These are boom times for business aircraft manufacturers, with record deliveries, orderbooks bursting at the seams, backlogs stretching into the next decade and used aircraft prices at record levels. The economic gloom that is engulfing the USA and parts of Europe is seemingly having little or no impact on demand for business aircraft.
For the first time last year annual business jet deliveries exceeded 1,000 units, while in its latest forecast, US analyst the Teal Group predicts a whopping 14,242 business jets valued at over $216 billion will be delivered over the next 10 years.
Company analyst and report author Richard Aboulafia says the growth is being fuelled by continued strong corporate profits, high resource prices, and increased manufacturing outsourcing to diverse locations. "Globalisation has created a much more diverse market, with greater opportunities for further growth," he says. Aboulafia cautions, however, that a "mild downturn" will take place after 2010-11. "The second half of 2007 - the most recent numbers available - indicates two consecutive quarters of a mild corporate profits downturn. Looking at history, that downturn implies a business jet deliveries downturn about two to three years later," he says.
Unprecedented demand for its business jets is forcing Dassault to Ramp up
This downturn could nonetheless be deferred if demand from international markets - which now account for over half of business aircraft sales for most manufacturers - continue to flourish.
International growth, particularly in Brazil, Russia, India and China - know as the BRIC countries - has been a blessing for many airframers whose profits and sales successes had previously been indelibly linked to strong US corporate profits. "If the global economy can stay de-linked from the USA, international demand could compensate for any US market softness," says Aboulafia.
He also suggests that the production bottlenecks across the industry have helped create record backlogs, implying a prolonged upturn. "Our forecast of a downturn, therefore, is conservative," he admits.
The market optimism infecting airframers has been reflected in the decision by many leading companies to aggressively launch clean-sheet designs this year in an attempt to exploit niche market segments and fend off competition. Five new models had been unveiled by the middle of April and more new designs ready to scoop up untapped demand are expected this year.
This stampede comes after a new design drought of several years punctured only by upgrades and minor improvements to some models - a softer and less risky tactic for attracting and retaining customers.
"Despite the ups and downs, we've had over 12 years of very strong market growth. So, products launched today will arrive after any market dip [in around 2012/13] and will likely enjoy a market that has returned to prosperity," Aboulafia says.
First off the mark with its latest clean-sheet product was Bombardier, which in February unveiled the latest member of its Learjet family, the Model 85. The mid-size aircraft is the first all-new platform launched by the Canadian airframer since the super-midsize Challenger 300 in 2000. This was followed two years later by the unveiling of the super-large Global 5000 and Learjet 40 light business jets - variations of the Global XRS and Learjet 45 respectively.
Bob Horner, Bombardier's senior vice-president of international sales, says the timing for launching the Learjet 85 is perfect "and simply underlines Bombardier's success in gaining a foothold in every business jet category from light to ultra long range". The Learjet 85 is the first all-composite aircraft to be built by a major manufacturer - composite specialist Grob is building the first prototype. "We made a leap with this product by deciding to build an all-carbonfibre aircraft as Bombardier has traditionally stuck with metal," says Horner.
The use of composites should enable Bombardier to price the aircraft competitively in what has become a very busy market sector. Here the airframer cleverly positioned the aircraft into a niche between its Learjet 60XR - which is likely to be phased out - and the Challenger 300, but with a price tag to rival its mid-size challengers - the Gulfstream G150, Cessna Citation Sovereign and Hawker 900XP. "Customers are continually moving through the product range and it's our role to excite them with fresh products and ideas," says Horner. "We need to capture niches to underscore our philosophy that there is a product to fit everybody."
Horner says Bombardier is continuing to mull over other new products and enhancement across its range, but is unlikely to venture into the very light jet market. "It's a high-volume market and very different to the one we operate in now."
Within its competing market Bombardier sales are booming. Last year it received 452 orders and delivered more than 232 business jets, helped by booming international markets, which are expected to account for 70% of its deliveries outside the USA this year, it says. Bombardier's in-production business jet fleet totals over 2,948 aircraft, including 86 Learjet 40/XRs, 345 Learjet 45/XRs, 165 Challenger 300s, 709 Challenger 600 Series aircraft, 35 Challenger 800 Series aircraft and 190 Global Express/XRS.
