Graham Warwick/WASHINGTON DC
One question will be on everybody's minds at this year's US National Business Aviation Association (NBAA) convention - will the gathering global economic turmoil mean an end to the boom the industry has been enjoying for the last two years? Not that anyone at this traditionally upbeat tradeshow - held this year in the gambling mecca of Las Vegas, Nevada, from 19 to 21 October - would think to utter the word "recession" out loud, or expect to be paid much attention amid the glitz and clamour of customer parties and product launches.
The fact is, the picture is far from clear. Business aircraft sales, historically, are closely tied to US corporate profits, and these are falling as the economic downturn in Asia, Russia and now Latin America takes its toll on exports. Also the rocketing US stock market, which created many rich individuals able to afford business aviation, has fallen substantially.
RECORD BACKLOGS
Against this stands the tangible fact that aircraft manufacturers' order backlogs stand at record highs, with no acknowledgements before to NBAA of any worrying trend towards cancellations. If the orderbooks stay firm, and even if a little juggling of customers is required, they are enough to ensure that the industry will fulfil analysts' forecasts of another two years of strong aircraft deliveries.
Then there are the intangibles. Like the economic pundits' projections that the recession, when it comes, will not be as deep or a long as the last one. Or the industry analysts' belief that management and shareholder attitudes toward business aviation have been changed for the better, for ever. Or the new factor that fractional ownership has brought into the equation for forecasting aircraft demand.
The exponential rise in fractional ownership has been like that of the stock market, and is linked to its creation of "high net worth individuals", but fractional ownership has yet to follow the stock market's fall. Many believe it will not, arguing that the rich will remain rich even if stocks lose some of their value. Others believe that fractional ownership programmes will gain customers if corporate flight departments are forced to dispose of aircraft, but want to keep the services they provide. Either way, fractional ownership is likely to become an increasing important factor both in the sales of business aircraft and in the definition of new products. This is expected to be particularly true for the new class of ultra-long-range business jets and, ultimately, for supersonic business jets - if they are developed.
With pricetags in the $40 million range, the new global-range aircraft are ideally suited for fractional ownership, particularly in programmes which include access to a short-haul aircraft for in-country hops. With a supersonic business jet potentially costing almost twice as much, fractional ownership may by the only way such an aircraft can be viable.
ENJOYING SUCCESS
Business aircraft manufacturers hope to avoid a deep recession. They are only now enjoying the fruits of the endeavours during the last downturn, when they launched development of many new aircraft to stimulate market demand. This has resulted in record order backlogs for the new designs, which generally offer better value for money - more comfort and higher performance - than the previous generation of business jets.
Manufacturers have concentrated for the past to two years on getting their new designs to the market and on producing aircraft, to recoup their investment. Those thinking of launching new aircraft now will be hoping the any downturn will be short and shallow, and over before their new products come on line early in the next century.
There is certain to be at least two new product announcements at NBAA. Cessna will launch a stretched version of its Citation Excel "superlight" business jet and Bombardier is expected to "soft launch" its New Midsize Business Jet (NMBJ). Both the stretched Excel and the NMBJ are intended as competitors for Raytheon's Hawker 800XP mid-size business jet, and are likely to supersede the Citation VII and Learjet 60, respectively. Bombardier is likely to make a full launch contingent on securing sufficient initial orders - it went through a similar process before launching the Global Express in 1993.
Elsewhere, there is activity in almost every business aircraft niche, including several that did not exist until recently. One of the most active segments is the entry-level market. The single-turboprop business aircraft is a recent invention, and now the Pilatus PC-12 and Socata TBM 700 are to be joined by the ASI Jetcruzer and New Piper Meridian. The single-turbofan business jet is also on the horizon, in the shape of Century Aerospace's Century Jet and Visionaire's Vantage, although exactly when these aircraft will become available remains open to question.
The current entry-level business jet, Cessna's CitationJet, now faces competition from Raytheon's bigger and faster Premier I, and may be due for movement. Raytheon, meanwhile, hopes to make the delayed first flight of the composite-fuselage Premier I on the eve of the Las Vegas show. Sino Swearingen is continuing development of its SJ30-2, but appears to be carving a new niche for a long-range light business jet.
