Karen Walker/ATLANTA
JUST WHEN THE commercial flight-simulator industry might have paused for breath and enjoyed a period of stability after years of unprecedented turmoil, it appears that the waters have been stirred again. FlightSafety International (FSI) has entered 1996 with a view to changing the marketplace dramatically.
Traditionally, FSI has focused on manufacturing simulators for the many training centres it operates, chiefly in the USA. The great majority of those simulators, are for general-aviation (GA) and regional-airliner aircraft types. While the US company has, occasionally purchased simulators from other manufacturers, it has rarely made its own simulators available for sale, and has seemed even less interested in mass-producing machines for the commercial-airliner market. Its declared intention, therefore, to address this segment of the business aggressively from now on, with the ultimate goal of becoming the market leader, will be examined closely by customers and competitors alike.
Initial reaction from FSI's main competitors - CAE Electronics of Canada and Thomson Training & Simulation (TTS) of France - is a cautious "wait and see". Although neither company underestimates the production capability of FSI's Simulation Systems division in Tulsa, Oklahoma, CAE remains confident that it will retain its dominant market position, while TTS has been buoyed by a recent spate of orders.
BOOM YEARS
The presence of a third major player in the industry, however, could upset overall market shares in 1996. The last time that three major manufacturers were in the picture was in the boom years of the mid- to late-1980s, when CAE and the then-Thomson-CSF and former Hughes Rediffusion Simulation regularly battled for contracts. In those days, a one-third share of the total world wide market, could still mean taking orders for 12 to 15 full-flight simulators (FFS). The difference in 1996, following years of recession, is that the total market is unlikely to be much more than 1995's 17 units. If FSI succeeds in taking one-third of those sales, then it will have gained a respectable portion of what would be, for FSI, new business, but it would be grim news for CAE and TTS.
The question is, can FSI really make its mark with the airlines? Capacity is not the issue - there are some 25 simulators in production in Tulsa and the company has regularly produced high numbers of FFSs and other training devices. Credibility is the key - can a mass manufacturer of simulators for GA and regional aircraft produce machines, which will meet the exacting standards of the major airlines? FSI says "yes" and provides pertinent proof - a Boeing 777 FFS just completed at the Tulsa factory and due to be installed at the company's Seattle, Washington, training centre later in 1996.
FSI argues also that it is harder to build simulators for GA aircraft, because unlike the makers of commercial airliners, GA manufacturers issue few data packages, so it is up to the simulator manufacturer, to build up the data to ensure fidelity. Consequently, FSI has its own flight-test department to collate this critical information, and now rarely builds a simulator to anything less than the US Federal Aviation Administration's highest Level D standard.
Another weapon in FSI's armoury is its new vice-president of marketing and sales, Adrian Gale. He brings many years of experience working for CAE, most recently as marketing director for commercial simulators. He leaves no room for doubt of FSI's intentions. "We are out there now and we are bidding in every competition," he says. "We are looking to be market leader." Gale feels it is the right time for FSI to make this move. "One of the things that we see is that 1996 will be the turn-around year. People have been saying it, but we see that it is happening. So it is a good time to get into the market, when it is on the way up," says Gale. "There are also some very bullish forecasts coming from Boeing and McDonnell Douglas [MDC] - but a market turn-around is not the only reason. We have always been in the business of making money, and we don't want to cut ourselves from a market that we could successfully handle."
Gale believes that FSI has a particular strength in offering packages to those airlines which want "truly turnkey solutions", because of its experience in providing training centres, syllabuses, courseware and instructors as well as the training hardware.
There can be no doubt, however, that neither CAE nor TTS intends to make FSI's task an easy one. CAE continues to be a formidable force. While 1995 remained essentially flat in terms of FFS sales - 17 units compared with 1994's 16 and 1993's 17 - CAE claimed ten, or 59%, of those sales. Notable contracts included two FFSs for Garuda - for the Boeing 737-300 and MDC MD-11; a 777 FFS and flight-training device (FTD) for Japan Air System (JAS); an Airbus A300-600 FFS and MD-11 FFS, plus FTDs, for China Airlines; and a 777 FFS for Korean Air. CAE claimed all of the available airliner FTD sales - four units - and 67% of the visual-systems market with its MaxVue.
John Caldwell, president and chief executive officer of CAE, parent of CAE Electronics, sums up 1995 as having turned out "...pretty much as we expected". This year, he predicts, might see a small upturn, and he expects that his salesmen will have to fight hard for each order. "We are not hung up on market share, but we have a very strong belief in our product and in what we do. We have every intention of remaining number one in the world, and we will go aggressively after each unit. We don't look at targets, but we do intend to maintain our leadership," he says.
AGGRESSIVE STANCE
Caldwell is not in the game of putting down any of CAE's competitors. He is well aware of FSI's more-aggressive stance and speaks of "respect" for TTS, which makes a "very good product", he says. His focus, however, is not on his competitors' strategies, but on his own four-point plan. "First, we will be even more aggressive in providing value-added products in terms of overall cost and training. Second, we hope to shorten delivery schedules. Third, we are looking at how to lower the cost of making a simulator to improve our margins; and fourth, we expect to see a natural evolution in technology." With those guidelines in place, Caldwell says: "I can say with some confidence that we have every intention of remaining number one."
Although the majority of 1995 was bleak for TTS, the break in its fortunes finally came towards the end of the year when it picked up four FFS orders - an A320 and A340 for Airbus, a 737-800 for Lufthansa and an A300-600 for China Eastern. In February, the company also announced an order from Royal Brunei for a 767-300ER FFS. Michel Orman, sales and marketing director at TTS, feels that these recent successes indicate the end of a difficult time for the company as it has attempted to bring together three manufacturers - the former Thomson-CSF, Link-Miles and Hughes Rediffusion Simulation - into a single entity. "This has been the key to our success in late 1995," says Orman. "We were trying to take the best of three worlds - and now it is done. My main message is that we are now better than ever. You just have to look back at what was Thomson ten years ago - we were a small niche player. Now we are a major player in the market, but that market went down from 40 full-flight simulators a year to ten. But as we see the market return to 15 to 20 units, then we will be a major player."
Orman has also confirmed TTS' intention to continue a partnership with US visuals manufacturer Evans & Sutherland (E&S), despite the fact that it has its own Space visual-system. "We will continue the interest of both companies - it is important for customers to be able to continue with the same family of products, so we will continue to go with the E&S products where it makes sense and we will propose Space where it makes sense," says Orman.
Both CAE and TTS agree that the available FFS market should be around 18 units in 1996 and that an important segment will be the 777 market. That number could be higher if, as hoped, two multiple orders arrive in 1996. The most important of these will be an order from Saudia, which is looking for full-flight simulators and FTDs for its new 777s, 747-400, MD-90s and MD-11s. The winner of that will have a large advantage in market share
Source: Flight International
