Graham Warwick/WASHINGTON DC
Simulator manufacturers have started 1998 as they ended 1997 - busy. As expected, orders for commercial flight simulators are tracking closely the recent surge in airliner sales. At least 45 full flight simulators were sold last year, short of the last peak of 55 in 1989, but well above the recent low of 15 in 1996.Sales this year are expected to approach those achieved in 1997, but a levelling off to a sustained 25-30 orders a year is predicted from 1999 onwards.
The new year has started strongly, with simulator orders - announced and unannounced - already into double figures. Canada's CAE Electronics, which ended 1997 in pole position with about two-thirds of booked orders, has led the charge in 1998, but rival Thomson Training &Simulation (TTS) is known to have unannounced orders in hand, as have competitors Flight-Safety International (FSI) and Reflectone.
Deals announced so far this year include:
Continental Airlines - CAE: Boeing 737 Next Generation and 777 full flight simulators (FFSs) and flight training devices (FTDs); Delta Air Lines - CAE: a 777 FFS and an FTD to add to 13 flight simulators and training devices ordered last year from CAE; Finnair - CAE: an Airbus A320 FFS; Boeing - CAE: a 717 FFS for the Flight-Safety Boeing Training International (FSBTI) joint venture; Mexicana - TTS: an A320 FFS; Sabena - TTS: an Airbus A340 FFSs to join an A320 FFS ordered last year from TTS; and SAS Flight Academy - CAE: a second 737-700 FFS.Several key deals remain to be announced, including US Airways' selection of CAE to supply simulators to support its new Airbus fleet, beginning with three A320 FFS. FSBTI, meanwhile, has ordered four 737-700 simulators into production at FSI to meet projected demand for training on the type - and despite buying a 737-700 machine from CAE in 1997.
The Continental and US Airways deals are similar to "preferred supplier" contracts signed by CAE last year with American Airlines and Delta Air Lines, to support large-scale orders placed with Boeing. These have resulted so far in orders for 10 FFSs from the two airlines, and include priced options for additional machines required as fleet renewal progresses.
While CAE led the market last year, securing sales of 29 FFSs, followed by TTS with 14, FSI remained a formidable force despite selling only one machine to an "outside" customer - a 717 FFS to Boeing for use by FSBTI. In 1997, the US training company ordered no fewer than 22 full flight simulators into production at its Tulsa, Oklahoma, manufacturing plant.
SECOND SOURCE
After ending 1996 in pole position, TTS was forced into second place last year - but sold more simulators than in the year before. Two customers featured prominently in its 1997 orderbook: United Airlines, with three A320 and two 777 FFSs; and the TTS-owned Orbit Flight Training centre, with A320, A340 and 737-800 FFSs plus an A320 simulator jointly owned with the Pan Am International Flight Academy.
Reflectone secured two orders last year, but they were important ones for the US company - its first for A320 FFSs. They were placed by Airbus, with one machine destined for its Miami, Florida, training centre and the other for the Asia-Pacific Simulation & Training centre in Singapore.
One marked characteristic of last year's orderbook is the preponderance of sales involving narrowbody airliners - A320 family aircraft and Next Generation 737s. The last peak, in 1989, followed a surge in sales of widebody aircraft as airlines worldwide renewed and expanded their long haul fleets. The intervening years, although lean by comparison, were sustained by continued sales of simulators for widebodies - mainly from Asian carriers.
This time around, the peak is mimicking the recent surge in orders for narrowbodies as airlines - principally North American and European - get to grips with renewing their short/medium haul fleets. Orders for some 20 A320 family simulators have been placed since the beginning of 1997, while around 14 Next Generation 737 devices have been ordered over the same period.
This trend is good news for simulator manufacturers, as many more narrowbodies than widebodies are on order with Airbus and Boeing. Tempering their optimism is the fact that, historically, the aircraft-to-simulator ratio for narrowbodies is significantly higher than for widebodies. This has to be factored into forecasts of simulator demand based on aircraft orderbooks, but still leaves the picture looking healthy, at least for the near term. Even the Asian carriers are expected to bounce back, possibly as early as 1999.
Airbus has been actively encouraging operators to buy simulators - offering them as part of package deals with the aircraft, or supplying its customers with a standard specification to provide to simulator manufacturers when conducting their own procurement competitions. Several recent deals have involved Airbus acting as buyer or broker.
TRAINING DEMAND
Boeing has expressed concern to suppliers that there may be too few Next Generation 737 simulators on order, but it has not followed the Airbus example. Instead, it appears to be relying on operators, independent training centres and its own joint venture with FSI to meet the anticipated training demand. Based on sales so far, particularly to European operators, AshSarin, CAE's director of marketing and sales, does not anticipate a shortage of 737 training capacity.