Also riding high, Cessna delivered 387 business jets last year, more than any other manufacturer, and with a backlog valued at over $12 billion across its nine-strong Citation family, expects to deliver a record 470 jets this year.
The Citation series has been hugely successful for Cessna, which has handed over more than 5,300 aircraft since production began over 25 years ago. Cessna has also introduced 22 new aircraft across its general aviation aircraft range over the past decade.
Its most recent addition is the large-cabin Citation Columbus - Cessna's largest and most expensive Citation yet, with a $27 million price tag in 2008 dollars.
The all-metal Columbus is a logical move for Cessna, allowing customers to step up from its mid-size Sovereign and high-speed Citation X. Significantly, however, Cessna has leapfrogged the super-mid-size sector - traditionally the next step up for its customers - with an aircraft with a price and range to rival the Challenger 605 and Dassault Falcon 2000 large-cabin business jets.
"We took all the messages from our customers over a six-year intensive market research programme," says Cessna's senior vice-president for sales and marketing Roger Whyte. He says the Pratt & Whitney Canada PW810 turbofan-powered Columbus is designed to be the best-value proposition in its class, with a target range of 7,400km (4,000nm) at Mach 0.80 with eight passengers, a maximum cruise speed of Mach 0.85 and an 11.1m (36.3ft)-long cabin First flight is scheduled for 2011, leading to US certification in 2013 and entry into service in 2014.
In the light jet market Cessna is hoping to steal a march with the CJ4 now under development as a replacement for the Bravo. The CJ4, which flew for the first time earlier this month, is a stretched derivative of the CJ3 with a modestly swept wing and uprated Williams International FJ44-4A engines. "The CJ4 will have greater speed, altitude and range performance than the Bravo and is scheduled for certification in 2009 and service entry in 2010," says Whyte.
Cessna is also working on an upgrade to its popular super-light XLS business jet. When the XLS+ enters service later this year it will be equipped with Rockwell Collins Pro Line 21 avionics, digital engine controls, reprofiled nose and a new interior. "Our product development strategy looks 20 years ahead," says Whyte. "If you are going to keep up with what's going on you have to set a long-term goal. There is intense competition in all market segments."
Dassault has consistently pitched its models at the top of the market, where its Falcon family of business jets has secured a sizeable chunk. Its most recent addition, the SMS/5X, entered development last year and service entry is expected in 2014. The Rolls-Royce RB282-3-powered SMS is set to carve a niche at the bottom of its range in the super-mid-size market, replacing the Falcon 50EX, the last of which was delivered earlier this year.
"It will be the major event of the marketplace," says Dassault's vice-president of Falcon programmes, Olivier Villa. "We will reveal more details at the National Business Aviation Association convention in October."
The French manufacturer received orders for 212 business aircraft last year, dwarfing the previous high of 158 recorded in 2006, and delivered 70 jets. The bulk of the orders were for the ultra-long-range Falcon 7X, which entered service last year.
This unprecedented demand is forcing Dassault to move quickly to ramp up production so that having to wait for delivery slots does not drive customers to competitors, says Villa. The earliest available slot for the Falcon 7X is now mid-2014 for a Falcon 900 it is 2011 and for a Falcon 2000 it is 2012, he says. "People aren't walking away from a sale due to the long backlogs, they are just taking a little longer to think about it."
Dassault broke ground late last year on a second assembly hall in Merignac, near Bordeaux. This will provide extra capacity for the Falcon 7X and provide assembly space for the SMS. The plant, to be ready next year, will double the assembly floor area to 32 aircraft positions. Dassault is also set to expand and improve the production processes at the company's component/subassembly plants in France and completion lines in Little Rock, Arkansas. "With all our improvements in place, we plan to produce 10 Falcon jets a month by the end of 2009," says Villa.
Meanwhile, although international sales are growing considerably, the slowdown in the US economy - which accounts for around 25% of Falcon sales - seems to be having a slight impact on orders. "It is slower in the USA, this year but still growing, and it's too early to say if the economic crisis will have a bigger effect," he says.
What is apparent is the effect of the weak dollar on euro-zone production, which is forcing Dassault - the only European airframer in the top five - to increase outsourcing to dollar-zone or other low-cost areas by another 10% over the next 18-24 months. "It is killing us," Villa says.
