JUSTIN WASTNAGE / PRAGUE, LUCERNE & MUNICH
Military manufacturers in Central Europe are having to adapt by developing new products for the North American corporate aviation market
As defence budgets around the world collapsed after the end of the Cold War, several military aircraft manufacturers saw their markets disappear. Necessity being the mother of invention, new civilian products from three Central European airframers have been developed for markets that have the potential to be more profitable than the companies' core business.
The growing sales success of the Pilatus PC-12 in the USA vindicates the Swiss manufacturer's decision to produce a single turboprop business aircraft at a time when the conventional wisdom was pointing towards the unchallenged supremacy of twinjets. The demand for turboprop corporate aviation is also likely to prove profitable for Aero Vodochody in the Czech Republic, and for Germany's Grob, both of which are close to delivering small business aircraft to owner-flyers.
The trend was set by Pilatus, when it launched the PC-12. In the mid-1980s, the company, which takes its name from the Swiss mountain inside which it was first going to be housed, commissioned market studies into developing a utility aircraft to replace its popular PC-6 Turbo Porter. But Pilatus, which also owned a second range of utility aircraft at that time - the Britten- Norman Islander and Defender - decided to target the emerging business owner-flyer community.
Pilatus's Swiss roots meant that it was already an adept exporter. So far, 450 PC-7 turboprop trainers have been sold to air forces across the world and the improved PC-9, developed originally on behalf of the South African air force, has sold twice as many aircraft outside South Africa and Switzerland as inside those countries.
Political wrangling
Pilatus says it has never been able to count on the support of the Swiss air force, which has always had a policy of buying from European and US manufacturers, and has had to fight the Swiss government all the way as it blocked PC-9 sales, initially to South Africa, and then to Mexico. Switzerland may offer the company export risk guarantees, but provides none of the behind-the-scenes political arm-twisting that other aerospace manufacturers get from their governments. It was this enforced outward viewpoint that allowed the company to focus plans for a civilian turbine on overseas markets.
The PC-12 was initially conceived as a cargo aircraft, after the company saw the success of its PC-6 conversion and the Cessna 208 Caravan. Although the firm's aircraft have always had civilian uses, such as parachuting and cargo, the military was historically the main customer, accounting for nine out of every 10 aircraft sold. But market research pointed to a demand for more speed and increased cockpit comfort - as well as greater civilian usage. All along, use by private pilots had been an afterthought; but following interest from small business owners when the aircraft was exhibited at various air shows, the company added a leather interior and cushioned sidewalls.
Three-quarters of all production is now for US customers, where the company trades on the Swiss reputation for quality and reliability. But Swiss class is not cheap. "It's a fact that aircraft built by people cost money," says Ignaz Gretener, vice-president for general aviation. Pilatus is so concerned with keeping an artisan feel to production that it only subcontracts limited parts of the structural assembly, with OGMA in Lisbon doing the riveting. "Swiss quality control is crucial," says Pilatus.
That the PC-12 has found such a ready market in the USA is testimony to its quality. A major selling point has been that turbine aircraft can land at community airfields where jets are banned by local noise regulations. This means an executive can fly to his holiday home at the weekends after having used the aircraft for short-haul business trips all week. But its success in Europe has been hampered by regulations. In the European Common Airspace Countries, single-engined aircraft are forbidden from flying commercially under instrument flight regulations (IFR). Gretener says that this, coupled with better ground transportation in Europe, has seen the PC-12 make less headway in its home continent.
The company is lobbying the Joint Aviation Authorities for a rule change, pointing out that privately owned single-engined piston aircraft are permitted to fly over built-up areas - and that these aircraft are often less well maintained than turboprops in commercial use. The firm has plenty of customers, it says, just waiting for the rules to change. The Swiss air ambulance service REGA is interested in the product, but it is simply not allowed to use it, says Georg Langhans, sales director in Europe for the aircraft. Also, private owners look to charter out aircraft downtime, which is impossible without commercial IFR approval.
Elsewhere in the world, the product has been greeted with enthusiasm. The Royal Australian Flying Doctor service was the launch customer in 1989, and now three out of four divisions of the service have PC-12 fleets.
Yet the project almost never got off the ground. In the 1990s, Pilatus was still owned by the Swiss holding company Oerlikon-Buhrle. The conglomerate had diversified into weapons systems investment and had tried to produce an air-defence system, but lost SFr1.5 billion ($890 million) after the project was scrapped. The resulting Oerlikon-Buhrle analysis concluded that aviation was too volatile a market and recommended concentrating instead on its consumer brands, such as Bally shoes. Pilatus sought out Swiss investors who would retain the company's facilities beside Lake Lucerne, rather than buy the design rights to its aircraft.
The company is now set to launch its new PC-21 advanced trainer, but says it would be imprudent to develop more than one major new project at a time. For now, it will alternate between civilian and military projects. The PC-21 was developed from the PC-12 profits, and revenue from as few as 500 PC-21s will pay for the"PC-16, PC-18 or whatever", says Gretener.
In the Czech capital Prague, meanwhile, many beers were downed as aerospace workers came to grips with the business culture of their new partners. The word for beer is almost identical in Czech and in Taiwan Chinese - and this happy coincidence was a useful tension-breaker in the fraught early years of co-operation between the Czech Republic's Aero Vodochody and Taiwan's AIDC in their joint venture, Ibis.
Peter Ciprovsky, vice-president of civil aircraft programmes at Aero Vodochody, says there was a sharp learning curve when the Taiwanese won the bid to invest in the Ae-270 utility aircraft in 1997. European negotiating techniques are almost the reverse of Asian ones and subtle meanings were lost in translation. But despite a far from smooth start, the relationship is now excellent, Ciprovsky says. The first customer Ae-270 has entered production and is due to be delivered to a South African operator by September.
