Monday, October 15, 2007
So, What’s a VLJ?
Define the VLJ market, we asked. Is it an aircraft? Is it a mission? Is it the number of passengers or the acquisition costs? Is it a matter of stand-up headroom or aircraft weight? Like beauty, a VLJ is clearly in the eye of the beholder or the salesman, as the case may be.
Perhaps it is what makes us so excited about this new type of aircraft; the fact it is expanding the market and attracting new owner-operators, who are joining aviation’s ranks for the first time. Similarly, it could be the fact they are ushering in a new transportation paradigm, one that combines the scale of an airline with the efficiencies of private transportation.
As expected, the answer varied with the manufacturer with some jumping on the VLJ bandwagon despite being heavier than what the conventional wisdom accepts as a definition at 10,000 pounds. Others sought to distance themselves from the VLJ market – a little – clearly more comfortable with focusing their sales efforts on owner operators rather than the burgeoning number of per-seat, on-demand models.
The half dozen or so individuals who spoke with AviationToday’s VLJ Report seemed to focus more on mission and range as well as the role of VLJs in expanding the aviation market beyond its traditional customers.
As our interviews provided too much copy for one report, we will be running the interviews over the next few weeks. We hope to start a dialogue with our readers who can post comments as to what they think the answer should be.
Adam Aircraft President Duncan “Dunc” Koerbel, as had his engine OEM counterparts, defined the market in threes – the owner operator, some of whom will be transitioning from piston twins and turboprops – and corporate fleet departments now operating Embraer Legacy’s, Citations and King Aire 90s. Adam has a backlog of 400 aircraft.
“How big things really get for the VLJ will depend on the on-demand, point-to-point, air taxi operations,” he said of the third segment, adding that there are 6,000 King Aires in operation today. “With the regional jets from Embraer and Bombardier, regional airlines figured out how to use this new tool and people will figure out how to use VLJs. It will take time, perhaps seven years but by 2014 this will be a very different industry than it is today. In the meantime, Adam Aircraft has plenty to do with the first two parts of the market and, with our partners, we think we have the best models.”
Koerbel noted the coming market estimated conservatively at 3,000 aircraft. “I’m really comfortable with anywhere we are in those numbers,” he said. “We’ve got a great future. We are the best value point in the VLJ market at $2.3 million and while that is $600,000 more than the Eclipse, there is a whole lot of value for that.”
Steve Crowley, vice president, sales, marketing, and customer support, also chimed in. “One of the things I see is the fact that when a new product emerges and is it more capable a new market is always created,” he said. “The same thing happened with the RJs and the business jets will do the same thing with a new piece of equipment. It will allow people to operate in a new market driven by new technology.”
The two come by their emphasis on the regional airline market as a precursor to what could happen with VLJs, honestly. Crowley was a senior executive at Bombardier Aerospace, where he held multiple positions including vice president asia/pacific sales for Bombardier Regional Aircraft and vice president sales and marketing for the Bombardier C-Series Program. Before Bombardier, he had a long and successful career at Boeing. In his most recent assignment at Boeing, he served as business director and deputy to the executive vice president of commercial airplane sales. Koerbel’s aerospace career encompasses such regional airline experts as Raytheon Aircraft, Fairchild Dornier and Bombardier, where he has held senior positions in engineering, production, and program management. He led the Global Express aircraft program as vice president and general manager Global Express & Global 5000 Business. At Lockheed Martin, he served as vice president & general manager, aircraft division where he was responsible for the aircraft heavy maintenance (MRO) business plus all facets of business development, operations, contracts. He also worked with local and federal government customers. As Fairchild Dornier’s vice president, new airplane program office in Munich, Koerbel was in charge of the program office for the 728 and 928 airliner development programs. Koerbel began his aviation career at Raytheon Aircraft serving in numerous capacities including leading the development and certification of the Premier I business aircraft, the first jet aircraft designed by the company and first “clean sheet design” in 15 years. He also ran the FAA Part 25 Beechjet 400A product line along with developing and certifying the FAA Part 23 Super King Air 350.
Embraer, with its Phenom offerings and long history in designing for the regional airline market, touted the VLJ’s role in creating a new market.
“I believe the very light jet is the new entry-level segment of the market” said Luis Carlos Affonso, executive vice president, executive jets. “They have created a new segment using new technology in engines, avionics and aerodynamic design.”
More importantly, he said, is the price point and what the customer expects for it. “These are offered at a price range never seen before,” he said. “Before, to get into a jet was $4.5 million, now it is between $1.5 million to $3 million. To me that is what’s new. VLJs have all the features of a large jet at an entry-level price range but with a design objective for big comfort, a baggage compartment and a lavatory. Even being priced at unprecedented levels, they are still expensive airplanes and customers will be expecting a certain level of comfort.”
