MRO BLOCKCHAIN

SERVICES
A trusted framework and new cost efficiencies
Chapter 1 - the airline perspective

WHITE PAPER
2 SITA FOR AIRCRAFT | MRO BLOCKCHAIN SERVICES WHITE PAPER
CONTENTS

Introduction 4
Cost and needless complexity 4
Collaboration and trust 5
First steps 5
SITA leadership 6
Airlines 7
The challenges for airline MRO buyers, engineers and admin 7
The challenges for those impacting or impacted by MRO 8
The challenges for decision-makers 8
Conclusion 11

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INTRODUCTION
The air transport industry has been spending
US$ 50bn a year on material inventories (pre-
COVID). Those inventories require the tracking of
hundreds of millions of records by a widespread
and disparate group of companies.
Because each stakeholder maintains their own records, there
is no consistent “truth” about the status of parts, because
there is no process for recording and recognizing historical
information held by other stakeholders. That exacerbates risk
and cost. And if there is inconsistency between stakeholder
systems, the risk of data overlap increases – as does cost.
While creating a workable alternative has been difficult to
achieve, the global maintenance, repair and overhaul sector
is a critical area for change, particularly at a time when the
industry is setting out on the road to post-COVID recovery.
The scale of the industry’s recovery requirement is massive.
Incurred losses have been unprecedented – as has the
cash burn. Government aid has prevented widespread
bankruptcies, but much of that aid was provided as debt.
Passenger numbers collapsed from 4.5bn in 2019 to 1.8bn
in 2020 and IATA forecasts only a slight recovery to 2.4bn in
2021. Fuel prices dropped significantly in 2020 compared to
2019, but have risen sharply in 2021. Non-fuel unit costs shot
up (+17.5%), although these will fall back as capacity returns.
Against this background, it’s more important than ever that
radical and effective ways can be found to reduce MRO costs,
streamline communications and enable an effective level of
trust between all parties. All the while, of course, maintaining
and enhancing safety standards, operational flexibility and
passenger focus.
4 SITA FOR AIRCRAFT | MRO BLOCKCHAIN SERVICES WHITE PAPER
COST AND NEEDLESS COMPLEXITY
The complexity of MRO has led to a range of issues and
challenges covering the complete life cycle of aircraft
and aircraft spare parts – and, in particular, the paperwork
and documentation required as parts move from manufacture
through multiple ownership to disposal. There’s no existing
mechanism to easily share transactional information,
parts ownership and movement among stakeholders in
near time, let alone one that supports real-time
communications. Not least, this leads to financial waste
and compromised efficiency.
For example, from a business perspective:
• I nformation on the history and condition of an aircraft and
its thousands of parts may be spread across a wide variety
of systems and organizations, using different standards
and belonging to companies in competition with each
other – and they are likely to be reluctant to create and
share data.
• T
 he lack of industry-wide aircraft parts traceability that
is transparent and readily accessible while maintaining
data privacy and data security adds needless cost and
complexity.
• T
 hese issues compromise the operational efficiency of
inventories, leading to further direct and indirect costs.
• T
 hey also compromise the buying and selling of parts
between maintenance organizations.
From a process and IT perspective:
• T
 he tangled complexity of the existing workflow lacks
integration and coherence.
• T
 here is limited process automation – too many processes
still rely on manual paperwork.
• E
 ssential data is all too often isolated across many parties
and systems – or simply lost. And any IT change to the
existing MRO ERP can cost up to US$ 10m or more to
change. No wonder organizations have been reluctant to
change existing systems.
BLOCKCHAIN CAN RECORD EACH TIME A PART IS INSTALLED OR
REMOVED FROM AN AIRCRAFT – AS WELL AS THE IDENTITY, LOCATION
AND CREDENTIALS OF THE TECHNICIAN HANDLING THE WORK.
COLLABORATION AND TRUST
Blockchain technology offers a solution to this massive level
of fragmentation, based on inherent trust and reliability.
Offering a ledger of digital events that can be replicated,
shared and trusted – based on consensus between parties –
blockchain offers resiliency, traceability, disintermediation
and proof against tampering. Key to the advantage of
blockchain is its ability to create new ways of publishing and
sharing information based around a single source of truth and
shared control of data by stakeholders.
Blockchain removes the friction that inevitably arises
when establishing trust between parties. It provides an
environment in which businesses can quickly contract,
exchange services, record transactions, manage payment
and disengage. So blockchain can record each time a part
is installed or removed from an aircraft – as well as the
identity, location and credentials of the technician handling
the work. It can capture how long the part being replaced was
in service, purchased/sold. Put simply, it will revolutionize
