Is it the Chicken, the Egg, the Aircraft or the Client that comes first?
This week the aircraft manufacturers PR machines will be working overtime in Singapore as the industry shows itself off at the annual air show. Sitting at the heart of the Asian market, the industry is using the show as an attempt to get over the inertia created in the market by the Chinese slowdown. For a number of years Asia has been the great industry prospect but to date this hasn’t quite materialised in terms of consistent orders or growth.
Across the rest of business aviation, it seems the world has largely become flat! Very little growth and in some areas decline and perhaps more significantly leading sources within the industry are telling us that this is a ‘new’ reality and that our expectations should not be high for the next few years.
How important is growth? How do we create growth?
The answers to both I suspect are very different depending on your perspective. The manufacturers need growth in order to be able to justify the continued investment in cash intensive new aircraft projects. Faced with a flat market and declining order backlogs they can no longer rely on the long-range cash cows to support the wider business (Bombardier!?)*.
Business aviation operators, airports and suppliers also need growth but their needs are driven by people rather than hardware. In short they need more clients. Create more clients and you win on each count, right?
At first glance both of these arguments appear to be mutually supportive but there might not be as close a relationship as we like to think.
New aircraft development programmes are eye-wateringly expensive and given the need for competitive price points at the small end of the market; it must be difficult to justify them without the sight and security of big orders and so the safe investment ground must be at the top end of the market, right?
Forbes and the like, tell us on a regular basis that new billionaires are being created on a regular basis all over the world. Surely this must be music to the ears for the likes of Gulfstream and crowd, that should represent a steady stream of buyers for the latest, largest and greatest. But ask Gulfstream, Bombardier or Dassault if they are seeing that level of new clients coming into the top of the market and I suspect the answer is a resounding NO.
I think the answer has to be built around a more organic approach to developing our industry, manufacturers individually or collectively need to offer a pathway which can take an aircraft owner from his first charter to the first light jet purchase then on to a midsize and so on. By the time the client is ready to hit long-range territory, they are already brand loyal, know exactly what they want and more importantly understand exactly what value the aircraft will represent to them.
Surely this must create a more robust and resilient industry?
It’s the ultimate expression of Darwinism, survival of the fittest. For every billionaire created there must be hundreds or thousands of millionaires who may never reach the long range cash cow but are good, steady and reliable light or midsize buyers!
Capture their interest at the bottom and then feed them up the client experience chain, knowing full well that a good number will drop out along the way but in the process still generating revenue at each progressive step. This applies equally whether you are an operator or manufacturer.
So how do we capture their interest?
At the moment we all seem to jump on to the luxury product marketing bandwagon, extolling the luxury and aspirational nature of private jet flying. Marketing to emphasise that as you climb aboard your jet you have definitely made it! Is this realistic and an accurate reflection of the world?
At the G650 end of the market then that’s really not a problem. Try and convince anyone riding in the back of a Mustang, having just had the ‘awkward’ conversation about the potty (sorry toilet) arrangements that they are even close to luxury! At the moment you need to ‘go’ then the rear toilet on a delayed and packed 737 is an infinitely more appealing prospect than setting up the privacy curtain around the potty.
The actual client benefit is the 4–6 hours of time that the Mustang ride puts back into their day; that time is the real value. This is time that could be spent with their family, doing something they enjoy or putting together the next deal to push them up the wealth rankings.
We need to focus on the benefits and not the luxury. A private jet of any size is simply a tool to enable and facilitate whatever it is that the client is engaged in. Business productivity, time, convenience, flexibility, control, discretion, security and privacy are the benefits and yet we happily focus on the gloss and not the practicalities.
If you want to feed the top of the pipeline then we need to be stuffing the bottom, surely? As an industry we need to think long and hard about how we achieve that and how we can focus on the actual lifestyle or business benefits rather than the aspirational illusion of the long-range cash cow which only a few will ever attain.
Here is where we need to start….The New Business Class, Convenience, Flexibility and Value.
*To be absolutely fair to Bombardier they have been wrestling with clean sheet design projects for both (ultra) long-range cash cows and the C-Series regional airliner. Two big cutting edge projects in different markets = lots of cash spent. In doing so they have almost completely abandoned their Learjet heritage and the light and midsize markets in the process.