures, vibration, remotely. And if we see a step change or a change in any of those parameters, we can analyze it and we can respond accordingly. And many times we can avoid an event that can disrupt a customer’s operation. So on the newer aircraft, the Gulfstream 650 is an example, we get real time data and we’ve actually seen a trend on an aircraft and deployed people with parts to the aircraft that have been there ready for when it arrives.

Andy Robinson (09:55):

So you’re able to avoid any type of disruption. What we’re very excited about, particularly in this year, and next is with the introduction of the Pearl engines. Pearl 15 and the Pearl 700, we’ve developed what we call an Engine Vibration Health Monitoring unit. And this unit is a internet of things developed tool that is far more capable than anything we’ve had before. And it can monitor over 10,000 different parameters, and with the right analytics capabilities, you can actually even monitor the accessories on an engine. So historically, when I talked about Engine Health Monitoring before, I mentioned temperatures, pressures, speeds, and vibration, that is all the insides of an engine. That’s looking at performance of your blades and vanes with the Engine Vibration Health Monitoring unit, we can now look at the performance of, for example, a fuel unit. We can see if that fuel unit is starting to be slow to respond or the [torque molten 00:10:57] needs more voltage than it did before to move.

Andy Robinson (11:00):

And when we can see that, then we can predict that this unit is starting to get tired. We should plan to remove it now, before it causes an event. And so you can potentially, as this develops eliminate any and all disruption on an aircraft through Engine Vibration Health Monitoring. So it’s a very exciting place for us. And we’re working with OEMs and companies to find ways to get the data and get as much complete data as we can as quickly as we can, so we can monitor the fleet.

Andy Robinson (11:32):

And one of the big advantages for Rolls-Royce of course is that, we have over 70% of the fleet on CorporateCare and Engine Health Monitoring is part of CorporateCare. And so we can look at the fleet and look at the fleet trends and look and see how engines compare to other engines in the fleet and how engines compare to the design spec. So we can actually see how it’s performing, how it’s lasting in service and any potential issues that may be there with the Pearl engine and the Energy Vibration Health monitoring unit. I think we’ve got a lead on the market. It’s a key part of what we call our IntelligentEngine. And the IntelligentEngine is a concept where we have digital twin of the engine in house, and we can compare the engine performance against its digital twin and see which areas are slowing down deteriorating in any way.

Tony Kioussis (12:24):

Another area where we’re seeing technological advancement coming into play is in virtual training. I suspect the pandemic help accelerate progress in this area. How does this approach to training improve your customer support?

Andy Robinson (12:39):

We did actually launch virtual reality training on our BR725 at the middle of this year. We’d actually been working with our C3 members over the past year or so and developing its capability. And the beauty of virtual reality training, and we currently offer it on the BR725, which is our engine on the G650 is that with the right equipment, and we can ship that equipment to a customer or service center and perform the training from our home base, and in this case, our trained in schools in Indianapolis. So our training on Indianapolis will be virtually with technicians, for example, in Dubai, and we can give them the full course. And the course is very, very realistic. You immerse yourself into the environment. You can take parts off the engine, you can rotate the engine, you can perform maintenance on the engine, and it’s all done remotely effectively from your living room.

Andy Robinson (13:36):

So it’s been a fantastic help for us during the pandemic, obviously, while we’ve got constraints on travel, but it also helps our customers, because they can do more training, and sometimes it’s expensive to send people to the training school just the travel and the hotel costs alone so that can be savings for our customer. And as the technology improves, their experience improves. We are very committed to virtual reality training. It’s not going to replace all training, but it’s something that we are convinced brings significant value.

Andy Robinson (14:08):

The feedback we’ve had from the customers that trialed it and have since completed the training, it’s been an incredibly positive. So we’re now looking at developing a new course on troubleshooting. So it will be immersive within the cockpit of an aircraft. And we would go through troubleshooting training using this technology and we’re looking at also introducing other engine types.

Andy Robinson (14:32):

It’s something that came out during the pandemic. And I’d love to say we were able to develop it in that timeframe, but it’s something we have been working on. The benefits of it certainly showed itself during these troubling times with COVID and the working from home type environment. And of course, it’s in our interest, in everyone’s interest to have really well-trained technicians working on our products. So, it’s a very important aspect of our customer support.

Tony Kioussis (14:58):

An area that has received much attention this past year and rightfully so is sustainable aviation fuel. I know that aircraft engines have already been proven to operate using blended sustainable aviation fuels. Where does a Rolls-Royce stand in this initiative?

