Business Aviation to rise above turbulence in 2016
A period of recovery for the business aviation industry is upon us. After a seven-year economic slump, followed by market dips and overall stagnation, the market has made a partial but firm recovery, and in some unexpected ways.
The industry, which generates over one million jobs and over $200bn in revenue in the United States alone, has been watched closely by many across the world in recent years. Europe, which accounts for just 14% of annual sales in terms of new business aircraft globally values the sector and sees it as worth saving; business aviation in Europe employs in the region of 160,000 highly skilled workers and generates over $12.5bn in revenue.
Throughout 2015 global shipments of business aircraft grew to almost 800, up nearly 11% from 722 jets in 2014, and reached $25bn in sales.
The light aircraft sector has been unusually active of late and one of the stars to watch for in 2016 will be Honda. The new HondaJet has been in development since 2003, with the significant amount of time from R&D to production due to the development of new technology. A clean-sheet design comprising a full composite airframe and the implementation of an entirely new engine system — a GE-Honda joint venture, which features an unusual over-the-wing engine mount design called OTWEM. The sleek new HondaJet is one of the fastest aircraft in the light aircraft category. It has a maximum speed of 420 knots (778 km/h) and is capable of flying over 1,000 nautical miles (almost 2,000 km) with six people on board at a price of $1,100 per flight hour. Honda hasn’t yet revealed the logbook for this small aircraft priced at $4.5m, but has announced the annual production of an impressive 100 units.
Another much anticipated model expected in 2016 after seven years in development, is the single-engine jet Cirrus SF50 Vision. For this model we see another clean-sheet design with another completely new engine configuration — this time mounted on top of the fuselage slightly ahead of the V tail.
The new 6-seat single engine jet’s maximum speed is 300 knots (kn), with a cruise speed of 259 kn and a range of up to 1,000 nautical miles (nm). But the most obvious benefit of the lightweight and single engine is price per flight hour of only $660 and an acquisition price of a mere $2m.
There finally seems to be some major design developments in this sector, which means certification becomes one of the major obstacles from R&D to market entry. This is on top of Cirrus’ near bankruptcy in 2010 and subsequent take-over by state-operated Chinese investors.
Another ultra-light jet that could rattle the slumbering European market is the Eclipse 550, which is EASA certified for commercial operation. With a price tag of just under $3m, the revamped Eclipse can fly four passengers up to 574 nm, while its maximum range is 1,300 nm at a speed of 330 kn, although its maximum speed is listed at 375 kn, all for the cost of $890 per flight hour.
After a long wait, the turboprop market is also seeing some development. The front-runner Nextant G90XT is not new, but rather reborn and built on the refurbished Beechcraft King Air 90 series, by the very same company that refurbished more than 60 Beechcraft 400A. For under $3m, the new-old Nextant will offer brand new, low-maintenance GE H75 engines, a Garmin G1000 glass cockpit, and digital pressurisation. Overall, a combination of old and new that seems to work perfectly for the market. The 6-seater runs at a maximum speed 280 kn and maximum range of 1,240 nm, costing $880 per flight hour. All of which provides another interesting option for air-taxi operators.
One of the beneficiaries of the economic recovery is Embraer with the success of its Phenom series in the light aircraft category, especially with a staggering 300 units of the Phenom 300 model being delivered since 2009. These numbers encouraged Embraer to invest in the design of a new larger model — the Legacy 500. Together with the smaller Legacy 450 it’s expected to fuel Embraer’s market growth across a new niche market not previously covered by Embraer.
Both aircraft are built on the same platform, with slight differences in cabin length and physical limitations in terms of fuel capacity on the smaller Legacy 450. Customer demand forced Embraer to remove fuel limitation, providing a last minute improvement in range to 2,900 nm. At the going rate of $16.6m customers get a full fly-by-wire aircraft — the lowest price on the market. As the US remains the single biggest market for Phenom and its new Legacy series, it is unsurprising that Embraer is moving its entire Phenom and Legacy 450/500 production into a new facility based in Florida.
Cessna hasn’t announced any new developments for 2016, but did begin delivery of its new $16.25m Citation Latitude model in 2015. With Garmin G5000 avionics, flat floor stand-up cabin, and a range of 2,850 nm, the Latitude will be the main growth driver for Cessna in 2016. The bigger Longitude is expected to enter service in 2017, downgraded to a 3,400 nm range. In 2019, the largest ever Citation, the Hemisphere is expected, which will reach speeds of 0.9 mach with a range of 4,500 nm.
The large aircraft segment has been absolutely dominated by Gulfstream, with 150 aircraft sold at well over a $5bn value. Over the previous two years, main growth drivers were new models G650 and G650ER, with ultra-long range, large-cabin aircraft, and in a class of their own. Its main competitor, Bombardier, is losing ground with slow-downs of their Global 5000/6000 production and postponed development of the Global 7000/8000 for deliveries in 2018 and 2019, by which time the new Gulfstream G500/G600 will enter the market.
Dassault, with five times less revenue compared to Bombardier and Gulfstream, is closing the gap fast. In 2016, Dassault begins deliveries of its new flagship Falcon 8X. Based on its predecessor, the best-selling Falcon 7X, but with more range 6,450 nm and more cabin space, this model will be the flagship for Dassault’s market growth. Compared to its direct competitors it offers the best fuel efficiency and a lower flying cost.
If Dassault’s largest cabin Falcon 5X 2017 deliveries begin as planned, Bombardier’s market share will take an even harder hit. Last year was a particularly poor one for Bombardier; with the company running out of capital its stock value collapsed, its Learjet 85 programme was cancelled, at a loss of $2.6bn and resulting in the loss of 1,000 jobs. The Learjet 60XR was terminated, and there was a 30-unit cut in Global 5000/6000 production for 2016, and a delay in Global 7000/8000 programmes. On the plus side, Bombardier has delivered over 100 of new Challenger 350 aircrafts in only 18 months, and driven by excellent customer and passenger feedback, charter operators are extending orders. In 2016, Bombardier’s hopes lie mostly with the Challenger 350 and the new, bigger 650. Based on the industry work-horse 600 series and upgraded in line with the smaller 350 model with new engines, avionics, and cabin, the Challenger 650 is a candidate for becoming one of 2016’s best-sellers.
Although market forecasts also predict a slow-down, the year ahead will be exciting nonetheless full of new developments. It’s perhaps not all blue skies for everyone, but the industry on a whole is looking towards a brighter horizon.
About the author
Slobodan Vuckovic is founder of AirDB.co Business Aviation Database and AvioTrader.com. Updated daily AvioTrader.com offers the most comprehensive catalogue of certified pre-owned aircrafts available on the market. AirDB.co offers the most comprehensive business aircraft data delivered straight to your mobile device.
Article originally published in the Jan/Feb 2016 edition of The European Magazine.