what have always been paper-based processes by moving
to sophisticated state-of-the-art digital processes while
ensuring security and confidentiality as required.
In essence, blockchain records what has been called a
digital ‘birth certificate’ for any and every part installed in an
aircraft. The certificate is updated every time the aircraft or
a part is serviced or inspected. The birth certificates of all
the parts can be brought together to create a digital twin of
an aircraft or complex assembly. This can provide a complete
record of the asset from the day it’s built to when it is finally
broken up. And the rewards are significant: PwC has found
that efficiency gains enabled by blockchain could cut MRO
costs by about US$ 3.5bn, while increasing industry revenue
by as much as US$ 40bn.
FIRST STEPS
Above all, blockchain is tailor-made for an industry that
demands greater collaboration.
SITA’s research technologists have been exploring
blockchain and its adjacent technologies since 2015. In
2018, SITA joined the Sovrin Foundation – the international
non-profit organization focused on the advancement of
self-sovereign digital identity. In May 2020, the company
expanded its support for the Foundation, alongside other
major technology, legal and financial companies as well as
university research experts.
In 2017, SITA Lab, the technology research team at SITA,
initiated a project to investigate the provision of a single
version of the truth for flight status data. It took place with
the involvement of Heathrow Airport Holdings, International
Airlines Group, Geneva Airport and Miami International
Airport and sought to answer fundamental questions:
• How do you setup, secure and manage a permissioned
blockchain?
• Who manages and controls permissions and access?
• How do you write a smart contract and who signs off
on smart contract logic - is it similar to an Airports
Council International (ACI) or International Air Transport
Association (IATA) standard?
• How do you update a smart contract?
• How do we keep some data private and some public?
• Is there a need for an air transport industry vertical
blockchain – one blockchain running many apps, or one
blockchain per app?
• If there is a trusted transparent verifiable ledger of flight
data, does it change anything?
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Currently, SITA is exploring a variety of additional areas
where blockchain can be of value in air transport, from the
air cargo supply chain to digital health (COVID) certification,
baggage to passenger compensation payments, operational
messaging to business data collaboration.
This paper details the work being undertaken by SITA to
provide a solution for the MRO sector that will help all parties
involved in MRO to manage processes and material more
effectively – delivering enhanced resilience, agility, cost
efficiency and the ability to respond to volatility.
The first chapter in this paper addresses the issues and
potential benefits from the airline perspective - chapters
2 and 3 will cover the MRO companies and organizations
themselves, and OEMs. We want to encourage feedback,
which should be sent to worldwide @ sita.aero, as should be
requests for further information and technical details.
6 SITA FOR AIRCRAFT | MRO BLOCKCHAIN SERVICES WHITE PAPER
SITA LEADERSHIP
For more than 70 years, and owned by the air transport
industry, SITA has pioneered new technologies focused on the
particular collaborative needs and ambitions of air transport.
No company or organization has a greater understanding,
involvement with and commitment to the use of technology to
create a safe, secure and successful air transport industry.
Above all, SITA is trusted across the industry as the global,
neutral enabler of mission-critical communication and data
exchanges, and of business transactions. The company has
been working across MRO for decades with its messaging
solutions and its leadership in Spec2000 compliant solutions.
The launch of MRO Blockchain is expected to be SITA’s first
commercial blockchain-based solution.
“SIMPLY PUT, WHAT THE AEROSPACE
INDUSTRY DOESN’T KNOW ABOUT
ITS PLANES IS COSTING IT SERIOUS
MONEY. AND WHAT IT COULD DO
WITH ALL THAT KNOWLEDGE HAS
THE POTENTIAL TO CREATE NEW
STREAMS OF ENDURING VALUE.”
Data for the life of the aircraft: How the adoption of blockchain can provide a boost of
power and efficiency to the aerospace industry. PwC April 2019
AIRLINES
Inevitably, airlines face some of the most complex
issues related to MRO, from a lack of digital
records to supply chain difficulties, system
inconsistencies to burdensome costs.
Those issues are generally focused around tracing the history
of parts and tracking their use. More specifically, airline
requirements include:
• Extensive traceability for parts purchased and borrowed.
• M
 ore rigorous and detailed visibility into operational
status and progress of repairs.
• C
 omplete cradle-to-grave digital records to improve
the inspection process when receiving repaired and/or
overhauled materials.
• M
 ore accurate visibility into supply chain processes, such
as order status, shipments etc.
• I mproved service level agreement management and
dispute resolution.
• Ready access to details of loans and borrows of parts.