He adds that Dassault has no set timeframe for product development. "We just look around for great opportunities in the market." The first Falcon 2000LXs are scheduled for delivery in the third quarter. "These are the aircraft that were originally ordered as EXs, but upgraded on the production line," says Villa. "We will provide a programme update on the [non-EX upgraded] 2000LX at EBACE." Dassault is continuing to work on an LX version of the Falcon 900 "but we still have some work to do before we can commit to a programme".
With the launch in April of its mid-size jet (MSJ) and mid-light jet (MLJ), Brazilian manufacturer Embraer is well on the way to transforming itself from a niche player to a dominant force in the business jet sector.
The company launched its market offensive three years ago when the Legacy 600 was its only product. Within weeks the company launched the Phenom 100 very light jet and 300 light jets. The Phenom 100 is on schedule for certification and delivery in the third and fourth quarters, followed a year later by the Phenom 300, which made its first fight late in April. At the top of the Embraer executive jet line-up is the E-190-derived Lineage 1000, which is expected to enter service in the second half of the year.
"By expanding our product line we are able to attract new customers and keep existing customers within the Embraer family," says Embraer's executive vice-president for executive aviation, Luís Carlos Affonso.
Embraer's strategy for attracting customers is to offer "great aircraft at great value", he says. Embraer has successfully identified market niches across its range. It MLJ and MSJ - likely to be called the Legacy 400 and 500 respectively - will be no exception, Embraer says, neatly positioned between the Phenom 300 and the super-mid-size Legacy 600. "They will offer more value than anything else in their class," Affonso says. Details are sketchy, but the MSJ and MLJ will each have a flat floor, a 1.8m stand-up cabin and a closed-loop fly-by-wire flight-control system - a first for Embraer - operated by sidesticks mounted on each side of the cockpit. "The MSJ and MLJ will be the smallest business jets with a full fly-by-wire system, the Rockwell Collins Pro Line Fusion avionics suite with synthetic vision system a standard feature, and optional head-up display and enhanced-vision system," says Affonso.
The MSJ performance includes a range of 5,550km with four passengers, or 5,180km with eight passengers, at M0.80 and take-off field length of 1,400m (4,600ft). The MLJ's range is 4,255km with four passengers and 4,070km with eight passengers, at M0.78 and take-off field length of 1,220m. The MSJ is scheduled to enter service in the second half of 2012, followed about a year later by the MLJ. According to Embraer, the mid-size and mid-light categories could represent 21% of the expected 13,150 business jets to be delivered over the next 10 years.
Affonso is confident the market will remain buoyant for the foreseeable future. "We have had phenomenal success with all our products and there are no apparent signs of a downturn in demand," he says. The Phenom family has a combined order total of more than 700 aircraft. Legacy deliveries rose from 27 in 2006 to 36 units last year, boosting Embraer's share of the super-mid-size market to 15%, while its top-of-the-range Lineage 100 has an expanding orderbook of 20 aircraft.
On the back of unprecedented demand across its range of mid- and large-cabin aircraft, Gulfstream in April launched its much-anticipated G650 ultra-long-range business jet - which it describes as the biggest, fastest and furthest-flying purpose-designed business jet yet. "Last year we delivered 269 aircraft - compared with 159 the previous year - and we made the largest amount of sales in the history of our company," says Gulfstream president Joseph Lombardo.
In the first quarter alone Gulfstream delivered 37 green aircraft, compared with 30 in the same period last year. The shipments consisted of 22 large-cabin aircraft - G350, G450, G550 - and 15 mid-size jets - the G150 and G200.
Gulfstream parent General Dynamics says the all-new, clean-sheet G650 has already generated a huge amount of interest and the company is sorting through letters of interest representing potential orders for hundreds of the $60 million aircraft. The G650 is described as the largest non-airliner business jet in the market, an aircraft with an array of sophisticated electronic systems for use by pilots and passengers, and with the largest cabin among conventional business jets. It will have a maximum operating speed of M0.925 - edging out the M0.92 Citation X for the title of the world's fastest civil jet - and will be capable of non-stop flights of up to 13,000km at speeds of M0.85.
Gulfstream plans to begin delivering G650 s in 2012 and a total of 83 aircraft in the first two-and-a-half years of production. "But the initial market response indicates there is demand for six to seven times that many G650s," says General Dynamics.
