[Yang Nak-gyu's Defence Club] 'The Power of K-Defense Industry'... Customer Service (CS) More Expensive Than Aircraft

Korea Aerospace Industries (KAI) established a Customer Support (CS) Center in July this year at the 23rd Tactical Air Base located in Minsk Mazowiecki, Poland. This was done to provide close support by setting up the CS Center first at the base where 48 Polish export-model ‘FA-50’ light attack aircraft, to be supplied by 2030, will be deployed. The true value of the CS Center is expected to emerge after 2030, when Poland begins full-scale operation of the FA-50.

The CS Center will be responsible not only for maintenance training of the FA-50 operated in Poland but also for logistics and technical support, parts procurement, and other operational support services. The high added value generated through these services exceeds the price of the aircraft itself. For example, if the aircraft price is 30, the value of the business handled by the CS Center corresponds to 70. Considering that the export performance of the Polish FA-50 amounts to 3 billion dollars, the follow-up business is estimated to be worth 7 billion dollars (over 9 trillion won). The KAI CS Center in Sacheon, Gyeongnam, which was toured on the 30th of last month, has consolidated know-how to reduce aircraft maintenance costs.

Assuming 100 won per aircraft, the operating and maintenance costs usually amount to about 600 won. The photo shows the takeoff of the 6th KF-21.

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War is about money. Without economic power, victory in war is impossible. For this reason, countries desire not only excellent weapons but also low maintenance costs. If maintenance costs are high, weapon systems may have to be abandoned even during war. For example, the U.S. military spent 11 billion dollars in 2008 alone to deploy about 7,700 Mine-Resistant Ambush Protected (MRAP) vehicles in the Afghanistan war and other conflicts, but due to the expensive maintenance costs, most were transferred to neighboring countries.

Therefore, defense companies entrust the management of operating and maintenance costs of weapons to CS Centers after manufacturing the weapons. Although it might seem that incurring operating and maintenance costs would bring profits to defense companies, this is not the case. From a long-term perspective, customers inevitably leave. This is why CS Centers maintain quality through various methods. Just like commercial products have the ‘KS (Korean Industrial Standards)’ certification, military weapon system parts are also assigned various certification marks. The KAI CS Center manages over 50 first-tier suppliers but aims for zero-defect product supply. Each part’s history is also tracked, including production date, producer, and identical products. This is to prepare for emergencies. If a defect occurs in a weapon system part, the operation of weapon systems using the same part may be halted. Kim Gyu-deung, Head of the Quality Management Office, said, “All quality inspections are conducted not only on produced parts but also during assembly and ground testing,” adding, “Countries importing aircraft can reduce risk factors accordingly.”

The warranty period varies depending on the contract with countries importing domestic aircraft. Usually, it is one year, but Poland, the largest importer of ‘K-Defense,’ requested two years. This is why KAI opened its Poland base office in July last year. The office manages all flight information and maintenance days of the aircraft imported by Poland. It can also predict the operational rate. This is top-secret information known only to the respective country and KAI.

KAI plans to develop transportation manuals in the future. These manuals provide guidelines on how to disassemble an aircraft and transport only parts of it on the ground. For example, if an aircraft’s wing is hit and requires repair, instead of bringing the entire aircraft body to the manufacturer, the wing can be disassembled and transported to the manufacturer. Replacing only some parts or the airframe can restore normal operation, saving costs and time.

Additionally, KAI intends to strengthen Performance-Based Logistics (PBL) projects. This system, first introduced in the domestic military industry in August 2010, involves the aircraft manufacturer providing logistics support and receiving performance-based rewards or penalties accordingly. Advanced countries operating military aircraft have adopted this system, judging it more efficient than self-managed logistics support.

About 250 helicopters (rotary-wing aircraft) produced by KAI are used by the Korean military, the Korea Forest Service Aviation Management Office, the Coast Guard, and other domestic agencies. So far, they have received an average of 27.6 support requests per month from users and addressed 27.3 of them. Integrated System Support (IPS) is also a means to attract future customers. Its purpose is to predict aircraft lifespan and maximize operational rates based on collected data.

A KAI official said, “For weapon systems, reducing operating and maintenance costs is more important than development,” adding, “This will enable us to receive high evaluations in the global aircraft market.”

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