PARIS (Reuters) - Airbus and Boeing leave this week's Paris Airshow with plans for ambitious growth in aviation services, as flattening demand for new jets and pressure to raise profit margins encourages planemakers to deepen their exposure to airline operations.
The two largest planemakers set out their stalls at the world's biggest air show in a series of announcements that could set them in competition with some of their suppliers and even some of the airlines that have ordered jets in recent years.
The overlap reflects the complexity of the aviation market as it matures, leaving a large fleet of aircraft to service or upgrade and tens of thousands of people to train - all services that could in turn become tools to help sell even more jets.
"Many customers are now looking for fixed cost per flight hour with assured outcomes on part availability. It is the (airline) CFO's dream to get costs out and management risks under a third party," Stan Deal, head of Boeing's newly created global services division, told Reuters.
"The future state we want to get to is that we can support every element of a day of operations on the airplane."
For years, air shows were all about "moving the metal," winning as many orders as possible.
Orders are still buzzing, but higher-margin services have taken a prime time slot for the first time with a volley of announcements from each company.
"Would you imagine having your Mercedes car without the associated services? It makes no sense," said Laurent Martinez, head of 'Services by Airbus'.
"We are definitely the best placed to serve our aircraft because we know the aircraft nose to tail," he told Reuters.
Boeing's (BA.N) newest division starts up on July 1 with a mandate to roughly triple Boeing's commercial and defense services to $50 billion in 10-15 years. The existing commercial unit will also keep its own services sales team to support the effort.
Airbus (AIR.PA) said the worldwide aftermarket services business for jetliners will double to $3.2 trillion over the next 20 years.
The overall services market is worth an estimated $100 billion a year: almost as much as building and selling jets but yielding fatter margins.
"We are definitely on a major growth plan," Martinez told Reuters. "In 2017, we will see double-digit growth."
Both companies are ready to look at modest acquisitions to expand their services businesses.
"I would characterize them as bolt-on acquisitions to accelerate our position in the market," Deal said.
"The market is growing fast. ... We see more and more airlines that are concentrating on their core business and want to have all their operations subcontracted," Martinez said.
Norwegian Air Shuttle (NWC.OL) , which had selected Boeing over Lufthansa Technik to maintain its fleet in Boeing's biggest commercial services deal last year, returned to the show to sign a new deal for Boeing to take charge of flight training.
As fleets age, upgrades are lucrative too.
United Parcel Service (UPS.N) last month signed a deal with Airbus and Honeywell (HON.N) to upgrade the cockpits on 52 elderly A300-600 freighters, and arrived in Paris this week with a deal for Boeing to convert three second-hand 767 jetliners to freighters.
Powering the expansion in services is a transformation in the way data can be used to connect aircraft, pepper them with sensors and predict upcoming maintenance problems.
Airbus launched such a platform with four airlines, powered by analytics firm Palantir Technologies.
"We are able to define the weak signals for components and ... change the component before it fails. This is the future of maintenance," Martinez said.
Data can also be used to optimize a flight trajectory, saving fuel by 1-2 percent, Airbus said. Boeing offers to manage airlines' fuel demands, even if their jets were made by Airbus.
In a further step, services are being baked into the way planes like Boeing's proposed mid-market jet are designed.
The switch demands a different culture from the measured, highly regulated process of building a plane for public transport. That will stay in place wherever safety is an issue.
"Part of standing it up separately (as a new services division) is to break the shackles of that, recognizing that we are going to be a fast-paced innovator with short sprints of incremental innovation and some big-bang innovation," Deal said.
Editing by Mark Potter