We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Check Writers' Offers

What's Your Topic?

Hire a Professional Writer Now

The input space is limited by 250 symbols

What's Your Deadline?

Choose 3 Hours or More.
2/4 steps

How Many Pages?

3/4 steps

Sign Up and Get Writers' Offers

"You must agree to out terms of services and privacy policy"
Get Offer

Safran in the propulsion & aerospace equipment

Paper type: Essay
Pages: 12 (2924 words)
Downloads: 15
Views: 289

Executive Summary

Safran is a key player in the propulsion & aerospace equipment, space & defense sectors, offering a variety of products & services to 2500 customers in 155 countries. In the following pages, we talk about the Safran Group & its activities in general and about its business partnerships in particular, focusing on their subsidiary Safran Helicopter Engines Asia’s (HEA) operations in the Philippines and their existing partnership with Airbus to promote Safran’s Support by Hour maintenance program. The Support by Hour is a premium revenue generating activity for Safran and a cost saving one for its customers but doesn’t seem to be working well in the Philippines, partly due to a lack of promotion effort from all parties involved (Safran and its partner Airbus) and partly due to cultural barriers.

In this report, we evaluate the fit of this existing partnership to the requirements of Safran considering various dimensions of partner selection, then we will issue recommendations with respect to this matter.

Since this paper is also based on a previous consulting experience, we were fortunate to get real insights through interviews and discussions with those actually facing this decision of partner re-evaluation.

We conclude by giving our recommendations and proposing solutions to better leverage the existing partnership and/or look at other potential partners who could prove more suitable for Safran HEA in the Philippines.

Section 1 – About the company, the SBH maintenance service and the challenges

Company profile

Safran is an international high technology group, operating in aircraft propulsion and equipment, space and defence markets with a global presence in 155 countries, with more than 92000 employees and sales of 21 billion euros in 2018. With its deep roots dating back to 1896 over dozens of industry consolidations, Safran was created as recently as 2005 by the merger of SNECMA (1945) & SAGEM (1925) pooling years of expertise in mechanical & precision equipment, rocket propulsion technologies & aero engine manufacturing. The current CEO of the group is Philippe Petitcolin heading 12 companies of which one is Safran Helicopter Engines, led by CEO Franck Saudo. It was found as Turbomeca by Polish engineer Joseph Szydlowski in 1938. Safran Helicopter Engines specializes in small & medium gas turbines for helicopters, ‘offering a complete, unrivaled range of engines, solid partnership with other engine makers & comprehensive support services.’

The company runs on the core values of safety, reliability, innovation and local support. Their value proposition of risk reduction through Safety Management Systems has been benchmarked gold standard in commercial aviation. SHE operates 13 sites around the world, has more than 18000 turbine engines in service and has supported 100 million flight hours to date. They offer a wide range of products from 500 to 3000 shaft horsepower, including rotorcraft turbines for helicopters, Turbojet engines for Missiles, drones & auxiliary power units and have committed to design & manufacturing excellence for 80 years. Every 9 seconds, a Safran powered helicopter takes off somewhere in the world. In addition to these products, they also offer a plethora of EngineLife services, created to support customers all along the life of their engine right from purchase till resale or end of life which encompasses training, consulting, technical publications, material & maintenance, technical expertise and cost control & availability. For the cost control & availability part of these services, SHE has a program called Support By the Hour (SBH) that offers support contracts for all customers, civil or military.

Support By the Hour program

Suppliers of manufacturing product equipment, aeronautics, defense & space companies, schools, universities, labs & authorities are some of the key partners of Safran HEA’s products and services. The SBH program is a comprehensive maintenance service which allows these civil and military clients to enjoy Direct OEM Support, cost & budget control, access to the Safran Network & Replacement pool, protection against financial and supply chain risks & enhances the residual value of their assets. The cost of SBH to the clients is calculated on the basis of their engine flight hours. It is available in 3 versions: SBH®5Star, SBH®Classic and SBH®M, each with different costs & offerings to best suit client needs depending on their fleet size & flight hours. It is important to note that Safran HEA breaks even through the sale of its products and makes most of its earnings through its services of which SBH is an important one.

Existing Challenge

Safran Helicopter Engines Asia (SHEA), one of the subsidiaries of Safran Helicopter Engines, covers 18 countries in south-east Asia & the Indian sub-continent. In the Philippines, they partnered with Airbus to make their services available to the customers & unlock the market together, utilizing Airbus’ size, agility & marketing capabilities. Even with the partnership, however, Safran’s SBH has 0% market penetration among small fleet operators in the Philippines.

There is no import of spare parts because of the taxes involved. In order to import, the operators need an Import License which requires them to present their financial statements which they are not willing to do. This is where Airbus comes in & does this job for them without them having to submit their financials. However, the Filipinos only want to deal with other Filipinos & do not easily trust everyone. Additionally, culture plays a hindering role because the helicopters’ operators aren’t very forward looking & do not have a mid or long term vision. They do not believe in the concept of insurance & paying upfront to protect against something that might never happen.