Market changes
Aero Vodochody owns 50% of Ibis Aerospace, which markets the Ae-270. Taipei-based AIDC and its chairman, Cheung Fong, own the remaining half. The need for a foreign investor arose early on in design of the aircraft. Following the collapse of communism in 1989, Aero Vodochody was faced with the stark reality that the market (made up of former Soviet bloc countries) for its Aero L-39 Albatross military trainer, which was already edging towards the end of its shelf life, had been almost eliminated overnight. "To say that there was panic is an exaggeration, but it was surely a crisis," says Aero Vodochody president Milos Valis.
While creating Westernised versions of the current trainer, the company also recognised the immediate need to develop a civil aircraft and design work started on a "flying tractor" high-wing, low-speed piston aircraft, based on the Antonov An-2, to compete with basic fixed-gear utility aircraft. Original designs were drawn up by a team led by Jan Miluka, who had previously been responsible for Zlin's series of aerobatic aircraft.
By 1995, however, Aero Vodochody had noticed the early success of the Pilatus PC-12 and saw room in the owner-flyer turboprop market for another player, producing a market of 800 units. The design was modified, with the wing lowered, fuselage lengthened and engine cowling re-engineered for a turbine. "The Ae-270 design was 80% completed in 1992," says Ciprovsky, "but the project was frozen due to lack of funds".
Aero Vodochody cast its net around for risk-sharing partners, and South Africa's Denel showed strong interest before AIDC approached the company in 1995. By July 1997, a new joint venture had been formed. AIDC would provide the wing to Aero Vodochody, which produces the fuselage and has the final assembly line. The aircraft is then sold through Ibis, which is a separate company. Six members, three from each country, control the board of the new company, and a limited personnel swap has begun.
Know-how, no cash
Karel Sovak, Ibis sales director for Europe, the Middle East and Africa, says: "We had the know-how, but no cash. AIDC had the cash and needed a project in which to invest." With a highly skilled workforce available at much lower salary levels than in Western Europe, and forecast sales in excess of 800 units, the Taiwanese were eager to conclude a deal.
The project is, however, now international, with Canadian engines and German seats. The company is also excited about the arrival of green primer paint to replace the Soviet-era deep burgundy in time for the first production aircraft's maiden flight in September.
Over the German border in southern Bavaria, Grob has, like Pilatus, struggled to survive. The company claims to be the first to mass-produce gliders when it started an assembly line for the Schempp-Hirth Standard Cirrus in the early 1970s. Plastics manufacturer Grob was in a good position to exploit the new composite materials, such as glassfibre reinforced plastic and plastic foam, for aircraft construction to replace traditional craftsman-built gliders of the 1960s. That the company should then develop its own glider, the G102 Astir CS in 1977, was as much testimony to Swiss founder Dr Ernst Grob's passion for aviation as any hard-headed business decision.
It was his enthusiasm and that of his son Burkhart that propelled the aerospace business forward. Despite only accounting for a small share of the company's total profits, the aircraft found customers among air force flying schools - notably the UK's Royal Air Force air cadets - and the company started to explore the market for a dedicated trainer aircraft built from composites.
The resulting G115 was developed together with the military of several countries. Grob took two years to modify the stall characteristics and test the structural integrity of the aircraft before launching an aerobatic version, the G115D, specifically requested by the Norwegian and UK navies. Two years later, the design team developed a glassfibre reinforced plastic variant of the original carbonfibre model, the G115E, in response to a need for a faster aircraft.
Reworked aircraft
Hans Doll, Grob's sales director, says the request for a 135kW (180hp) engine, coupled with the requirement for a constant speed propeller, meant reworking every detail of the aircraft. "Because it's going to be flown for over 1,000h a year it needs to be strong," Doll adds. So successful was the redevelopment that the company now offers a 195kW variant, the 115TA.
The rolling development process is central to Grob's philosophy, says Doll. It was as part of work on the latest trainer update, the G120, that the company again started thinking about a civilian product. The company integrated instrument flight rules avionics into the aircraft for launch customer Lufthansa Flight Training, which trains German air force pilots under a private finance initiative. This led Grob to commission a market study last year into how IFR single-engined turboprops are used. The survey found that many owner-flyers like to take one or two passengers and baggage, but often feel six-seaters are "overkill". This led to the launch of the G140 four-seater turboprop.
"We were overwhelmed by the demand for the aircraft," says Doll, but Grob is still cautious of the civilian market, and is keen not to let the excitement caused by the aircraft's launch at last year's Paris air show overshadow the trainers. One reason why the company is so reluctant to expose itself to the vagaries of the civilian market is because of its experience with two civilian product developments in the 1980s.
The then-West German border police had expressed an interest in the acquisition of a low-observable surveillance aircraft and part-funded research into the 56.6m (185ft)-span, pressurised, all-composite Strato 1 aircraft capable of cruising at an altitude of 54,000ft (16,460m). But the end of the Cold War rendered the project obsolete.
Despite attempting to build a commercial case for a weather-monitoring scientific aircraft, the Strato 2 project failed to meet its objectives. Additional funding was killed following German press allegations over the company's political connections.
Following this expensive episode, the company was reluctant to diversify from trainers. A pusher-turboprop four-seater business aircraft, the GF 200, was dropped by Grob despite having its proof of concept phase promoted by the German research and technology ministry.
Lessons learned from building aircraft for military customers have seen important cross-overs for all three companies. This should stand them in good stead as they explore a future which now lies firmly in the corporate sphere.
Source: Flight International
