Business aviation’s road to recovery

After a disastrous 2009, business aircraft manufacturers now see signs of improvement in the market and are making renewed efforts to promote their latest models in the Asia-Pacific region

5th May 2010


The global recession last year forced austerity measures on all players in the aviation industry. But nowhere were the metaphorical hatches battened down more tightly than at the lighter end of the business jet sector.

Many airlines had sufficient reserves and foresight not to cancel orders outright, even benefiting from delays to aircraft development programmes. But corporate aircraft customers drew their purse strings tightly shut and the business aviation sector suffered accordingly.

Some half-dozen manufacturers of cutting-edge very light jets (VLJs) went out of business as their shoe-string margins stretched to breaking point once lines of credit were withdrawn and orders dried up. More established airframers producing light, super-light and light mid-sized jets suffered too as operators stopped spending.

There is very little lag between a market downturn and a slump in lighter business jets, explains the Teal Group, a private aviation consultancy.

Yet this segment has also been home to some of the keenest aerospace innovation in recent years. Aircraft prices have come down too, partly in response to increased activity at the lower end of the market, while manufacturers have also either introduced new aircraft into the sector or revamped existing product lines.

Cessna Aircraft, the maker of the Mustang VLJ, for example, received type certification in March for the latest in its Citation range, the eight-seat CJ4. Planned during the heady days of 2007, the stretched version has attracted 150 orders.

This success comes as some comfort to Cessna, which had to slash its production schedule last year by 40 percent and cancel its large-cabin Columbus 850 programme.

Citation success

According to Trevor Esling, Cessna’s vice-president for international sales, the relative success of the Citation range at the expense of larger cabin jets is typical of what is going on in the market.

“In parts of the world where large business jets are common, we have seen the start of a shift towards lighter aircraft,” Esling said. “In markets such as the Middle East and Russia, for example, owners are proving themselves increasingly savvy in choosing an aircraft for their needs; it is now far better understood that you don’t need a Boeing Business Jet if your main needs are for domestic or short-haul regional travel.”

This message is echoed by other manufacturers. Christophe Chicandard, sales director for South-East Asia and the Pacific for Bombardier Business Aircraft, who has recently been on a tour of the region showcasing the Learjet 60XR light jet, said: “Actually flying from one continent to another is quite straightforward; it’s once you get there that business jets come into their own.”

This view is echoed by rival Gulfstream Aerospace, whose entry-level jet, the G150, is priced at a shade over US$15 million.

Not long before the Learjet tour, Hawker Beechcraft showed off its mid-size business jet offering – the Hawker 750 – around the Asia-Pacific region. Brett Carlson, the manufacturer’s regional sales director for India, Africa, the Middle East and Australia said that when you look at where people are travelling to do business today, it’s actually normally within a 1,700nm (3,000km) range.

The company was convinced enough of this view that it removed the ventral fuel tank from the design of its Hawker 800XP to make the 750, replacing it with additional baggage capacity.

Underserved segment

Still, the 4,660lb-thrust (20.7kN) Honeywell TFE 731-5BR-powered Hawker 750 offer a range of 2,100nm with four passengers, or put another way, the 750 reaches Newfoundland from either California or Geneva and will transport six passengers from Mumbai to Saudi Arabia or Thailand. Carlson said the 750 was created after the company realised there was a market niche it was not addressing.

“The 750 competes with the Bombardier 45XR and the Cessna Citation XLS, but it’s still a relatively underserved segment, compared to others,” Carlson said. Hawker is betting on the relatively low price point of the 750 – US$12.1 million – being a key selling point for a larger, longer-range jet. “Most of the people looking at the 750 are trading up from turboprops,” he added.

Bombardier’s Chicandard said that the light and light mid-size markets also benefit from a trading-up cycle – not only from existing business aircraft owners, who account for some 60 percent of the total market, but also from first-time customers initially attracted to very light jets, but then put off by limited range or cabin size. He also credits new business models such as fractional ownership, jet cards and online charter brokerage for helping raise the profile of light jets.

Both salesmen know aircraft brand loyalty is incredibly important in business aviation. Carlson says some 80 percent of Hawker sales are to existing Hawker customers, which means the entry-level jet sector is the most competitive as each manufacturer vies to attract the attention of first-time jet buyers.

“Every OEM [original equipment manufacturer] struggles to grab market share, but especially among those customers in chains of other OEMs,” he said.

This is part of the reason for the demonstration tours manufacturers have been mounting this year. The Hawker 750 was taken around Indonesia, Malaysia, Singapore, China, India and Australia before ending up at the European Business Aviation Conference and Exhibition (EBACE) in Geneva. The Learjet 60XR did a similar circuit and Brazilian manufacturer Embraer also demoed a mock-up of its Phenom 100 very-light jet around the region.

