The simulator business remains a cut-throat one for the survivors
Graham Warwick/ATLANTA
The commercial flight-simulator market has changed beyond recognition in the past five years. Full-flight simulator (FFS) sales have fallen from a record high of 55 in 1989 to a recent low of 16 in 1994, forcing the industry into a fierce consolidation which has caused the disappearance of some of its best-known names.
Now, the market is showing signs of recovery, as airlines return to profitability, but the industry is still struggling with overcapacity, competition continues to be cut-throat, and margins narrow or non-existent. Surviving simulator manufacturers face a new threat. Recession-hardened airlines are increasingly interested in low-cost simulation, leading to competition from new-entrant and non-traditional players.
Five gruelling years have reduced the industry to two major players: CAE Electronics and Thomson Training & Simulation (TTS) - the combination of Thomson-CSF, Link-Miles and Hughes Rediffusion Simulation. In 1994, these two companies accounted for all but one of the 16 FFS sold. The second ranking consists of FlightSafety International (FSI) and Reflectone.
SIMULATOR SALES SHARE
CAE of Canada claims an unprecedented 75% of simulator sales in 1994, its market share for the previous five years having hovered around 50%. Among the 12 FFS sales CAE recorded last year, six were for Far Eastern customers: three for Air China (Boeing 737-300, 747-400 and 757/767) and one each for Asiana (767-300), China Southwest (737-300) and Singapore Airlines (Airbus A340-300).
Business- and commuter-aircraft simulators accounted for four of the six remaining sales: to Bombardier (Canadair Challenger 604 and Regional Jet), Lufthansa CityLine (Regional Jet) and Simuflite Training International (Gulfstream IV). The remaining two sales were to repeat customers: Emirates (Boeing 777) and KLM (767-300ER).
The new year has started strongly for CAE, with three FFS sales announced so far - all to Far Eastern customers: two to Garuda Indonesia (737-300 and McDonnell Douglas MD-11) and one to Japan Air System (777).
TTS' first year following the acquisition and subsequent consolidation of Hughes Rediffusion was a tough one. The company sold three FFS: two to Avions Transport Regional (ATR 42/72) and one to Japan Air System (McDonnell Douglas MD-90). The French-headquartered company has yet to announce any orders for 1995.
FSI did not sell any FFS to outside customers in 1994, but has embarked on a major programme to equip its training centres with Level D simulators. In the past few months, FSI has installed Level D simulators for the Cessna Citation V Ultra, Dassault Falcon 20 and Learjet 31A business-jets and Raytheon Beech 1900D and Saab 340 regional airliners. FSI has announced plans to install Level D simulators for the Challenger 601-3R and 604, Citation X and Gulfstream V business-jets, Bombardier de Havilland Dash 8 and Saab 2000 regional airliners, and the Boeing 777. The Level D simulators are being built by FSI's Simulation Systems' division using Vital daylight visual-systems produced by its Visual Simulation Systems division.
JOINT VENTURE
FSI has signed a joint-venture agreement with Yunnan Tobacco Group to establish Kunming FlightSafety Aviation Training in Kunming, China. The US company's first Chinese training-centre is to be operational in the fourth quarter of 1995, equipped with new 737 and 757/767 simulators. Boeing is establishing a Chinese training centre, and awarded CAE a contract in 1994 to upgrade an existing 737-300 fixed-base simulator to an FFS and to supply a 737-300 flight-training device (FTD), both of which will be installed in the new centre in Guanghan, China, in 1996.
Reflectone sold a single FFS in 1994, to Jetstream Aircraft (Jetstream 41). The US manufacturer also sold a 737-300 simulator, acquired with the assets of AAI-Microflite Training International, to Pan Am International Flight Academy. Reflectone has opened its 1995 account with the sale of an RJ Avroliner FFS to Avro International Aerospace.
A name which disappeared in 1994 was Aeronautical Systems Designers. The UK company was acquired by Quadrant Systems, a company part-owned by former Rediffusion executives Jeff Sandiford and Graham Ketley. Quadrant has formed a strategic alliance with Binghamton Simulator to market the US company's reconfigurable FTD, the Multiple Aircraft Training System.
FTD market expectations
FTD sales in 1994 were at about the same level as for previous years and have yet to fulfil market expectations for this relatively new class of trainer. CAE sold four Level 5 FTDs - three to Air China (737-300, 747-400 and 767) and one to Boeing (737-300). The Canadian company also sold ten ab initio trainers to China Southwest.
TTS sold one Level 7 FTD (fixed-base simulator) to Avions Transport Regional (ATR 42/72) and one Level 4 device to Japan Air System (MD-90). FSI sold two Level 5 FTDs to Japan's Civil Aviation College (Raytheon Beech Bonanza A36) plus two lower-fidelity cockpit-procedures mock-ups. Atlantis Aerospace of Canada sold two Level 4 FTDs to China Eastern Airlines in 1994, and has opened its 1995 account with the sale of two Level 5 devices to Miami-Dade Community College for the Raytheon Beech King Air. The China Eastern and Miami-Dade FTDs will feature IVEX VDS-2000 visual systems.