About the partner Airbus & their role

Airbus & Philippines have a long standing relationship from 40 years ago, since Philippine Airlines ordered the cornerstone A300B4 jetliner. Since then, Airbus has built relationships & industrial partnerships in the country. Local suppliers supply a wide range of equipment & parts for their aircraft, however, the helicopter engines are powered by Safran. Under their partnership with Safran HEA, Airbus provides maintenance of (Safran’s) Arriel 1 & 2 engines, customer support, on & off-site assistance among other things. However, it is important to note that Airbus also has its own Helicopter Care programs dedicated to the airframe. We explore & evaluate this partnership more in the coming sections. Our analysis will focus on the findings about the market & the company specific mechanisms to assess the fit of this partnership.

Safran partnered with Airbus to unlock the Filipino market and make its services available to the customers, especially the small fleet operators (SFO). Despite Airbus having around 40 years of experience in the said market, Safran’s CMC partnership with Airbus didn’t yield them good results. To understand this outcome, we need to understand market environment, customers needs and expectations and commercial structure of the organisation in the Philippines.

Section 2 – Context Analysis

Market Environment

The Filipino market is a large market but with no SBH penetration, hence offering a massive growth potential for SBH. Safran exists through its partner, i.e. Airbus as a Certified Maintenance Center and its responsible for all the sales, marketing and maintenance issues in the Filipino market. A Customer Support Manager (CSM) from Safran HEA supports Airbus in its operations and even helps to pay visits to some of the prioritized customers.

Culturally, filipinos are not keen on paying in advance for the services and they prefer to deal with filipinos. Customs result in high lead time, making Service by Hour (SBH) lose one of its key value proposition. During election years, flying hours tend to increase substantially leading to need of operational helicopters all the time.

The cultural fit between Safran HEA’s partner and the operators seems to be of most importance in the Filipino market.

Customer Needs and Expectations

There is no urgency for spare parts due to factors such as low flying hours, ease to borrow helicopters from other operators, use of backup helicopters by some of the operators. Operators in Philippines are more concerned about airframe problems rather than the engine’s. In addition to this, the entry ticket and customer’s wrong perception about an existing minimum number of flying hours, to make SBH purchase relevant, strongly lowers the demand of SBH among the operators.

Hence, lack of fit of SBH service or wrong perception among customer weakens the value proposition. Other services, however, such as Health Monitoring seems to be better suited and more valued.

Commercial structure of the organisation in Philippines

The obligation to cover the same models of helicopters into multiple SBH contracts is a major obstacle for some operators. Airbus lack of knowledge about its negotiation levers and levels especially when customers ask for discount leads to non-closure of the lead.

The joint selling between Airbus and Safran is complicated. Safran directly deals with the small fleet owner (SFO) with at least 4 helicopters. This approach leads to frictions between the partners. The training to Aribus about SBH and how to sell SBH needs to be improved according to Airbus.

Setting up a Certified Maintenance Center (CMC) is a good idea. However, the partnership between Safran and the CMC, i.e. Airbus, should be improved on several aspects.

Digital Transformation

After interviewing them, almost all the operators highly appreciate the idea of having digital records, digital planning mechanisms, parts ordering system etc. The regulation requires that some aspects of the fleet management should be logged in hard copy – Airbus has a “Fleet Keeper” tool that is accepted by the Aviation Regulator and takes advantage from digital capabilities.

Operators feel that digital transformation is inevitable, but they are still apprehensive.

Interviews’ key findings : focus on the partnership

As part of the ASP project, some interviews have been conducted with the operators and Airbus. The partnership aspect was a critical topic of these interviews.

From the perception of Airbus and the operators, the main findings are:

Airbus frequently asked Safran to adapt its service to the local market needs and culture;

Airbus is complaining about Safran not respecting the terms of the partnership by engaging themselves with the customers without even inviting Airbus sales representatives;

Airbus is asking for more trainings to help them understand their service and how to sell it;

On the other hand, Airbus seems to have its own agenda of selling its own “Parts by The Hour” service: the salespersons have their own objectives to achieve. Thus, selling the SBH was not very important to them;

Several operators want to deal with people who understand their ways of working and culture. Some of them clearly said that they would like to deal with Filipinos.

Section 3 – Partnership Assessment and future possibilities

Assessment of the current partnership

Based on the key findings from the interviews, the partnership between Safran et Airbus is not-so-golden.

When Safran decided to have a partnership, the idea was to find a partner who can represent it in front of its customers in the Filipinos market. Safran expected that the partner had solid insights about local market environment and consumer needs as well as a good understanding of the SBH service. To better convince the local consumers, the partner needed also to have a great marketing capability supported by its experienced local salesforce and a well-developed network with relevant business KOLs. Safran supposed the partner to be motivated enough to work efficiently with it, sharing the same strategy objective and contributing to the mutual value creation.

Airbus, as the partner finally chosen by Safran, was responsible for selling and maintaining Safran’s engines and service. While it seemed not willing to help Safran increase SBH market penetration, which have invoked some trust issues that weakened their partnership.