‘Third pillar’ of sales

Demonstration flights were once rare, but Asia is now seen as the future third pillar in business jet sales.

“In 1999 the market was almost entirely driven by the USA, but today 70 percent of sales are outside the USA,” Chicandard said. “The first wave was North America, then Europe came in and we see Asia being the third wave.”

Today, the continent accounts for just one tenth of the global fleet, but Bombardier’s ten-year forecast shows it being closer to a third by the end of the decade. Still, N-registered aircraft will continue to dominate, as many Asian aircraft are not registered in their home territories for a variety of reasons.

Teal’s revised 10-year forecast predicts deliveries of 12,768 business aircraft between 2009 and 2018, down from a previous forecast of 18,400 aircraft. Bombardier’s figures, meanwhile suggest 11,500 deliveries over the same period, although the Canadian manufacturer’s numbers do not include the very-light jet segment, where it does not compete.

Nonetheless, the forecast is unusually optimistic, considering the year we have just had. Bombardier business aircraft continued to sell last year, in contrast to some other manufacturers’, but most of the new sales activity took place at the heavier end, in the company’s Challenger and Global product lines, with Learjet business hurt by used inventory coming onto the market.

Asia is, in large part, the reason for the forecasts’ optimism. According to the US General Aviation Manufacturers’ Association (GAMA) annual shipment report, only 42 of the 2,276 business aircraft (turboprop and jets) delivered last year were delivered outside the Americas and Europe. But the manufacturers believe this imbalance is about to change.

While Russia has provided much of the growth in recent years, the manufacturers hope China and India will take up the baton this decade. Of these markets, India is for once being courted ahead of China, as private flying is more established in India and the abundance of airstrips is greater.

Chinese regulation

Chinese business jet operators, on the other hand, still require flight-planning permission days before departure, while aircraft import restrictions also present a barrier. Unlike Russia, which adopted larger jets more naturally as its billionaires needed transportation over vast distances, light-jet manufacturers are hoping to educate the Chinese, Indian and South-East Asian markets on the benefits and capabilities of light and mid-size aircraft from the outset.

Bombardier predicts that the Asia-Pacific region will account for 1,030 of the total 11,500 global deliveries to 2018. Of this, the Indian subcontinent is expected to take 250, China 300, South Korea 35, Japan, the rest of South East Asia 180 and Australasia 200.

Chicandard said there is currently less resentment in Asia of business jets being “toys for the rich” and instead buyers recognise the fact that they are “time machines”, giving more time back to busy executives both for work and leisure.

Perhaps the most advanced developments in light jets have been in the cabin. Bombardier offers its Learjet 45XR in two, themed interior configurations: Black Series and Red Series.

In a seemingly counter-intuitive colour alignment, ‘red’ signifies the flying office, with six seats, tables, wireless internet access and computer stations. The ‘black’ configuration on the other hand is aimed at high-net-worth, private individuals who are more likely to be flying with immediate family or alone. It features a large screen television and a divan in place of two of the Red Series’ seats.

Hawker is one of only two manufacturers to use hand-built timber interiors on its aircraft (the other is Franco-US heavy jet maker Dassault Falcon Jet) the company’s Australian Sales Director John Oppenheim said. The Hawker 750 also has the largest baggage space of the light jets, with some 2.5 cubic metres (90 cubic feet) against the 2.25 cubic metres on the Citation XLS, the closest competitor in Hawker’s eyes.
Customer expectations

According to Gulfstream, business-jet customers are “basically looking for the same capabilities in the air that they have on the ground”.

“That means high-definition video, Internet, telephone service, fax and Blu-ray players. They also want to arrive at their destination relaxed and refreshed, so the cabin environment, such as acoustics, lighting and cabin levels and pressurisation, is important to them,” the company said.

Esling concurred, saying that when it comes to entertainment, people “expect what they have on the ground”. He added that while the range of options for a business jet is vast, Cessna is seeing consistent demand is for the basics, done well.

Cessna’s focus in recent years has been on “interior packaging” he said. In addition to aesthetics, this takes in the overall feel of the interior.

“All customers value peace and quiet, so we are also continually working to reduce noise,” Esling said. Novel innovations go beyond noise-cancelling technology to include fuselage design elements such as the heated glass windshield and smoother front-end profile of the CJ4, cutting wind noise by some 18 percent.

The ‘flying office’ has become more feasible with the advent of wireless internet connections. Equipment from Aircell and Arinc provide broadband links to aircraft that can support data transmission and voice calls in-flight. Chicandard said these products, widely available only since the beginning of last year, have added to the value of jets as business tools.

