October 8, 2012
Brazil's Embraer aims to double role of airline services
SAO JOSE DOS CAMPOS, Brazil, Oct 8 (Reuters) - Brazil's Embraer, the world's largest maker of regional jets, unveiled a new aircraft support center on Monday, betting that services can bolster customer loyalty in a market with aggressive new entrants.
By streamlining services through a 24-hour support center at the planemaker's headquarters outside Sao Paulo, Embraer aims to expand the unit's focus from emergency parts replacement to higher-value training and engineering for flight operations.
The center is part of a plan to double the share of services in Embraer's regional jet revenue within five years, Luiz Hamilton Lima, vice president of services and support for commercial aviation, said in an interview. Services made up about 10 percent of Embraer's commercial jet revenue in 2010 and 2011.
Beyond a short-term boost to revenue, the company's push on services is meant to drive customer loyalty ahead of launches by new rivals, like Russia's Sukhoi and Japan's Mitsubishi Aircraft Corp, a unit of Mitsubishi Heavy Industries Ltd. Both companies will soon introduce commercial jets in the 70 to 120 seat segment.
"This market will become more and more competitive," Lima said. "We want to consolidate our position as No. 1 in revenue in the segment."
Embraer made two-thirds of the regional jets delivered worldwide in 2011, more than twice as many as Canada's Bombardier.
But a fragile global economy has slowed regional jet orders to a trickle. Embraer's Chief Executive Frederico Curado said in July that he had begun to feel pressure to lower prices as a result of stiffer competition.
The emphasis on customer service in commercial aviation follows a similar shift in executive aviation, where Embraer has invested in pilot training and support to cling to its slipping share of a weak private jet market.
Lima said the planemaker is also trying to tap demand for its more sophisticated airline services, such as optimizing flight paths for fuel efficiency and managing maintenance plans to reduce aircraft down time.
While there are 29 service centers worldwide for Embraer's regional jets, Lima envisions the center in Sao Jose dos Campos as the nerve center of global operations, tracking each airline's needs and suggesting value-added services.
"I want to be benchmarking against Amazon," said Lima, marveling at the customer profiling of the online retailer. "You buy a pacifier and the next thing you know, they're selling you baby clothing and special parenting books."
On a recent visit by Reuters to the new support center, Lima stood at the back of the facility, which resembles a control room from the space program. Rows of three-screen terminals faced a full-wall map of Embraer jets undergoing maintenance, each with flashing real-time status updates.
Details about the facility were presented on Monday to attendees at a Paris conference of Embraer's airline customers. The company did not disclose its investment in the center.
Embraer initially staffed the facility with 100 employees, but Lima said by March it should employ 200. The additional staffers will work with Embraer suppliers to speed up diagnosis and response time for grounded jets.