Andy Robinson (15:16):

Pioneering the power that matters is one of our vision statements. And we are committed to having a carbon neutral environment by 2050. So, sustainable aviation fuel, electrification, hybrid power is something that we’re very much focused on. We are very proud to be able to say that all of our engines today, all about business aviation engines on our airline engines can run on a 50% blend of kerosene and SAF. And our newer engines, we believe can run on 100% of sustainable aviation fuel. And we’re doing testing to prove that. It’s pretty much an area of focus for us. We are working with a number of oil and gas companies to help develop more sustainable aviation fuel processes and increase the volumes available. We’re even exploring if a small nuclear reactor could help power the synthetic fuel plants. It’s something that we all very much focused on.

Andy Robinson (16:12):

Another way that of course can help with this is in engine design. And so we know with the newer technologies and newer materials that are available for Pearl 700 engine, which is our latest and is in flight test right now with the Gulfstream G700. That is a much lighter engine. It has a thrust-to-weight ratio improvement of 12%, with an 8% takeoff thrust increase compared to the BL725. The engine is lighter and can provide more thrust. So which obviously means it can run cooler, and when it runs cooler, it’s burning less fuel, and less fuel means benefits the environment.

Andy Robinson (16:49):

So there’s a number of areas that we’re looking at. One is obviously technology on the existing engine types. One is increasing the availability of sustainable aviation fuels, alternative fuels should say. And another area that we’re exploring is how through CorporateCare we can help customers to become carbon neutral. And that’s something that our services development team are looking at and something that hopefully we’ll be able to talk about in more detail in the not too distant future.

Tony Kioussis (17:17):

What else would you want people to know about Rolls-Royce’s plans and capabilities as they pertain to the business in general aviation sectors of the industry?

Andy Robinson (17:26):

From a services perspective with our C3 partners, we are very much focused on continually improving the customer experience. What we’ve found is that having service centers all around the world and that physical capability is one thing, but digital is extremely powerful. So we’re looking at digital solutions that can help simplify our customer’s experience. We are right now developing a brand new customer portal for our business aviation customers. And we hope to launch that early next year. This year we launched a new Technical Publications platform which has been given great reviews by the customers that have used it so far. It’s much more modern, much more interactive, a lot of hyperlinks videos, pictures, et cetera. So it’s a much more customer friendly experience than what we’ve had in the past.

Andy Robinson (18:17):

We’re also looking at different services that we can offer. We’ve looked at pre-buy services services. We’re looking at flyaway kits, we’re looking at a number of things that we can offer. And we’ll continue to work close with our Corporate Customer Council. We’re looking to have a net zero source of power by 2050. And through that, we’re looking at electrification. So, we believe there will be a hybrid electric aircraft in the not too distant future. And we’ve got an M250 engine, that we’ve been using in development, and we’ve managed to [inaudible 00:18:53] to an aircraft with primarily electric hybrid power.

Andy Robinson (18:59):

And maybe you’ve seen the pictures at some very cool looking aircraft, but we’re also working to break the world speed record with an electric aircraft. A zero emission electric aircraft that we’re targeting to fly it over 300 miles per hour. And we’ve completed quite a number of testing and ground testing predominantly, and where we’re looking to fly that sometime next year with our own pilot, who’s pioneering that project. So, electrification is a definitely an area for us to explore, it’s definitely an area that we’ve put a lot of focus in. I think it will probably come in a smaller aircraft. Initially, it will be a little while before we can see full electric on the larger platforms with the distances and speeds that they fly, but we definitely see a market for electric aircraft.

Andy Robinson (19:44):

And then the other area that we’re looking at is Supersonic. So business aviation particularly is a market that would be interested in Supersonics. We’re working very closely with Boom. I was fortunate enough to be at the Boom launch of their XB-1 demonstrator a couple of months ago in Denver. And we’re working with them on engines for their own virtual aircraft, which will be a 50 seater that can travel over two times the speed of sound, similar to Concord, in its looks, but the Concord got it speed by having afterburners on the engines, it was very noisy ruined a significant amount of fuel. So it was an expensive aircraft to operate. But the engines that we’re looking to develop with Overture will be much more efficient, will not use the afterburner. The aircraft is looking to maximize the use of carbon fiber. So it’s a very interesting area for us that we’re very excited about.

Tony Kioussis (20:38):

This has been another asset insight podcast covering the aircraft ownership life cycle. Please visit our ever-growing podcast library at assetinsightpodcast.com and select from any number of topics discussed with business aviation industry experts. This is Tony Kioussis and as always, thank you for listening.