Universität zu Köln

Wirths, Oliver ORCID: 0000-0003-4036-4979 (2019). Business Model Innovation in the Aerospace Industry: Strategic Options for Maintenance, Repair, and Overhaul Firms. PhD thesis, Universität zu Köln.

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Abstract

Aircraft Maintenance, Repair, and Overhaul (MRO) is a $76bn industry in which established service firms such as Lufthansa Technik, Delta Tech Ops, and AFI KLM Engineering & Maintenance come under increasing competitive pressure by aircraft, engine, and system manufacturers such as Rolls-Royce, Airbus, and Thales. Increasing price pressure on asset sales and the opportunity to generate profitable service-based revenue streams in the aftermarket makes servitization an imperative for manufacturers, who pursue this type of Business Model Innovation (BMI) aggressively. Traditional MRO service firms do not only play a vital role for shareholders and employees but also let airlines benefit from competition in a contracting MRO market that is in danger of being monopolized. Furthermore, MRO services represent 15-18% of airlines’ direct operating costs (compared to 8% for aircraft financing) and are paramount to ensure safe, reliable, and punctual airline operations. This study explores how MROs can successfully innovate their business model when faced with competition from manufacturers that offer product-service bundles to their customers. While academia has made significant advancements on how manufacturers can successfully add services to their business model, we know very little about how traditional service firms can navigate in such a servitized environment. By conducting three case studies based on 50 in-depth interviews with MRO and airline managers, I identify a portfolio of four business model configurations that MROs can employ to offer solutions and create value in solution networks. My findings indicate that MROs can use a contingency-based approach to innovate their business model through solution-specific and relational dynamic capabilities. When competing with manufacturers, MROs can gain a competitive advantage by leveraging the unique elements of their service-based business model. However, when alliancing is the more promising option, MROs need to innovate their business model to successfully add and appropriate value in these complex, coopetitive relationships. My intention is to make three academic contributions: The principal contribution is clarifying the role of pure service firms in servitization research and the development of strategic options for MROs to cope with servitization practices of manufacturers through business model innovation. Second, this study takes a first step in unveiling the “dark side of servitization”, uncovering the currently obscure less favorable aspects of this phenomenon. Third, I outline business models of MRO firms that have been overlooked in the efforts of describing changing airlines’ and manufacturers’ business models, even though they represent a central link in the supply chain. This study also claims to make three managerial contributions: first, managers of MROs can make use of the findings to drive the innovation of their business model and ensure long-term competitiveness when faced with servitization. Second, the results inform airline managers about significant environmental changes in the MRO market relevant for technical airline operations, make-or-buy decisions, and MRO procurement. Third, aerospace manufacturers can benefit from the insights developed in this work to either build a positional advantage against MROs or rely on these specialized players to complement their service offers.

Item Type:	Thesis (PhD thesis)
Creators:	Creators Email ORCID ORCID Put Code Wirths, Oliver Oliver.Wirths@gmail.com orcid.org/0000-0003-4036-4979 UNSPECIFIED
URN:	urn:nbn:de:hbz:38-101006
Date:	2 October 2019
Language:	English
Faculty:	Faculty of Management, Economy and Social Sciences
Divisions:	Faculty of Management, Economics and Social Sciences > Business Administration > Supply Chain Management > Professorship for Business Policy and Logistics
Subjects:	Economics Commerce, communications, transport
Uncontrolled Keywords:	Keywords Language Servitization English Business Model Innovation English Dynamic Capabilities English Traditional Service Firm English Dark Side English Aerospace English MRO English Maintenance, Repair, Overhaul English Airline English
Date of oral exam:	2 October 2019
Referee:	Name Academic Title Delfmann, Werner Prof. Dr. Dr. hc Reinartz, Werner Prof. Fritze, Martin Jun. Prof. Dr.
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/10100