The business-aircraft industry is booming. Aircraft orders are rising and, if recent predictions are to be believed, this trend will continue until the turn of the century. Sales of secondhand aircraft are also scaling new heights. The knock-on effect is naturally felt by the business-aircraft interiors market, in completions for new aircraft and interior refurbishment for secondhand machines. In both areas, interiors companies are working at full capacity, and the backlog at many major completion centres is around 12 months.
Increasingly, however, the new-completions work is being handled by original equipment manufacturers (OEMs) with the independent third-party service companies having to rely more heavily on refurbishment.
CHANGING TASTES
The interiors market has undergone significant changes in the past 15 years, with customers are demanding more functional and comfortable cabins. "Business aircraft are now used more as business tools than glamour objects," says Curtis Van Nice, director of sales and marketing at Dallas, Texas-based K-C Aviation. "Fifteen years ago the focus would have been on what was going to be done at the front end of the aircraft, in terms of avionics and mechanical modifications. The aircraft interior was often almost secondary. Today, we are concerned about getting the most use out of the aircraft and creating a more comfortable environment for people to work in-to allow them to extend their office to the aeroplane," he adds.
According to Van Nice, customers are moving towards high-gloss veneer and solid colours in the cabins. "Leather upholstery is always asked for; silk finishes are not common any more-the cost of an aircraft has risen and people expect more when paying a higher price," he says. Van Nice and Stephen Brown, director of aircraft refurbishment at Innotech Aviation in Montreal Canada, believe that modern technology is making irreversible strides into the aircraft-interiors market, boosted in particular by the introduction of telephones and satellite communications (satcom).
"Satcoms are becoming very important to people who want to communicate from anywhere in the world: the first thing we look at when we refurbish an aeroplane is how are we going to improve their communications," says Brown. With an interior for an average business jet such as a Raytheon Hawker 800XP priced at around $1-2 million, it is not surprising that this sector of the business-aviation industry has become increasingly competitive and lucrative.
SHIFT TOWARDS OEMS
"There has been a gradual shift in the market towards OEMs taking on more of their own completions," says Brown: "There is money to be made and it also allows them to control their products a lot better." Innotech sold its Dorval-based Canadair Challenger green-aircraft completion business to Bombardier in December 1996. The company now specialises in aircraft refurbishment and maintenance, and is building a new $8.3 million centre which is scheduled to open in December. Bombardier, meanwhile, is building a site which is dedicated to Global Express completions.
"Bombardier bought its Learjet and Challenger completion centre in Tuscon, Arizona, in the early 1990s and it manages to put through about eight Challengers a year, because that is all it can handle. Now it has the Global Express coming on line and all the completion centres are full. The only way it can double its own production capabilities is to build its own completion centre," says Brown. "It made an offer to buy Innotech, and now it is in the process of tripling capacity."
K-C Aviation's Van Nice also believes that there is a trend now for manufacturers to take on more of their own completion and refurbishments. His company performs around 20 completions a year on Gulfstream IV and Challenger business jets (it has just celebrated its 200th Challenger completion) from its base at Dallas Love Field. The company has also been named a Boeing Business Jets completion centre. "All of the OEMs would love to vertically integrate their companies, but they operate in a competitive environment and we are able to compete with them and provide a higher value to the end customer: that is the reason we are often selected", claims Van Nice.
The majority of the work for the third party companies comes from overflow of business from the OEMs and from repeat business. Van Nice believes that customers receive a better service from the dedicated completion centres, as they exist for that purpose. "A large manufacturer can build 100 aircraft much more efficiently than we can build 100 of something. But each one of these aircraft has its unique differences and unique requirements, people in the custom completion business can satisfy these requirements more easily," he says.
Boeing Business Jets is the only OEM that does not handle completions, and has no plans to do so. "We're no good at it," says Tom Lindberg, Boeing's vice-president, customers. "We will focus on what we do well, and that's building a green aircraft," he says.
