THE INNOVATION CHALLENGES IN THE AVIATION ENVIRONMENT Aarti Panday

THE INNOVATION CHALLENGES IN THE AVIATION ENVIRONMENT Aarti Panday

Overview National System of Innovation TIA Mandate, Role, Themes The Aviation Landscape Innovation Challenges Where To From Here? 2

The National System of Innovation (NSI) Import Modify Increased Wealth Improved Quality of Life Initiate New Technologies Diffuse International Funders Private Sector Universities NGO s Science Councils Government 3

TIA Mandate TIA Act No. 26 of 2008 stimulating and intensifying technological innovation in order to improve economic growth and the quality of life of all South Africans by supporting the development and exploitation of technological innovations. the application in practice of creative new ideas, which includes inventions, discoveries and processes by which new products and services enter the market and the creation of new businesses. Technology Ideas Technology Innovation 4

IP Value TIA s Positioning Along The Innovation Value Chain Partnerships (e.g. NRF) High Risk/ Uncertain Return Focused TIA Support Lowered Risk/ More certain Return Partnerships (e.g. IDC, NEF) Basic Research Applied Research Tech Development Commercialisation Technology Readiness Level (TRL) TRL 1-2 TRL 3-9 Business Readiness Level 5

TIA s Role VALUE CHAIN AREA Applied Research Technology Development Commercialization TIA ROLE Innovation Catalyst [Connector] De-Risk Innovation - Technology Value - Market Acceptance Venture Capital Catalyst ORGANIZATION CAPABILITY Innovation Spotting Core Business: Innovation Market- Readiness Investor Spotting DEPENDENCIES - Tech Transfer - Science Councils - Private Sector - Outliers - Market Readiness skills and mindset - Innovation Forum - Top Tech 100 - Brokerage Technology Stations and Platforms 6

TIA s Role + Other Funders in the Value Chain 7

TIA s Themes 8

The Aviation Landscape 9

The Aviation Landscape 10

The Aviation Landscape - Value Chain South African Aviation Industry 2011 (IATA) 2% GDP, 300 000 jobs directly Catalytic : jobs & economic impact millions & billions Broadest Context: Design Life Cycle Tier One (Complete System) Tier Two (Major Sub-Systems) Tier Three (Minor Sub-Systems) 11

Broadest Context: The Aviation Landscape - Value Chain Innovation Diversity Continuum: Adapting/refining existing products/systems/ processes Cumulative simple, small incremental innovation on existing products/systems New, large-scale, complex systems 12

Innovation Challenges - Global High profile program execution failures Established industries have a different class of problems Change of innovation paradigm Technological complexity vs. faster, cheaper, better Managing globalisation Offshore manufacturing A380, B787,

Innovation Challenges: South Africa High Barriers to Entry Compliance & Safety Access to Finance/Funding Narrow Focus in Aviation Landscape Fragmented Participation Socio-political History 14

Innovation Challenges High Barriers to Entry First mover status Product innovation Process innovation Disruptive technology Product differentiation Value proposition 15

Innovation Challenges Compliance & Safety Regulated industry Rigorous framework across life cycle Country-specific regulations Licenses, Ratings, Competencies Common place vs. new players BBBEE Employment Equity/Affirmative Action Women Socio-political History

Innovation Challenges Fragmented Participation Industry, Academia, Science Councils, Service Providers, Policy-makers, Funders, Regulators, Engineers, Artisans, Pilots, Technicians, Fire Personnel, Cabin Crew, Aeromedical, Dangerous Goods Inspectors, Air Traffic Controllers Customers?

Clusters, Networks, Hubs, Aerotropolis Geography Innovation Challenges Fragmented Participation 18

Access to Finance/Funding Business models for commercialising innovative new technology Exit strategies Innovation Challenges Generic Criteria Decision to invest? Market Opportunity Business Model Strong Management Team What investors want? Return on investment: 3 7 years Diverse management team: technical, business, all the skills Risk averse vs. risk aware?

Access to Finance/Funding Scale of funding required Years of investment Source: Government, Private Equity, Venture Capital Tangible milestones Disciplined project management Innovation Challenges Some numbers: Development cost, Airbus A380 : R149 billion ( 11 billion) Eurocopter Tiger: R13.8 billion (US $ 1.4 billion) Rooivalk: R1 billion (concept to first prototype flight) Rooivalk: R7 billion (total project cost) 20

Narrow Focus in Aviation Landscape Innovation diversity Innovation across aviation landscape wide portfolio Organisational structure and culture Innovation Challenges Aircraft design Major subsystem design OEM/System Integrator

Quest Kodiak Innovation Challenges ICON FAR 23 Certification Private Investors Mission Work LSA Category Private investors phased approach, final phase US $ 60 mill

Where To From Here? Let us work together: Collaborations, Networks Compliance is a non-negotiable Deep pockets required - Tier 1 Boost business/commercial/finance skills Wide range of innovation sources Challenges are opportunities Joint Aerospace Steering Committee (JASC) Industry Forum, R&D Forum Engage, debate, share, learn 23

A new dawn is inevitable 24

Aarti.Panday@tia.org.za Contact us at manufacturing@tia.org.za Download funding templates & guidelines at www.tia.org.za Email proposals to investments@tia.org.za Joint Aerospace Steering Committee: Ms. Yolandi Lombaard Ylombaard@csir.co.za