• Ready access to tooling.
• D
 igital records to speed the inspection process when
receiving tooling.
This is made more complex by the layers of personnel
required – including users, influencers and decision makers
– each facing differing sets of challenges and an ability to
respond effectively.
THE CHALLENGES FOR AIRLINE MRO BUYERS,
ENGINEERS AND ADMIN
Currently, those airline staff involved in buying spare parts,
handling logistics and customs administration, dealing
with warranty claims and dealing with engineering quality
assurance are constrained by too much paper documentation,
including incomplete and inaccurate records.
Their day-to-day work is handicapped by a lack of digital
tools. Processes are time consuming and generally
manual, with multiple channels of communication between
stakeholders. Missing or delayed information is almost
unavoidable, further delaying processes.
It happens. With a predominantly paper-based system, it’s
inevitable that parts can be delayed or delivered to the wrong
location, or the wrong parts provided. As a result, airlines
all too easily end up with too much inventory, or not enough.
Repairs can be left incomplete, with the airline left unaware.
The result, of course, is a heightened lack of confidence in the
supply chain.
All of this carries a cost. Overhead costs increase due
to the manual reconciliation of records and time spent
chasing suppliers. Unnecessary excess inventory increases
the cost of ownership. Further cost is incurred resolving
disagreements between systems – exacerbated because
the current processes are unable to function on a common
platform or with the assurance of a single, agreed source
of truth.
ANSWERS
It’s not difficult to see how things could be made better.
Airline buyers, engineers and admin staff would all be able to
work more effectively (and happily) if they had fast access to
complete and accurate data, reliable information and timely
transactions. If they could work with industry standardized
purchase orders, their completion and exchange with
customers and suppliers could be handled more quickly
and accurately, with fewer errors. Communication would
be improved and an open and transparent audit trail would
be available.
Overall, there would be increased trust in the supply chain.
And that would reduce or remove excessive inventories
(saving potentially considerable sums) and generally reduce
the costs of overheads and manpower.
A continuous record of every part’s condition in an aircraft
would also help reduce the time spent on routine inspection
and maintenance – increasing asset utilization. And with the
potential to digitize workforce credentials on a real-time
basis, verifying and recording who did what helps further
boost confidence in the aircraft’s condition.
Thanks to its single version of the truth, the MRO Blockchain
platform allows seamless and detailed collaboration among
all parties concurrently. Communications are simplified at
customer and supplier relationship touchpoints. Workflow is
simplified and well ordered, enabling all parties to access the
key information required to connect, collaborate and deliver
parts, on time and with trust.
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MRO BLOCKCHAIN PLATFORM ALLOWS SEAMLESS AND DETAILED
COLLABORATION AMONG ALL PARTIES CONCURRENTLY.
COMMUNICATIONS ARE SIMPLIFIED AT CUSTOMER AND SUPPLIER
RELATIONSHIP TOUCHPOINTS.
The resulting ‘digital passport’ collects events and keeps
track of records along the part journey, providing the
opportunity to create a unique and complete universal record.
It can be applicable to any part with a serial number and a
repair scheme. As well as providing one source of truth and
visibility to all stakeholders, it eliminates the work involved
in retrieving missing records, increases efficiencies in parts
sale, lease or repair, reduces the risk of penalties or non-
compliance against lease terms – and maintains parts value
for re-sale or re-lease over time.
THE CHALLENGES FOR THOSE IMPACTING OR
IMPACTED BY MRO
The pain points of the current MRO systems spread well
outside the immediate circle of those handling buying,
administration and quality assurance. Also impacted are
maintenance planners, maintenance engineers, quality
assurance engineers, accounts payable and receivable, and
VP-levels of staff handling the supply chain and engineering.
ANSWERS
Resolving these challenges is essential to satisfying a wide
range of operational requirements – particularly maintaining
fleet availability and reliability, reducing the time spent with
aircraft in the hangar.
Greater supply chain efficiency will help reduce potential
delays and improve customer satisfaction across the board –
including the collection of historical records, parts movement
records, parts ownership records etc. Internal efficiencies
will help eliminate end user frustrations, enabling systems
and internal processes to run more effectively.
Crucially in today’s tight economic environment, using
the MRO Blockchain to deliver these benefits will improve
confidence and trust between stakeholders by using a secure
platform that can be easily deployed. It will help reduce the
cost of overheads, the costs of inventories and the cost of
maintenance overall.

