Judging by those who have failed, fallen, or not yet made it, the near-three-decade duopoly of Airbus and Boeing in airliner manufacturing is highly durable. Chinese and Russian attempts aside, only Embraer has endured.
The market for providing full flight simulators (FFS) for their products appears no less forbidding for interlopers, with only a few managing to compete with leader CAE.
In recent years, Lockheed Martin, Textron, and now L3Harris have made strategic decisions to retreat from the industry – although Textron still makes simulators for its own general aviation products. Meanwhile, the new private equity owner of L3Harris’s Commercial Aviation Solutions arm plans to remain in commercial simulators, as the former parent focuses on its core military business.
When it comes to manufacturing commercial and business aviation simulators, CAE’s dominance of the market has intensified over the past 10 years. The Canadian company – which like its main rival FlightSafety International also offers training services – expects to deliver 50 FFS this financial year (ending on 31 March): slightly more than in 2023 and higher than all its competitors put together.
L3Harris, which builds FFS at its production site near London’s Gatwick airport, remains a competitor for now. FlightSafety, meanwhile, is best known for its business jet, regional jet, and military devices, but late last year underlined its commitment to the large airliner market, disclosing a contract to build an Airbus A350 FFS for Delta Air Lines for delivery in the fourth quarter of 2024.
Aside from some very small players, the rest of the field is made up by Dutch start-up Sim International, which focuses on Airbus and Boeing FFS (in reality, it is a re-start-up, as its founder sold his original business in 2011), and Austria’s Axis Flight Simulation, which entered the market just over 10 years ago to “challenge the duopoly” in regional and business jet simulators.
One reason for the small number of players has been CAE’s voracious appetite for acquisition. Just five years after buying the original Sim Industries – “to expand into adjacent markets” – Lockheed sold its commercial flight training arm to CAE in 2016. The Canadian firm took out another main competitor in 2020, buying Tru Simulation & Training Canada from Textron for $40 million.
There are other factors that deter or disillusion entrants. Annual unit volumes are low and FFS are complex machines. CAE and FlightSafety – and to a lesser extent L3Harris – more than supplement their hardware revenues by providing training, with businesses they have patiently built up over years. It also requires close relationships with the OEMs, whose data simulator manufacturers depend on.
For its part, CAE – which has built its services revenues from just 15% of its total sales 20 years ago to being its dominant business today – says it “never takes our market position for granted”, and that it works to build “enduring relationships” with customers rather than “one-off transactions”, something reflected in the fact that many have been loyal for decades.
Demand from its own training centres makes up almost half of CAE’s simulator output – 20 commercial and business jet FFS in the last financial year. The company says the continuing recovery in the air travel market – which is driving a demand for airliners and pilot training – will continue to deliver annual percentage growth for its commercial aviation business in the “mid- to high-teens”.
DIVESTMENT DECISION
L3Harris’s Commercial Aviation Solutions headquarters in Crawley, West Sussex, housing its manufacturing hall and a 10-bay training centre – and opened by the then-Prince Charles in 2019 – will soon come under the auspices of new owner TJC. L3Harris announced the $800 million divestment, which includes avionics and flight data analytics businesses, last November. It is expected to close by June.
L3Harris employs an outsourced production system, with most modules manufactured by suppliers and only final assembly – and limited module production – carried out in Crawley. In contrast to CAE, more than nine in 10 of the FFS L3Harris builds are destined for third-party customers. Other than Crawley, the company has just one other simulator training centre, in Bangkok.
FlightSafety’s A350 contract with Delta underlines that this is a segment that the Columbus, Ohio-based firm is determined to stay in. While the majority of its FFS are for general aviation, business, or regional aircraft, FlightSafety has built several large commercial airline devices including for the A320 and A350, and Boeing 737, 757, 767 and 777.
“[Delta] is a big one for us,” remarks Nathan Speiser, FlightSafety’s executive vice-president of sales and marketing. “It is great to have that win and it is a market we will continue to focus on.” The company has had a long relationship with the Atlanta-headquartered carrier on its regional feeder business, providing Embraer E-Jet and now E2 simulators, he adds.
However, he is realistic about prospects in the large airliner segment. “Business jet training is something we will always hang our hat on, and our defence share is beginning to grow. In commercial, I think we will focus on certain operators that match the FlightSafety brand. We are looking for long-term relationships rather than chasing market share,” he says.
FlightSafety, which recently consolidated all its production at its plant in Broken Arrow, near Tulsa, Oklahoma, expects to deliver about 13 FFS in 2024, about half of which will go to its own training centres. It has a more vertically integrated production model than L3Harris, manufacturing its own cockpits, mirrors, and wiring. “We try to maintain as much of this in house as we can,” says Speiser.