To accommodate the explosion in demand, Gulfstream has begun a $400 million facilities expansion programme at its Savannah, Georgia base. One major element of that expansion is a new 28,400m2 (306,000ft2) manufacturing/assembly hall, which will accommodate two G650 production lines. Lombardo admits that the desire to boost production rates to shorten the lead times must be balanced against the increased costs that a sharper production ramp-up would impose. "Backlogs are a very sensitive issue with our customers, but we don't want to risk raising production rates to levels that cannot be sustained," he says.
The US economy also has a significant role to play. "Of course the US economy is heavy on our minds," says Lombardo, "but there is nothing we can see that indicates we are going into a down cycle." Lombardo points to a strong appetite for business jets worldwide. "International sales now account for 53% of our business and we are focusing our resources in these markets - particularly China and the Middle East. Our brand carries a lot of weight and it is particularly important for us to focus on sales and customer service," he says.
Lombardo says the company continues to invest heavily in new technologies and aircraft to stimulate customers appetite for new products. The company says its development cycle is around five to seven years, with its last clean-sheet design, the G150 developed jointly with Israel Aerospace Industries, certificated two years ago.
Lombardo will not be drawn on further product development, but it is predicted that the company will launch - perhaps as early as this year - a new super-mid-size contender. The G200, formerly the Galaxy business jet, continues to sell well, Lombardo says. "This is a very successful aircraft, of which we sold 44 last year. The 200th G200 will be delivered in June."
Gulfstream receives much of its product feedback from its dedicated customer advisory board. "This tool helps us to find out what our customers are thinking and what they want so we can try to outsmart the competition," says Lombardo.
Product development is also at the heart of Hawker Beechcraft's strategy. The company has been a key player in the business aircraft market since its former owner Raytheon acquired the BAe 125-series more than 15 years ago Today around 900 examples of the type have been handed over and the ubiquitous mid-size aircraft has spawned two siblings following the launch two years ago of the shorter-range 750 and the longer-range 900XP.
"Through the 800XP platform we have successfully identified two niche markets," says Hawker Beechcraft president commercial sales, Brad Hatt.
He says Hawker, then part of Raytheon, was the first to introduce the super-mid-size concept in 1996 with its Hawker 4000 (nee Horizon) business jet. After a protracted and exhaustive development effort, the eight-seat 4000 is expected to clear its final hurdle in June with the first delivery. "In retrospect we launched the aircraft too early as we were concentrating our efforts on other programmes - the Premier I light jet and the T6 Tucano trainer - which took up our time and resources," Hatt says. The company is aggressively exploring new products including a stretched version of the 4000 and is planning to launch an updated version of its Premier IA - dubbed the Premier II at EBACE next week.
The Beechcraft King Air family of twin turboprops has undergone a series of enhancements over the years in an attempt to stave off the threat from the emerging numbers of very light jets and to provide a smoother transition to the Premier and mid-size models. These enhancements have helped to boost the King Air fleet to over 6,300 aircraft.
Last year the company introduced the improved C90GTi and the B200GT, "which have sold very well", Hatt says. With a fleet of over 6,200 aircraft in service, the King Air family is popular throughout the world, Hatt says, "and last year was our best year yet [with 157 aircraft sold]". Hawker Beechcraft delivered 319 aircraft last year and the company is confident the growth will continue at a steady pace. "The US market is soft, but the international market is red hot," says Hatt. "This is a cyclical business, but all of our indicators do not show a slowdown."
For fellow twin-turboprop manufacturer Piaggio Aero Industries, the USA accounts for the majority of the current order tally for its P180 Avanti II, but the international markets are beginning to play a more prominent role, according to chief executive José di Mase.
"While the US market accounts for 65% of our 114 orders, we are starting to see increased demand in international markets, particularly Europe, the Middle East and China. Here we plan to deliver our first aircraft this year to a state-owned company," he says. Di Mase attributes the success of the Avanti II, a revamp of the 20-year-old Avanti, to a number of factors. "It has the performance of a jet in a Falcon 50 cabin, but uses 30% less fuel," he says.
Piaggio is set to ramp up production this year from 21 to "more than 30" and is in the throes of building a new factory to enable it to build up to 50 aircraft annually. "You can't get a used Avanti on the secondhand market and you have to wait two years to get a new one."
