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Aviation History
1992
1992 - 0975.PDF
INTERNATIONAL Editorial Enquiries +44 (81) 652 3842 Editorial Fax 444 (81) 652 3840 Display Advertising +44 (81) 652 3315 Display Advertising Fax +44 (81) 652 8981 Classified Advertising +44 (81) 661 6373 Classified Advertising Fax +44 (81) 642 4431 Telex 892084 REEDBP G Subscriptions +44 (81) 649 7271 Back issues (recent copies only) +44 (81) 652 3335 Picture Library +44 (81) 652 3427 Flight Directories +44 (707) 46952 USA Newstrade Sales Enquiries +1 (718) 392 7477 LONDON Quadrant House, The Quadrant, Sutton, Surrey SM2 5AS, UK Editor Allan Winn Editor's PA Jacqueline Worsiey Deputy Editor Forbes Mutch News Editor Andrew Chuter Features Editor David Learmount Business Editor Kevin O'Toole Military Editor Mike Gaines Air Transport Editor Ian Goold +44 (81) 652 3882 +44 (81) 652 3882 +44 (81) 652 3852 +44 (81) 652 3843 +44 (81) 652 3845 +44 (81) 652 3835' +44 (81) 652 8809 +44 (81) 652 3834 Technology/Industry Editor Simon Elliott+44 (81) 652 3838 Databases Editor Tom Hamiil Editorial Assistant Kate Sarsfield Design Editor Mike Wells Layout Sub-editor Annabel Goddard Layout Sub-editor Jenny Long Technical Artist Tim Hall Technical Artist David Hatchard Technical Artist John Marsden Spaceflight Correspondent Tim Furniss Photographer (Europe) Mark Wagner +44 (81) 652 3096 +44 (81) 652 3842 +44 (81) 652 3828 +44 (81) 652 3848 +44 (81) 652 3847 +44 (81) 652 8047 +44 (81) 652 8047 +44 (81) 652 8054 +44 (237) 451756 fax +44 (237) 451600 +44 (272) 358200 Fax +44 (272) 358290 Display Advertisement Sales Sales Manager Clive Richardson +44 (81) 652 3315 Assistant Sales Manager Nick Wilcox +44 (81) 652 3892 Regional Manager Northern and Eastern Europe Mark Janaway+44 (81) 652 3317 Regional Manager UK and Scandinavia Janice Lowe +44 (81) 652 3316 Advertisement production Howard Mason +44 (81) 652 3267 EUROPE/MIDDLE EAST European Editor (Brussels) Julian Moxoii +32 (2) 657 9689 Fax +32 (2) 657 5260 Munich Correspondent Paris Correspondent Gilbert SerJbon Israel Correspondent Arie Egozi +49 (89) 689 1041 Fax +49 (89) 689 1045 +33 (1) 4825 5261 +972 (3) 967 1155 Sales Director (France) Pierre Mussatd +33 (1) 46 Representative (Italy) Romano Ferrario +39 (2) 29 46 29 58084 302 AMERICAS American Editor Graham Warwick +1 (404) Fax +1 (404) Washington Correspondent Kieran Daly +1 (703) Fax +1 (703) USA West Coast Correspondent (Los Angeles) Guy Morris +1 (714) Fax +1 (714) Photographer (USA) Craig Sohmitman +1 (310) Fax +1 (310) President RBP (USA) Ray Barnes +1 (212) Traffic Manager JoAnn Lapp +1 (212) Fax +1 (212) Vice.President US Sales John Tidy +1 (714) Fax +1 (714) Sales Director (Mid West and Canada) Gene Glendinning +1 (708) Fax +1 (708) Sales Director (East Coast) Robert Hancock +1 (703) Fax +1 (703) Business Development Director Sheena Robbins +1 (703) Fax +1 (703) 587 2927 594 1534 836 7443 252 8971 252 8972 452 4464 452 3515 867 2080 867 2080 687 6604 756 1057 756 2514 635 9920 635 0602 7446 836 7444 836 7446 ASIA/PACIFIC Asian Editor (Singapore) John Bailey Australian Correspondent Paul Pheian Sales Director Mike Hancock (Si Account Manager Fiona Barthoiomeusz Regional Representative (Japan) Shoichi Maruyama +65 226 3188 Fax +65 227 1769 +01 (70) 532 791 Fax +61 (70) 532 791 +65 226 3188 +65 226 3188 Fax +65 223 6960 +81 (3) 3234 2161 Fax +81 (3) 3234 1143 Publisher Les Edwards +44 (81) 652 3436 For full advertisemen! information see inside back cover COMMENT uuuiSWu Qy^i If there is a recession-proof, peace-proof, perestroika-proof product of the aerospace industry, it must be the business jet. Most of the available evidence points that way: orders are, in many cases, at record levels; usage is at an all-time high, even in troubled parts of the world; manufacturers are working on new generations of bigger, faster and longer-range aircraft and much smaller entry-level designs. Yet the business-jet industry is in its highest- ever state of uncertainty. Cessna, despite its recent successes with new launches and high sales, has just been sold by its previous parent, Gen eral Dynamics (GD) to Textroh. Gulfstream, with ambitious plans at the very top of the mar ket (and beyond, into supersonics) has just postponed its intended stock offer. Now British Aerospace has an nounced that it intends to sell the majority (if not all) of its successful BAe 125 operation. The reason for all this uncertainty is clear: the business jet may be an attractive product to sell, but it has become an extremely expensive product in which to in vest development funds. GD cited the need to reserve funds for core businesses as the main reason for divesting itself of Cessna, which has major investment needs to develop the Citationjet and Citation X for production. Gulfstream is investing in its GV and GXT projects, as well as the much-more- ambitious supersonic SSBJ project with Sukhoi. BAe cites "...competing investment requirements across the group" as the reason for seeking major external investment for its business-jet operations. This need for investment is driven by several factors. Many of the existing designs are, in basics, mature — if not elderly. For example, the BAe 125 first flew in 1962; the Beechjet 400 (nee Mitsubishi Diamond II), small Learjets and the just-deleted Cessna Citation 500, date from the late 1960s. At the bigger end of the market, the design of the current Gulfstream GIV can be traced back to that of the Gil of 1964 and the Canadair Challenger back to 1977. Although these designs are still competitive (and in many cases bear almost superficial resemblance to their ancestors), they do not incorporate much of the modern technology which newer designs have. Updating or replac es <-|-i I he business jet may be an attractive product to sell, but it has become an extremely expensive product in which to invest" ing these designs to keep them competitive (especially as environmental restrictions tighten) is, and will increasingly be, an expensive process. Again, when many of these designs first appeared, a business jet was just that — a business jet. Now, there are long-range, short- range, small and large, fast and slow business jets, and there is no such thing as a universal aircraft. That means that a manufacturer wishing to service the market adequately must offer a range or family. That is why Bombardier ac quired Learjet to sit alongside its Canadair Challenger series, and why Dassault, Raytheon (Beech) and Gulfstream's owner Forstmann Little were interested in buying Cessna. Purchasing a de veloped complementary product, rather than de veloping a new range from scratch, obviously makes sound sense — if that complementary product does not itself require immediate updat ing or investment. The scale of that in vestment itself becomes greater by the year. A business jet now requires most of the systems and technologies which are fitted to a medium-sized airliner, and therefore its development costs closely parallel those of that airliner. Airliners, however, can be sold in fleets, whereas few customers outside the military (where Beech and BAe have done well with large contracts) will ever order more than one or two business jets at a time. In general, the develop ment costs of a business jet must be recovered over far fewer sales than would be economic for an airliner — even the successful BAe 125 series has notched up only 816 sales in 30 years. That must make investment in a business jet a higher risk than investment in a similarly priced airliner (even if pricing in the business- jet market might be seen as being more elastic than is common in the cut-throat airliner sector). If business-jet manufacture was not a high- risk enterprise, it would have become a core business instead of a fringe business ripe for divestiture by so many of the companies which have dabbled in this market. The current round of chakges should lead to a more rationalised, more efficient and therefore more profitable industry. Perhaps the business jet manufacturers then will prove to be as recession-proof, peace- proof and peresfroifca-proof as their product's image would suggest. • FLIGHT INTERNATIONAL 15 - 21 April, 1992
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