Sim International’s chief executive Frank Uit den Bogaard says he returned to the industry – after selling to Lockheed in 2011 – to “build the next generation Level D FFS”. The company addresses only the Airbus and Boeing market, producing around 12 simulators annually, which den Bogaard says is a “sufficient base to service the market as a specialist supplier to the most demanding customers”.
HISTORICAL PERSPECTIVE
His history in simulator manufacturing goes back to 2004, when he launched his original firm. He says that over that time, the business has remained highly competitive with margins tight, but it has also become more capital intensive due to steady increases in the licence costs charged by the aircraft manufacturers for their data.
“We do not expect newcomers to be able to successfully enter this market. Sim is an established alternative with a 20-year track record,” he says. “Newcomers who tried mostly went bankrupt as they never got to grips with the product and were not able to create the necessary market volume to mature their product.”
Low margins and unit volumes was behind big names such as Lockheed, Textron, and L3Harris withdrawing from the industry, although he believes that consolidation and emerging local markets could open the door for new players in China and Turkey. Higher margins in the specialist helicopter and business jet segments have also allowed smaller entities to challenge CAE and FlightSafety, he says.
Perhaps the most significant of these is Axis Flight Simulation. Serial aviation entrepreneur Niall Olver, founder of ExecuJet and Grob Aerospace – developer of the now defunct SPn very light business jet – bought into the fledgling business a decade ago. Since then, it has established a niche in business jets and regional aircraft, especially ATR.
Last December, the Graz-based company – which has an engineering team in Hungary – qualified its second Level D FFS in the USA, and the first for the ATR 72-600 in the country. The simulator will be operated by Fort Lauderdale-based Avenger Flight Training, which provides courses for regional and low-cost airlines in North and South America.
Axis builds about four FFS a year – its products have included simulators for Textron Aviation Cessna Citation jets and turboprops, as well as Bombardier Challengers. Olver insists that in the general, business, and regional aviation market, customers tend to be smaller entities, and they welcome choice and price competition. “As a newer, smaller player we can provide that,” he says.
COST CONTROL
One of the ways it keeps its development costs down is that, rather than paying the OEM for a data package to design a simulator, it rents an aircraft and flies it for up to 100h from its facility in Spain to collate its own data. “It’s a lengthy process but it helps to open the market and it means we own the data rather than the OEM,” says Olver.
An even newer name is Avion of the Netherlands, which last year announced that it is to build eight A320neo FFS for a training company in India called Gen24 Flybiz. The Gen24 Group recently bought Avion. The first two simulators will be shipped to Mubai for certification by the Indian authorities before Flybiz’s first centre opens in July, with the remaining six to be delivered by the end of 2025.
The company, based in Nieuw-Vennep, near Amsterdam’s Schiphol airport, also operates an A320neo simulator at Luton airport, near London, and is developing its first 737 Max FFS.
According to Manoj Pandey, chief executive of Gen24 Group, the acquisition of Avion is an opportunity for Gen24 “to rapidly expand our footprint in professional flight training and simulator manufacturing”.
The design of FFS have evolved in the past two decades, with electric motion systems replacing hydraulics, giving simulators a more responsive and realistic feel. The same goes for visuals, where the rather generic, almost two-dimensional views from the cockpit in older generation devices are now replaced by highly lifelike representations of terrain and cityscapes.
MATERIAL SCIENCE
That said, the external shape of an FFS – a capsule on legs, containing a flightdeck, with an instructor station and small entrance lobby behind, has stayed largely unchanged. As with much in aerospace, the trend everywhere is towards ever-lighter materials, saving weight and cost. FlightSafety, for instance, says it is adapting a more modular design process to “significantly” reduce part numbers.
So where does innovation go next? It is likely to be inside the cockpit, with eye-tracking and other biometric technologies to allow pilots’ often micro-second behaviours to be assessed and analysed. It might sound Orwellian, but it could have a profound impact on safety by helping trainers better understand and address students’ weaknesses and habits, suggests FlightSafety’s Speiser.
There is also an argument that cheaper – albeit still highly sophisticated – static, enclosed flight training devices (FTDs) could replace demand for some FFS in future. To all intents, these offer everything an FFS does without the motion system, and, according to L3Harris’s vice-president commercial training solutions Ben Swann, the authorities are looking on them more favourably.
“We started seriously manufacturing FTDs in 2020 reflecting moves by regulators to allow more training to be done on these devices,” he says. “Today around 20% of creditable training can be done in these, because they are much cheaper to buy and operate, and are attractive to many of our customers.”