The traditional light business jet market continues to be dominated by Cessna's Citation Bravo and Ultra, although sales of Bombardier's competing Learjet 31A have been boosted lately by the company's own fractional ownership programme. Raytheon appears to be waiting until next year's NBAA before unveiling a larger version of its Premier able to compete with Cessna's light Citations and, possibly, replace Raytheon's own Beechjet 400A. Superlight segment
The new "superlight" segment is represented by Bombardier's Learjet 45 and Cessna's Citation Excel. Deliveries of both began this year after longer than anticipated certification programmes. With both claiming backlogs of 150-200 aircraft, this sector looks likely to be popular. The reason is clear, both aircraft offer levels of cabin comfort usually associated with mid-sized aircraft at prices closer to those of light business jets. This, inevitably, is having consequences for the mid-sized market. "Traditional" mid-size aircraft, such as the Learjet 60, Dassault Falcon 50 and Hawker 800XP, continue to sell well, but market interest is moving towards so-called "super mid-size" business jets.
These claim to offer large-aircraft cabin at mid-size prices. Examples are the Dassault Falcon 2000, Galaxy Aerospace Galaxy (making its NBAA debut at Las Vegas) and the Raytheon Hawker Horizon.In price, as well as size, these aircraft represent a new class fitting between today's mid-size jets and large aircraft such as the Bombardier Challenger 604, Dassault Falcon 900 and Gulfstream IV-SP. The aircraft to be launched at NBAA by Bombardier and Cessna appear to be aimed at revitalising the traditional midsize market by offering better value for money.
The large business jet market has been dominated by the same three competitors for several years. Dassault has already made improvements to its Falcon 900, and Gulfstream is expected to follow suit this NBAA, unveiling enhancements to the GIV-SP. Bombardier is expected to hold off announcing any "Challenger 605" until its NMBJ is firmly under way.
The new ultra-long-range segment is proving an interesting battleground, with Boeing having carved out more of a share of the market than either Bombardier or Gulfstream would like. Whether the 737-based Boeing Business Jet (BBJ) can sustain its initial sales momentum - and whether Airbus' A319-based Corporate Jet can match it - is the issue. Gulfstream may be less concerned, because its GV programme is already past the break-even point, but Bombardier's all-new Global Express has yet to enter service and the programme is still some way from break-even.
The buoyant large-aircraft market has highlighted one industry issue - a shortage of completion capacity. Gulfstream bought K-C Aviation earlier this year to boost its GIV and GV completion capability, at the same time removing from the market one of the leading independent completion centres for large aircraft. Bombardier is boosting its internal competitions capability, but is vying with Boeing, particularly, for available outside capacity.
SUPERSONIC NICHE
The latest niche to emerge is for a supersonic business jet (SSBJ). Dassault announced it was studying an SSBJ at last year's NBAA, while Gulfstream confirmed at the Farnborough airshow in September that it had teamed with Lockheed Martin Skunk Works on an SSBJ technical and market feasibility study.
Dassault's design is becoming more defined, emerging as a tri-jet with Mach 1.8 cruise speed, 7,400km (4,000nm) range and Falcon 50-size cabin. Gulfstream's starting point is an aircraft with a speed of M1.8-2.0, range of 7,400km and a GIV-sized cabin. Both companies acknowledge that certification of an SSBJ is several years away, but both seem intent - if the market is proved to exist - to be there first. Richard Santulli, chairman of Executive Jet and creator of the successful NetJets programme, believes that the SSBJ is an ideal aircraft for fractional ownership. As his company, now owned by billionaire investor Warren Buffet, is the largest customer for both the Falcon 2000 and the GIV-SP, Santulli's views are likely to carry considerable weight as Dassault and Gulfstream move forward with their studies.
Fractional ownership faces its own issue, however, as the US Federal Aviation Administration debates whether to change the rules under which the programmes are operated Elsewhere, business aviation faces regulatory challenges ranging from the costs of moving to satellite-based navigation to possible restrictions on extended-range operations with twin-engined aircraft.
Here the NBAA comes into play, especially now that the closer relations it has developed recently with both its international counterparts and with bodies representing the manufacturers and other branches of general aviation are beginning to pay dividends. Coordinated responses on issues are gaining greater attention from regulators.
One thing is certain. Just as US investors are beginning to realise that the economy is now a global one, industry is beginning to realise that business aviation is a global endeavour.
Source: Flight International