Bombardier and Gulfstream allow their customers the option of taking their completed green aircraft (one which does not have an interior) to their preferred choice of completion centre. Bombardier has opted to complete the first 24 Global Expresses at its Montreal, Dorval centre, which is scheduled to open early in 1998. "We will do the first units in Montreal and then evaluate the situation," says Jim Ziegler, Bombardier's vice-president and general manager of aviation services. Although he concedes that the interiors business is lucrative, he believes that the relationship with the customer is more important. "It is difficult to get valuable feedback through our independents-you can gather information more readily when you have access to the customer," he says. Bombardier owns completion centres in Tuscon, which handles the Learjet 31, 60 (for which 50 completions are planned for 1997) and the Challenger 604, and at Wichita, Kansas, which will handle the Learjet 45.
Gulfstream is upgrading its factory-owned completion and service centres in Savannah and Brunswick, Georgia, and Long Beach, California, in a bid to win more business. "We want to bring more work in house: we already handle 100% of the GV work and around 90% of the GIV work," says Pat Franssen, director of interior design. According to Franssen, Gulfstream will complete around 21 GIVs and 13 GVs in 1997, which will increase to 25 GIVs and 30 GVs in 1998.
Dassault Falcon Jet handles all completions for its range from its Little Rock, Arkansas, site, which it set up around 15 years ago. "We recognised the advantage of keeping the work in-house. It's is the only way to control the quality and the schedules," says Bob Petri, manager of interior specification. Petri claims that customers can be put off a sale if they are quoted a price for a green aircraft. "They don't want to buy an empty aeroplane and then pay another $1-$2 million for an interior." He adds that, when aircraft were "shipped out" in the past and a problem occurred with the interior, the customer would complain to the manufacturer and not the completion centre." Petri adds that the workload has grown substantially. "We are exceeding 50 aircraft completions a year and we will try to do as many as we can in-house"
RAYTHEON DECISION
This viewpoint is echoed by Carl Childs, Raytheon Aircraft's vice-president of sales and marketing. "Raytheon made the decision to perform completions on the entire product line in-house. It is the only way to control your product line," he says. Raytheon now handles around 400 aircraft completions a year across the range, of which around 30 are on Hawker 800s. The company plans to increase Hawker production alone in 1999 to between 45 and 50 aircraft. "If you take an aeroplane from Savannah to Dallas, it can be sitting on the ground for up to a year, and there is no utilisation. It can take as little as three months to complete a Hawker," he adds.
Cessna also performs its own completions from its site in Wichita. "We do not sell aircraft without interiors," says Jan McIntire, Cessna's director of corporate communications. The company claims that it will complete around 180 new interiors by the end of 1997.
A criticism often levelled at OEMs concerns their ability to offer value for money or a wide choice of interior for the customer. Completion centres assert that they are often the preferred choice of the customer when given the flexibility. "Their approach is very different," says Brown. "They cater to the individual's specific needs, whereas the manufacturer will identify the standard configuration that they have developed." He believes that the difference between the cost of a green aircraft and that of a manufacturer-completed one may not always be a realistic one. "If you buy a green aircraft from Gulfstream, the credit for the price of the interior is not always obvious, because when you buy a Gulfstream you are buying 'a Gulfstream'. If you want to subtract the price of the interior it is simply their interpretation of it," he adds.
Business for the OEMs and independent completion and refurbishment centres is strong, and both are keen to express their willingness to maintain close links with each other. According to Innotech's Brown, "-we want to support the OEMs and develop a close association with them - after all, there is more than enough work to go around." Van Nice, however, believes that completion companies should be more cautious of expanding too rapidly. "We could increase the number of aircraft that we complete, but what we would prefer to do is expand our core business and continue to grow at a reasonable rate. Trying to double or triple your capacity area over a two-to-three year period is a recipe for doom."
Source: Flight International
