OPINION DIFFERS on how good, or bad, a year 1996 was for the commercial ßight-simulator industry, but manufacturers agree that sales will increase over the next two years before the boom cycle ends in 1999 and business returns to what passes for normal in this dynamic industry sector.

Some 15 full-flight simulators were sold in 1996, a number which disappointed CAE Electronics - mainly because it lost market share to a resurgent Thomson Training &Simulation (TTS). The latter claims 75% of 1996 sales, but expects to share the market roughly equally with CAE in the long term, says Eduardo Arrubarrena, managing director of TTS' civil business-unit.

FlightSafety International and Reflectone had little impact on the market in 1996, but still harbour hopes of emerging as significant participants. FlightSafety's acquisition by investment house Berkshire Hathaway and the subsequent formation of a joint venture with Boeing have been the most significant events of recent months.

FlightSafety Boeing Training International will be the largest airline-training company in the world, providing pilot, cabin-crew and maintenance training for Airbus, Boeing, Fokker and McDonnell Douglas aircraft with 100 seats or more. Each company is contributing $100 million in assets to venture, including 36 simulators at 12 locations, says Jim Waugh, vice-president, marketing, at FlightSafety.

Expansion plans include building or acquiring additional simulator centres and establishing an ab initio training school, he says. All training provided by Boeing as part of aircraft sales will be performed by the venture, and FlightSafety-built simulators will be sold to outside customers through the venture.

The scale and scope of FlightSafety's agreement with Boeing has raised warning flags with competing simulator manufacturers. CAE has sold several devices to Boeing and FlightSafety, but sees only a "slim chance" of selling simulators to the joint venture, says Andy Morris, vice-president, sales and marketing.


Boeing "endorsement"

FlightSafety says that the venture has a mandate "-to buy the best, at the most competitive price," according to Adrian Gale, vice-president of marketing and sales at the company's simulator-manufacturing arm. While he acknowledges that the Boeing "endorsement" implied by the agreement will not harm the prospects of selling FlightSafety-built simulators both inside and outside the venture, he still expects to have to be competitive.

Principal among TTS' concerns, says Arrubarrena, is whether Boeing or the joint venture will sell the aircraft data-packages required to build simulators. If it is Boeing, then there is "no problem", he says. FlightSafety's Gale describes as "nonsense" speculation that FlightSafety will get "data for free, and parts at a quarter of their cost" from Boeing, although Boeing Enterprises president Larry Clarkson has said that data would be provided free to FlightSafety for any simulators to be built for the joint venture.

Clarkson says that the venture is Boeing's response to the airlines' desire to divest themselves on non-core activities, such as operating training centres. Both he and FlightSafety's Waugh say that airline response to the agreement has been positive, with Clarkson saying that several airlines have called with offers to sell their training centres to the venture.

While acknowledging that airlines are keen to outsource non-core activities, CAE's Morris believes that Boeing may have miscalculated by setting itself up in competition with its customers, many of which make money selling training to other airlines. CAE, instead, is pursuing agreements with airlines where it would take over support of their simulators to allow the customer to concentrate on training.

TTS, unlike CAE, operates its own simulator centres, Orbit Flight Training in the UK and Asian ATR Training Centre in Thailand. Orbit is wholly owned by TTS, which has 90% of the Asian ATR joint-venture with Thai Airways International. Arrubarrena says that TTS, rather than linking too closely with Airbus or Boeing, wants to wants to develop partnerships with airlines to operate training centres. Airbus has not followed Boeing's lead, but has been offering package deals including simulators.

As simulator sales are trailing aircraft orders conspicuously, particularly for the high-selling Airbus A319/320/321 and Boeing 737-600/700/800 families - raising concerns about training undercapacity - initiatives such as the Boeing/FlightSafety joint venture and closer co-operation with airlines in establishing and operating training centres look set to play important roles in shaping the industry.

Source: Flight International