There is the same frustration with users and systems THE CHALLENGES FOR DECISION-MAKERS
inefficiency. The same lack of transparency, inaccurate
Fleet availability, reliability, and flexibility is critical. If either
records and time wasted on resolving inaccuracies and
of these factors are compromised as a result of inefficient
errors built into the global system. This can be particularly
maintenance and supply chain processes, the airline’s
the case where records are missing because of skipped tasks
reputation can be damaged, passenger satisfaction hit, and
and events – simply because the records were not created in
revenue lost. At worst, safety can be compromised.
the first place – or where documentation supporting a task or
event was lost. If the supply chain and the management of inventories run
out of control because of the complexity and inflexibility
Supply chain inefficiencies mean that teams are
of industry-wide processes, then the cost of aircraft
underperforming through delays that they didn’t cause.
maintenance can soar and the cost of overheads across the
Confidence and satisfaction is lost – resulting in the potential
board escalate. And there may be little the airline can do to
for financial hits – not least in selling aircraft or unwanted
mitigate the issues and the costs.
parts or returning aircraft to lessors.

At the same time, the cost of ownership increases as

overhead costs increase.

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If problems escalate to the extent that enterprise resource
planning (ERP) needs modifying or re-engineering, then
that might lead to a typical unbudgeted cost of US$ 10-40m.
Additional costs might be incurred keeping IT systems up
to the varying technologies and standards found across the
MRO sector. The next few years are going to be financially
challenging for every airline as the global travel sector
rebuilds in the wake of the COVID pandemic.
ANSWERS
Decision-makers have a number of straightforward but
critical demands to make of the MRO process. They expect
minimal impact of any ERP transformation.
They need to see improvements in service delivery
performance. That means reducing the delivery time for
maintenance, repair and overhaul. It means reducing the
time taken to process and deliver purchase orders to MROs,
OEMs, brokers and lessors. It means a faster purchase-to-
resell process – cutting the cost of inventories and increasing
margin. And it means a tight focus on improving customer
satisfaction at every point.
And, as always, they expect to see supply chain management
costs reduce.
The MRO Blockchain platform runs on a secure platform
that can be easily deployed at minimal IT cost without
ERP disruption or transformation. It creates a trusted and
efficient supply chain and customer and supplier relationship
ecosystem, enabling airlines to continue to drive down costs
while enhancing passenger satisfaction.
There are other benefits from a blockchain-based
industry-wide MRO process for decision-makers. For
example, an open system that facilitates collaboration across
the MRO spectrum makes it possible to streamline major
maintenance visits. At the same time, effective predictive
maintenance becomes possible, since the parts that make
up every aircraft in the fleet are individually known and
recorded. Problems likely to require downtime can be
headed off before they occur.
Costs can also be saved when any industry-wide safety
issues are raised. If regulators mandate the change of a part
or parts, OEMs and Distributors can pro-actively prepare
material while the airline identifies which aircraft are
implicated through its ERP system. And because the global
MRO system will be transparent and records-based, the role
of resellers of parts that are not commonly available or are
needed urgently (and which are often sold at inflated prices)
may be taken out of the equation.
Finally, there are real potential benefits relating to aircraft
finance. With data exchange open and transparent, airlines
can build value for their fleet in the secondary market, while
at the same time financial cutting risk. Insurance rates can
be based on real data per aircraft rather than aggregated
information, and end-of-lease handoffs can be effected based
on a complete and detailed history.
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 THE AIRCRAFT PARTS LIFECYCLE
Blockchain facilitates the seamless tracking, tracing and management of aircraft spare parts. Over the parts lifecycle,
this is how blockchain can add value.