Airline fleet replacement programmes have played a major part in the recent order boom. The American, Continental, Delta and US Airways deals together account for 15 of the FFSs on CAE's orderbook, and options included in the contracts cover a large number of additional machines. These preferred supplier deals do not restrict airlines to ordering simulators from CAE, but give the Canadian manufacturer the incumbent's advantage when competing for follow-on orders.
United has elected to follow a two-track approach, ordering additional A320 and 777 simulators from original supplier TTS while buying further Boeing 747-400 and 757 machines from CAE. The airline was by far the most active buyer of simulators last year, ordering a total of eight FFSs from the two firms.
USfleet replacement programmes also boosted sales of flight training devices last year. CAE booked orders for 21 FTDs in 1997, including no fewer than eight for Delta. Other customers included FedEx (five) and United (two). Although Asian and European carriers purchased a handful of devices last year, CAE's Sarin sees demand for FTDs as mainly a US phenomenon. Buying FTDs allows an airline to cut down on the number of more expensive FFSs purchased, provided they are used within an approved syllabus which provides training credits for using the lower fidelity devices.
DESKTOP TRAINING
TTS says that it sold two FTDs last year, plus another four desktop trainers. While the latter are not certificatable devices, they allow pilots to practise operation of the aircraft's flight management system without tying up an expensive full motion, full visual simulator. Among US airlines, United is a large user of such trainers.
Rounding out last year's simulator sales was another significant group of aircraft - regional airliners. Predictably, regional jets loom large in simulator orderbooks, as they now do in aircraft sales. CAE sold four regional aircraft FFSs last year, including its first for the Embraer RJ-145 and Fairchild Dornier 328JET.
FSI is the official training organisation for the ERJ-145, and its first two simulators for the Brazilian regional jet are already in service. Now the training company has ordered two additional FFSs into production, for 1999 delivery, to meet the training demand anticipated based on the aircraft's sales success. FSI has also begun construction of its third simulator for the Bombardier Canadair Regional Jet (CRJ).
CAE sold a CRJ simulator to Air Canada last year in a deal which Sarin expects could set a trend. Rather than buy the regional jet FFS, and another for the A340, the Canadian airline will pay by the hour to use the CAE-owned simulators. The machines will be based at the airline's training centre, and Air Canada will market any excess training capacity, sharing the revenue generated with CAE. Sarin says that CAE expects to conclude similar deals in the future.
TTS, meanwhile, has been building up its Orbit training centre, which is being relocated to the UK's London Heathrow Airport to be closer to customers. Orbit will be equipped with A320,A340, 737-800 and 777 simulators. A 737-200 machine has been sold by Orbit to the Pan Am academy in Miami, Florida, where the jointly owned A320 simulator will be based.
INDEPENDENT MINDED
The last boom period saw a substantial number of sales to independent training centres. So far, few have placed orders this time around - although German training centre RWL has just ordered a 737-700/800 simulator from CAE to join a 737-300/400/500 supplied previously.
There may be some ownership changes still in store for the training centre sector. The owner of Friendship Simulation in the Netherlands has purchased the Brussels-based European Aviation Training Centre, for example. The former Hughes Flight Training centre near London Gatwick Airport, meanwhile, is now part of Raytheon Systems UK following the Raytheon/Hughes merger.
Looking ahead, CAE's Sarin sees one comparatively new market sector that could emerge in the near future - commercial helicopter flight simulation. He highlights the entry into service at SAS Flight Academy of a Bell 412/212 FFS. FlightSafety would agree with him.The training company is adding Bell 412/212, Bell 430 and SikorskyS-76C+ machines to its fleet of helicopter simulators.
The keys to growth in the helicopter market are both technological improvement and regulatory advances. The eventual aim is to provide training credits similar to those available in a Level D airliner simulator - the highest fidelity recognised by regulatory agencies.
Visual system advances are a key to achieving that capability, as they have been to improving the training available in airliner simulators. CAE's own MaxVue visual is used already on several military helicopter simulators.
The Canadian company is close to selling its 100th MaxVue since entering the visuals market in 1992, including 10 systems sold last year, but the undisputed industry leader is Evans & Sutherland (E&S). The US company claims over 80% of the 1997 market for commercial visuals, including upgrades.
Almost all TTS simulators, and many of CAE's, are now fitted with E&S visuals. FSI meets all of its visual simulation requirements with its own ChromaView system, and is targeting the upgrade market. E&S has been successful, in part, because of its once-dominant visuals marketing partnership with Rediffusion and the large installed base that it now supports. CAE, Sarin says, is focused on the new-build market and on increasing the proportion of its own simulators that are equipped with the MaxVue.
The commercial flight simulation industry has been intensely, even destructively, competitive in recent years. Visual system prices are now half of what they were during the last peak, and, while simulator prices have remained basically stable, four surviving manufacturers makes competition tough even in good times like these.
Source: Flight International