Aircell described its on-board broadband as “the link we’ve all been waiting for”. The Aircell Broadband system was until recently the only player in town providing broadband to laptops and mobile handheld devices. But Arinc’s SkyLink has now arrived to challenge this, with contracts to provide connectivity to Bombardier, Cessna and Gulfstream aircraft.

Flying boardrooms

There is evidence that corporations are spending more time on board their aircraft, even using them as stationary boardrooms. Carlson said the Hawker 750 now comes with a microwave oven and icebox, which smaller jets never used to have, partly because the utilisation of the jets is much higher. Typically, lighter jets only offered hot water, leaving executives with a choice of eating instant noodles or venturing out to a restaurant.

Of course, performance still matters. The Learjet is often seen as the sports car of the corporate aviation market and the 45XR is no exception. Its climb rate of over 3,000m/s (10,000ft/min) is so high that pilots often have to provide air traffic controllers with altitude as well as position readings, because the aircraft outruns the radar sweep, one test pilot said. The aircraft can reach its 41,000ft (12,500m) cruising altitude in less than 14 minutes, he added.

The power behind this performance comes from two Honeywell TFE731-20 engines, uprated to 5,200lb thrust (23kN), which have full-authority digital control (FADEC) systems.

The Learjet brand still benefits from a legacy that stretches back to an original Swiss fighter jet design, the FFA P-16, reconfigured as a high-performance business jet in the 1950s by William Powell Lear. Bombardier, the brand’s owner since 1990, still trades off the aircraft’s ability to fly faster than its rivals.

By way of comparison with the Lear 45XR’s climb rate, Cessna aims to reach 41,000ft in its 3,400lb-thrust (15.1kN) full FADEC William International FJ44-4A-powered CJ4 in 28 minutes.

Still, the real key to new sales in performance terms is the aircraft’s ability to meet customers’ needs to fly farther and faster, according to Gulfstream. Operators also want aircraft with high availability and dispatch reliability.

G250 testing

Gulfstream has been test-flying its own newcomer, the G250 since December, with type certification expected next year.

The G250 is an upgraded version of the 10-passenger G200, which started life as the Galaxy Aerospace Astra under Israel Aircraft Industries’ ownership in 1997. It is Gulfstream’s first, true mid-size business jet and has seen improvements in both cabin comfort and performance from its forerunner.

The G250 features a new glass cockpit, 7,000lb (31kN) thrust Honeywell Aerospace HTF7250G turbofan engines and a bigger, cruciform wing. The aircraft cabin mock-up is making its way around the world this year.

But perhaps the most eagerly awaited new aircraft project in the market is the newest Learjet: the midsize/super mid-size 85. The Learjet 85 will be the first all-composite business jet certificated for public transportation. It is an example of how technology from the pioneering very-light jet segment has inspired larger jet makers to harness new technology.

Work on the Learjet 85 commenced in October 2007 and the aircraft was unveiled at the Paris Air Show last year. The Canadian manufacturer expects entry into service around 2013, said Chicandard.

Once again, the aircraft’s speed is a key selling point, despite the deviation from the original Learjet design. Its target cruise speed of Mach 0.78 (447 knots, or 828kmh ) is 15kmh faster than the G150 and almost a tenth quicker than Hawker’s mid-size 900XP and the Cessna Citation Sovereign. The G150 can fly some 150nm further at full speed, but Bombardier sees this as a trade-off worth having, as the aircraft’s range is still comfortably trans-continental at 3,000nm.

Simpler life

Life for pilots flying the aircraft is becoming simpler too. When Bombardier upgraded its 60 series Learjet to the XR model, the avionics suite was switched to what is rapidly becoming an industry standard, the Rockwell Collins Pro Line 21 integrated flight deck management system. Alongside the Lear 60XR and Bombardier’s larger Challenger family, Pro Line 21 flight decks can also be found on the bulk of the Cessna Citation family, the G150 and the Hawker jet families.

Rockwell Collins said the system is designed with virtually all classes of aircraft in mind, from light turboprops to widebody jets, as witnessed by its use on both the Piaggio P180 twin pusher turboprop and the planned Commercial Aircraft Corporation of China (Comac) ARJ21 regional jet.

The avionics manufacturer said its use of adaptive flight displays allows unprecedented flexibility in flight-deck configuration and flight-display formatting, providing pilots with the critical information they need in ways that reduce overall workload while promoting instant, intuitive awareness and control.

With the painful year 2009 behind them, manufacturers are now gearing up for a better 2010 – although still not on the same level as 2008. In fact, most forecasts now predict a levelling off until the middle of the new decade.

Still, with the longer term in mind, many eyes in the industry will be focused on Asia and the light jet demand the region will generate as it launches itself into the business aviation arena.

Asian Aviation at a glance