The following challenges could explain this unsatisfying performance:

Lack of a clear understanding of SBH offer among the Airbus sales force

Though Safran’s CSM had really visited Airbus several times to explain the key features of SBH and show them how to sell it to the potential customers, it is observed upon discussion with the salesforce that they didn’t even have a clear understanding about the basic guiding principles of the SBH program. For example, they had no idea how in different ways SBH could contribute to their MRO needs better. They even thought that SBH could be a viable option for operators only if the minimum flying hours had been completed, which was absolutely wrong. It is reasonable to suspect that Safran did not present the SBH well to Airbus or it didn’t provide enough support. While on the other hand, it signifies also that salesforce from Airbus may lacks basic competence to understand SBH and even motivation to ask for more support.

Lack of competence and motivation to be an efficient partner

With the ways to bypass customs or help decrease the customs delays, some partners are capable to help reduce the time spent in custom clearances and dispatches. Whereas, on Airbus’s side, there were no such initiatives taken to support SBH. In fact, a few large conglomerate operators testified that they had to figure out themselves how to reduce the customs time. Furthermore, it is shown that the local salesforce employed by Airbus relied heavily on their personal relationships rather than aggressively expanding the market nor pushing the SBH service to a wider consumers group, which is seen as a sign of incompetence to be an effective sales partner. One reason for this negative attitude is that Airbus’s salesforce had few belief in selling any “By the Hour” program. Even if the operators agreed that Airbus’s airframe had the most maintenance requirements, Airbus didn’t succeed in making its own “By the Hour” program well-penetrated in the Filipino market. Moreover, according the salesforce, SBH service was not perfectly adapted to the specific needs of customers in Philippines. As a result, they were not even convinced by themselves to help Safran grow the market. Worse still, the undefined sales objective measured by detailed KPI metrics and the absence of performance rewards have given the salesforce an excuse to keep tepid in the marketing process.

Lack of trust on the partnership

In principle, with a CMC, Safran was not supposed to meet operators directly. While in reality, having considered Airbus’s sales capability, Safren attempted to meet and sell SBH directly to prospects. For Safran, it was a way to overcome sales barrier from Airbus side. But for Airbus, this action was seen as an intrusion in the terms of contracts, which aimed at avoiding giving them commission or margin over the SBH sale. In addition, with a unclear understanding of range for negotiation, it was difficult for Airbus to negotiate a potential deal, because that depended heavily on Safran’s attitude, which was perceived by Airbus as a “not-so-pleasant” experience. They felt distrusted thereby becoming less motivated to contribute to sales growth. Issues like this had a very negative impact on the commercial motive, which was proven by the 0% SBH penetration in the Filipino market.

Our recommendations

Considering the market’s cultural characteristics, and following the interviews and the overall partnership assessment, Safran’s best option is to find a new local partner. The objective from this move is to build a fresh and healthy relationship, optimize SBH’ sales potential, then clarify and strengthen the accountability around SBH governance.

The new CMC partner should have:

  • A high reputation in the Filipino market,
  • A high capability of marketing, sales and business development,
  • A local logistic platform with ready-to-install spare parts,

Perfect internal processes to best serve the customers

Safran HEA is also THE key player for a successful partnership. Thus, it has to better serve its partner so that the latter can better serve the operators and convince them to enroll into the SBH program. Here are some key directions, as they are inspired from the learnings that we got from Airbus interview:

Provide the partner with regular trainings about the SBH;

Assist the partner at the beginning to help him sell the service (for 2 or 3 customers);

Define clear sales objectives with the right KPIs. The partner’s revenues from SBH sales should be linked to these metrics;

Listen to the partners feedback about SBH and, if necessary and profitable, adapt it depending to the market needs;

Define a clear governance structure around the SBH and the partner’s role as follow:

  • Activible


Finally, as for any partnership contract, each party will deliver its performance according to the (financial) value that will be generated by the contract. Henceforth, if Safran HEA’ strategy is to enroll into SBH all the 54 Small Fleet Operators (SFO) (at least in Manila area), then the incentives to the partnership should go accordingly. This is going to be the right path, knowing also that this market is free from any relevant direct competition and that the SFOs are major influencer in the market and can allow Safran HEA to even conquer the Medium and Large Fleet Operators (military, police, Oil and gas companies…etc).


The initial idea of penetrating the Filipino market through a partnership was a good one. However, the execution (partner selection and partnership management) was poor and it has been translated by 0% penetration rate all along the partnership. Based on the market context and needs as well as the (bad) weight of the existing partnership, it is better for Safran to go for a new partner, building on the learnings of the previous experience. The partner should not only be at the top in terms of its capabilities, but Safran should also clarify the terms of the partnership and better listen to its partner and the customers. These should be the right requirement for a successful partnership.

Cite this essay

Safran in the propulsion & aerospace equipment. (2019, Nov 30). Retrieved from https://studymoose.com/safran-in-the-propulsion-aerospace-equipment-essay

How to Avoid Plagiarism
  • Use multiple resourses when assembling your essay
  • Use Plagiarism Checker to double check your essay
  • Get help from professional writers when not sure you can do it yourself
  • Do not copy and paste free to download essays
Get plagiarism free essay

Not Finding What You Need?

Search for essay samples now


Your Answer is very helpful for Us
Thank you a lot!