Atlantis and IVEX launched an initiative in 1994 to determine to what extent visual-equipped Level 5 and 6 FTDs could perform the tasks of Level C and D FFS. Trial design and the initial 24 test subjects were provided by Embry-Riddle Aeronautical University. In early April, 24 Delta Air Lines pilots began training on a CAE-built McDonnell Douglas MD-88 Level 6 FTD equipped with a VDS-2000 visual.
In the Atlanta-based trial, five of the nine training sessions normally conducted in a Level D simulator are being performed on the visual-equipped FTD. The tests are being monitored by the US Federal Aviation Administration and analysed by Embry-Riddle, with results expected to be available in November.
Biggest change
Perhaps the biggest change in the commercial flight-simulation market over the past five years has been in visual-system sales. Rediffusion's domination of the market has ended and the majority of sales is now for simulator-visual packages. As a result, CAE took 75% of the market in 1994, selling a MaxVue visual with every simulator sold.
CAE sold three additional systems in 1994, to upgrade existing simulators, including two MaxVues to replace Rediffusion visuals on CAE-built Regional Jet simulators already in service. The final system was sold to Boeing to upgrade the 737-300 fixed-based simulator. The three FFS CAE has sold so far this year will have MaxVue visuals.
TTS continues to offer the former Rediffusion SP3000 visual alongside its own Space system under an agreement with image-generator supplier Evans & Sutherland. Visual sales for 1994 were split: one SP3000 (Japan Air System MD-90) and two Space (Avions Transport Regional ATR 42/72).
FSI did not sell any visual systems to outside customers in 1994, but installed a number of Level D simulators equipped with Vital VII daylight visuals. The company will deliver its first ChromaView Vital VIII visuals in 1995, both to outside customers and for internal use.
IVEX sold one VDS-2000 visual system in 1994, for Jetstream Aircraft's Reflectone-built Jetstream 41 simulator. The system has also been selected for Atlantis' four FTDs for China Eastern and Miami-Dade.
Evans & Sutherland (E&S) entered the commercial-simulator visuals market in its own right in 1994, following Thomson-CSF's acquisition of its long-time partner Rediffusion. The split was forced because TTS has its own visual to promote. E&S' initial priority is support of more than 400 Rediffusion-supplied systems operated by more than 100 airlines, but the US firm is confident of becoming an independent visuals supplier.
Computing turmoil
The computing side of simulation has seen its own share of turmoil over the past few years, with an end to Encore's dominance of the market. CAE's overwhelming market share has tipped the sales balance in favour of the Canadian company's preferred computing solution, the IBM RISC System 6000, with Harris Computer Systems' Motorola-based Night Hawk family accounting for most of the remaining sales.
Harris was spun off as an independent company in 1994 and among its first moves was a take-over bid for competitor Concurrent. Two offers have so far been rebuffed, and Harris is taking its arguments in favour of a take-over direct to Concurrent's shareholders.
Harris, meanwhile, will launch a new version of the Night Hawk at the International Training Equipment Conference (ITEC) . The Night Hawk 6000 series is the first to use the Power PC microprocessor developed jointly by IBM and Motorola. Deliveries will begin in May to customers which plan to upgrade existing Night Hawk installations.
Industry is cautiously optimistic of a slight upturn in sales for 1995, based on the return of some airlines to profitability and the continued good performance of Asia-Pacific carriers. Simulator demand is likely to be greatest for long-haul aircraft, with regional airliners and business aircraft accounting for a significant proportion of sales.
Atlanta-based Aviation Information Resources (AIR) has revised its Civil Jet Transport Simulator Supply Study to reflect the wholesale cancellation and deferral of aircraft orders and options by airlines since the first edition of the study was published. The consultancy now projects that the world simulator fleet will increase by 74% between 1993 and 2005, having increased by 176% between 1980 and 1993.
AIR forecasts the 2005 simulator fleet at 963 units, an increase of 406 on 1993's total. Growth will be highest in the Asia-Pacific region, the company estimates, with its simulator fleet increasing by 92%, to 215, in 2005. AIR cites a historical decrease in aircraft-to-simulator ratio as the reason why it projects that the world simulator fleet will grow faster than the aircraft fleet. Long-haul aircraft, high-technology cockpits and pro-simulation regulations are driving the ratio down, AIR says. Regulations on the horizon which are likely to encourage use of flight simulators include pending US action requiring regional airlines to train to the same standards as major carriers. This is expected to generate demand for simulator training, as now supplied by FSI, and simulators, with more regionals likely to consider it cost-effective to buy their own machines.
Regionals continue to balk at the price of today's flight-simulators. In an effort to encourage the use of simulation by smaller carriers, the European Joint Aviation Authorities (JAA) has proposed a "Level A" certification standard for a less-sophisticated, less-expensive, FFS. The FAA has yet to follow suit, although it is proposing to upgrade its simulator-certification standards to match those adopted by the JAA and the International Civil Aviation Organisation.
Source: Flight International