Cessna Spokesperson Doug Oliver sees the market in threes as well but from its lowest – the Eclipse 500 – to its highest capacity, the Cessna Mustang and then Embraer’s Phenom 100.
“The owner/operator, corporate flight departments and air taxis are all interested buyers but we never counted on the air taxi market,” he said. “Our target was the traditional owner/operator and small businesses with small corporate flight departments.”
Mustang Project Engineer Michael Dame pointed out that, based on the weight definition, the Cessna Citation was the original VLJ, coming in at 10,000 pounds back in 1970. Today, the Mustang carries much the same performance and price, adjusted for inflation.
“A lot of owner operations fly a lot – 400 hour per year – so they need an aircraft that is durable with ease of maintenance and that will also benefit the inexperienced operator. Our goal is to provide all the functionality of more traditional business jets while simplifying operations. Even though we did not target the air taxi market, all of that is good for air taxi operations as well.”
Clearly tired of all the doomsayers who have pontificated on the VLJ market and “don’t have the guts to stand up and say they were wrong,” Eclipse President Vern Raburn held court speaking his mind. He pointed to Cessna’s “stupidity” in saying the Mustang was not a VLJ but an entry-level jet. He defined the market differently.
“I think the size should be 8,500 pounds not 10,000,” he said. “If you look at existing aircraft some call VLJs a light jet. It is an interesting debate about personal jets rather than VLJs. It is about value and utility with the runway performance, operating and acquisition costs. The VLJ is truly a game changer; a new point in the market. The real analogy is the community market once served by Piper Navajos. There used to be thousands of them flying the skies. Those who say VLJ success won’t happen have a phenomenal ignorance of history. Those same communities need that service more today than ever.”
Indeed, he was describing the beginnings of the regional airline industry and airlines like SkyWest, which was founded on Navajos. Interestingly, SkyWest includes Eclipse COO Peg Billson on its board. In addition, Raburn and CEO Jerry Atkin have had many talks riding the Utah ski lifts on the parallels between the two dynamic industries.
Raburn noted that at one time, airplanes were bought by every segment of the market and cited the Beech 18 and DC-3 as examples. They were bought for personal use, freight, training and scheduled services. “Eclipse 500 is the first aircraft since the Beech 18 that is made for air taxi, corporate, and training,” he said. “It’s all still about carrying people for hire.”
He reported that he is now seeing the first glimmers of interest from the cargo market for high-priority freight the value of which is measured in time, not money, and expects to make an announcement in the not to distant future. “A 50-cent bolt is worth its weight in gold if you have a machine that needs it.”
He predicted that VLJs will follow the success of the light sport aircraft in a trend that seemed to be the rebirth of the venerable Piper Cub as causing an explosion of interest in flying. “We believe more than anything that the VLJ will expand aviation,” he said, pointing to the recent auction of an Eclipse 500 on e-Bay. Related Story “The winner was so excited about the Eclipse when it was first announced, he decided he had to learn how to fly. This is about taking a relatively morbid, incestuous industry and expanding the market.”
HondaJet is taking a different approach according to Stephen Keeney, senior manager corporate affairs, preferring to call the HondaJet an advanced light jet rather than a VLJ. “We view the very light jet as a personal transport,” he said, comparing it to the Eclipse, Mustang and Embraer Phenom. “It is a different aircraft size, interior and cargo capacity. We offer performance and top speed and fuel efficiency that does not fit into the traditional definition of the VLJ.”
He pointed to the natural laminar flow wing and the all-composite fuselage that not only offers speed and better operating costs but also noise reduction because the wing/engine mount on top of the wing, baffles the noise. The HF120 GE Honda Aero Engines is also 10 percent more fuel efficient.
In addition to the owner/operator, HondaJet is targeting charter companies that already own a fleet of jet but need an aircraft that its idea for the short-haul mission. “We will give the customer a different experience in travel and do it quickly,” he said, adding there is a demand for a new aircraft that will go 1,100 nautical miles at 420 knots at 43,000 feet. “It has a 66 cubic foot cargo capacity which is larger than the [Cessna] CJ1. We offer the fastest and highest operating aircraft and that reflects the Honda philosophy. We are a company that likes to go fast”
Saying it is too early to predict the success of new business models being introduced with the VLJs or whether or not there will be thousands of jets in the skies. “We prefer to analyze the potential for an aircraft the size, performance and price of the HondaJet,” he said. “We expect to produce 70 to 90 units per year, maybe more depending on the ultimate demand. We are not only looking to improve a customer’s productivity but maximize his or her free time. Customers are now more concerned with the amount of time the can spend with their family. Now, through our personal transportation device, they can realize that and maximize the time with their family by taking their family with them.”
As had other airframers, Keeney pointed to the similarities in VLJ production and the auto industry. “We are very knowledgeable about mass production and we are very flexible, which means if demand increases we can accommodate the market.”