Report
Teaser, summary, work performed and final results
Periodic Reporting for period 1 - SHOGANAI (World´s first real-time solution for controlling airplane operating costs)
Teaser
With an average net margin of a mere 5.6% and considering that Airlines´ P&L is composed in average by 70% Direct Operating Costs (DOC) [fuel, ground handling, airport taxes, navigation taxes, crew], today airline companies must exercise more cost control than ever.However...
Summary
With an average net margin of a mere 5.6% and considering that Airlines´ P&L is composed in average by 70% Direct Operating Costs (DOC) [fuel, ground handling, airport taxes, navigation taxes, crew], today airline companies must exercise more cost control than ever.
However, the harsh reality is that airlines are not even able to know what the real direct operating costs of their airplanes are. Airlines still work with technologies and processes of the past century. This makes impossible for a company like Easyjet to analyze its +7M monthly expense items against actual incurred costs. So two out of five invoices from suppliers can’t be verified and are directly paid.
Taking into account that an airplane like an Airbus A320 has operating expenses of approximately €4.7M per year, and with estimated current overpayments in the industry of between 0.5% and 2.5%, the potential savings per plane are between 84K€ and 136K€ annually.
Our innovation, SHOGANAI, is the first solution in the market that installs a hardware device in the airplane to control its operating costs in real time and achieve such savings. This is a worldwide novelty and a huge business opportunity.
Our proprietary hardware connects to the data buses of the aircraft and automatically detects all those events directly related to operating costs. Our Cloud infrastructure receives, parses and stores all the transmitted raw operational data, verifies its reliability and calculates the different cost categories items. The airline’s finance and operational teams then have access to SHOGANAI’s real-time dashboards for cost monitoring and analyzing.
Simulated invoices are generated from these calculations, facilitating cost conciliation between suppliers and airlines.
In addition, to make the service secure, reliable, auditable and ultimately trusted, all data captured by our hardware is recorded in a blockchain ledger/registry. By leveraging blockchain technologies, SHOGANAI aims to become the trusted layer so that airlines and vendors/suppliers automatically conciliate invoices on the basis of smart contracts and real-time DOC data.
The ultimate goal of Airplane Solutions with the SME Instrument project is to transform its tested prototype//minimum viable product (MVP) into a commercial product, ready to be used by airlines worldwide.
Work performed
During the period covered the main results achieved are:
1.- The Shoganai SaaS platform has been completed successfully, and it’s been used in the pilots with airlines we are currently executing. Initially, it was planned to be finished at 4th month after SME phase 2 award (July 2018), but finally it has been completed by 11th month (February 2019) because we realized it has more sense to do it after finishing D2.3 ‘Blockchain DLT Deployed’ (January 2019)
2-The Shoganai Blockchain DLT has been deployed and completed successfully, and now, it’s part of the whole Shoganai SaaS platform (D2.1). Initially, it was planned to be finished at 8th month after SME phase 2 award (November 2018), but finally it has been completed by 10th month (January 2019) because we have even included more functionalities in the blockchain itself. The main one would be the calculation of all the DOC, for each flight, by using smart-contracts, and secondary, it would be the support of the integration with the rest of the Shoganai SaaS platform through up to 3 APIs (Arale, Aiko & Ayumi
3.- The installation certification project has been done for Boeing 737 Classic (instead of Airbus 320, as mentioned at the SME WP2.3 title, ‘Hardware Certification Process & Industrialization for A-320’). The reason is that Boeing 737 Classic has been the aircraft model used in our first pilot (from up to three planned) with Air Horizont (HAT), a European charter airline.
Apart from that minor detail, the certification process has been executed without any additional issues and has been completed successfully. Initially, D2.2 was planned to be finished at 6th month after SME phase 2 award (September 2018), but finally it has been completed by 12th month (March 2019), because the aircraft provided by Air Horizont was not available before October 2018.
4.- We are developing new commercial agreements based on: a) Fee for the use of our technology in their aircraft and b) Fee for using our E2E service, leading to different economic estimates.
Final results
Overpayments to suppliers are well known in the industry. Each airline manages to recover part of them, usually through manual, expensive and slow processes.
Recently more automated, software-based solutions have emerged. However, all of them are based on the exploitation of data from the ACARS system (Aircraft Communications Addressing and Reporting System). This system transmits to the ground the different events that happen during a flight (OOOI events—out of the gate, off the ground, on the ground, and into the gate).
However ACARS is a 50 year old unreliable RF technology. In average 17% of the transmitted messages simply don´t arrive to the destination. Moreover they´re not stored anywhere, so there´s no way to recover them. The use of outdated technologies is a legacy issue in the industry. Malaysia Airlines’s Flight 370’s disappearance7 in 2014 brought to public attention the limits of aircraft tracking, communication and flight recorders. Still today the aircraft has not been found. Similar problem had the Air France Flight 4478, crashed in the ocean and not found until 2 years later. SHOGANAI, on the contrary, doesn´t rely on ACARS or any other legacy system. Instead, it connects directly to the airplane data buses through proprietary hardware. This plug-n- play device monitors 100% of the operational-related events. ACARS messages cover just 60%, although just 45% can be ultimately processed. That´s why SHOGANAI offers double the accuracy of competing software-based solutions and in real-time.
Finally, our solution offers a cost competitive advantage over existing alternatives in the market. SHOGANAI charges a success fee when it produces results, when it recovers overpayments. This allows to avoid high upfront and license costs, which in turn facilitates shorter sales cycles.
Website & more info
More info: http://airplane.solutions/.