Di Mase says the popularity of the Avanti has spurred the Italian company to explore other business aircraft products. "The Avanti has proved itself in the market and we are now looking to expand the line of products," he says, but gave few details. "It will be a clean-sheet design and, while we have two teams working on two designs - one bigger and one smaller than the Avanti - we will only invest in one."
While Piaggio continues to weigh up its new aircraft offering, Sino Swearingen Aircraft is waiting to restart manufacture of its SJ30 light business jet after its Taiwanese backers decided to sell the company last year. The San Antonio-based start-up has been thrown a lifeline by would-be owner Emirates Investments Development, of Dubai, but the sale is waiting to be approved by the US government. A source close to the programme says: "The paperwork is now with the US state department, which has to approve any sale of a US company by a foreign owner."
The SJ30 was certificated two and half years ago after a 20-year development run that resulted in the Taiwanese investing more than $700 million in the programme. If the sale to EIDC is successful, Taiwan will take a minority shareholding in the company.
Only two aircraft have been delivered to date - to US businessman Douglas Jaffe and Sino Swearingen's distributor Action Aviation. The orderbook for the $7.5 million aircraft has remained largely unaffected by the funding setbacks, with the tally exceeding 300 units, including 159 from UK-based Action, which has secured 159 of Sino Swearingen's 300 orders.
Eclipse Aviation has had little problem securing orders for its Eclipse 500 very light business jet, with a tally of around 2,600 units to date. However, vendor issues are restricting the company's ability to deliver high volumes of aircraft. "We built this aircraft to be mass produced and we only delivered 98 aircraft last year," says chief executive Vern Raburn."We have the capability to produce five times that amount, but we can't build them if we don't get the parts," he says.
Earlier this year Eclipse received an equity investment of more than $100 million from Etirc Aviation, making the Luxembourg-based company the exclusive provider of sales, customer service, maintenance support and flight training in eastern and western Europe, Russia, the CIS and Turkey.
Etirc is also setting up an Eclipse 500 manufacturing facility in Ulyanovsk, Russia. All aircraft produced there would be sold in Etirc's distribution area and Eclipse would supply parts for final assembly in Russia.
Raburn says he is exploring the market for the Eclipse Concept jet. The unpressurised four-seat aircraft was unveiled at Oshkosh in July 2007 as a marketing tool to gauge buyer interest and Raburn has not ruled out a formal launch of the aircraft at the same show this year. "There has been a visceral emotional response to this aircraft," he says,
At the very top of the range, the response has been equally positive with Boeing Business and Airbus blazing the trail with their expanding fleets of widebody business jets and VIP-configured airlines. "We have started 2008 with a bang and have booked eight orders for a mix of aircraft already," says BBJ president Steven Hill.
"Our problem is alleviating aircraft backlogs for our customers, but Boeing's priority lies with the airlines," says Hill. "The earliest availability for a BBJ family of aircraft is now 2013 and it's a similar picture for the 747, 767 and 777. For a 787, it's well beyond that."
Hill admits the backlogs are causing talks with potential customers to slow or terminate. The bulk of business is coming from international markets, mainly the Middle East, where the BBJ3 is particularly strong. Based on the 737-900ER, the $74 million aircraft has a maximum range, with five auxiliary fuel tanks, of 9,920km. The aircraft is set for certification in the middle of the year, with supplemental type certification for the auxiliary fuel tanks earmarked for year-end.
The VIP airliner market is equally buoyant for Airbus, which boasts more than 100 firm orders for the Airbus Corporate Jetliner family. As well as the ACJ and A320 Prestige this includes the A318 Elite. Last year the company delivered 12 ACJs, including the first Elite to Swiss VIP operator Comlux. The European airframer says it has had a strong first quarter with six ACJs and two VIP A350XWBs ordered so far.
© Reiner Heim Design
At the top of its range Airbus has also received its first order the A380 VIP - designated the Flying Palace - from Saudi Arabian royal family member Prince Alwaleed bin Talal bin Abdulaziz Al-Saud. The aircraft will be powered by Rolls-Royce Trent 900 engines. Faced with such strong demand for its narrow and widebody airliners, the European airframer was persuaded to establish a dedicated ACJ completions centre at its Toulouse base last year to ease the completion bottlenecks. The first aircraft completed aircraft was delivered in April, bringing the total of in-service VIP Airbus types to more than 150 aircraft.