MANUFACTURING: Original Equipment Manufactures (OEMs) provide documentation with each new part sold, including
the Authorized Release Certificate, Certificate of Conformance and Certificate of Compliance. These are the initial
traceability documents. They need to be issued in digital format and recorded on the blockchain.

BUYING/SELLING: Airlines and other parts buyers (brokers, MROs) demand “trace” for parts they buy. When/if the airline
or broker sells the part, the next buyer will always want as much trace as possible.

LEASING: Airlines/operators will be in possession of leased assets for several years at a time. These operators are
contractually obliged to maintain the assets as per the OEM manuals and any applicable instructions. Currently, returned
aircraft (at the end of a lease, for example) are accompanied by dozens of boxes of paper records. The owner of the
aircraft (the lessor) must audit these documents to ensure the aircraft was maintained in compliance with the lease
agreement. Because blockchain creates a digital ‘birth certificate’ for any and every part installed in an aircraft, these
actions can be performed in a fraction of the time and effort.

REPAIR & OVERHAUL: Currently, rotable aircraft parts can be renovated – repaired, overhauled, returned to ‘as new’
condition – many times and are expected to last the life of the aircraft they were initially installed on. Maintenance on any
given part may be accomplished by multiple repair providers over its lifecycle and recorded in various ERP systems and
in various formats. This creates a challenge when trying to determine back-to-birth history. Blockchain resolves that
challenge.

DISPOSAL: Aircraft parts may become surplus to current owners needs, but of value to another operator. However,
without proper paperwork these parts have no value at all other than as scrap. Again, blockchain’s digital record enables
the airline to extract that value.

SERVICE LEVEL AGREEMENTS (SLAs): These document the responsibilities of the buyer and the seller in a transaction.
In MRO, airlines require their spare parts providers and maintenance services providers to enter into SLAs that cover
areas such as conformance to agreed-upon repair turn-times and new parts delivery lead times. Digital documents and
Electronic Data Interchange (Spec 2000) recorded on a blockchain become the sole source of truth.

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CONCLUSION

There are some 25,000 commercial aircraft in
service, making 144,000 flights per day during
normal times. Those aircraft are made up of 25
billion parts, with three billion parts added every
year. And there are 20,000 suppliers. That results
in hundreds of millions of events that need to be
recorded and tracked.
The scale and dispersed nature of this massive ecosystem is
such that there is no real integrated and coherent workflow
between the stakeholders in the ecosystem. There is no end-
to-end process automation within the ecosystem. There is an
almost total lack of traceability and transparency for aircraft
parts. And there is massive complexity in monitoring service
level agreements (SLAs) and achieving required service
levels.
From a business perspective, it will generate trust
amongst stakeholders, ready and willing to share data with
confidentiality and integrity. Independent automatization
reconciliation will guarantee service levels. A reduction in
errors will lead to a reduction in direct and indirect costs.
Inventory management and operational process efficiencies
will be enhanced and maintained.
The introduction of SITA’s MRO Blockchain services will
always be backed by SITA’s founding and deep-rooted
commitment to collaboration, to shared resources and
services – particularly where sharing is better for all than not
sharing. And powered through the SITA cloud and physically
present wherever airlines serve.
If you would like to find out more, please go to
www.sita.aero/mroblockchain or you can
e-mail worldwide @ sita.aero

Using blockchain and its adjacent technologies, SITA is set to

help the industry move from point-to-point integration to end-
to-end digital consensus – creating new efficiencies in the
ecosystem and demonstrating immediate benefits.

From a process and ITR perspective this means end-to-end

process automatization and visibility of data exchanges. It
will involve Spec2000 format standards compliance for parts
and the maintenance of one source of truth, long-term data
integrity and validity from cradle-to-grave.

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 FOR AIRCRAFT

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