Medium'Sized*Business*Jets*–*The*Next*Sales*Frontier?*!
Although!much!focus!in!business!aviation!is!on!the!strength!of!Large! Jets!and! the! relative! softness!of!Light!Jets,!the!Medium!Jet!segment!has!faced!some!of! the! strongest! headwinds! in! the! post;recession!industry.! ! Buffeted! by! spikes! in! unsold! inventory!and!sharply!reduced!utilization,!prices!and!values,!Medium!Jets!represent!almost!1/3rd!of! the!world!business! jet! fleet,! and! are! operated! by! a! broad!spectrum!of!customers,! from!charter!operators!to!private! entities! to! large! corporate! flight!departments.!!As!we!enter!the!3rd!quarter!of!2014,!could!relief!finally!be!in!sight!for!long;beleaguered!aircraft!manufacturers,!aircraft!sales!professionals,!owners! /! operators,!investors,!and!other!key!stakeholders! that! focus!on! the! middle! of! the!market?!!!The!answer:!A!qualified!“Yes”,! but! first,! some!definitions.! ! Although!there!are!many!different!ways! to! slice! and! dice!the! marketplace,! we!classify! the! Medium! Jet!segment! as! all! aircraft!from! the! “Super! Light!Jet”! (Citation! XLS+! /!Learjet! 75)! up! to! and! including! the! “Super! Mid;size! Jet”! categories! (Citation! X+,! Challenger! 350,!Gulfstream! G280,! Embraer! Legacy! 500).! ! These!aircraft! have! 2014! list! prices! that! span! from! $US!13M! to! $26M,! maximum! takeoff! weights! from!20,000!to!40,000!lbs.,!4;passenger!NBAA!IFR!non;stop!ranges!from!1,700!to!3,600!nm,!and!standard!seating!layouts!that!accommodate!7;8!passengers.!!Note! that! we! exclude! the! $26;28M! Embraer!Legacy! 600! and! Dassault! Falcon! 2000S! from! the!Medium!Jet!category,!as!these!aircraft!tend!to!have!characteristics!more!associated!with!Large!Jets.!
!The!Medium!Jet! fleet! includes!6,440!aircraft!as!of!mid;September!2014,!or!32.5%!of!all!business!jets!currently! operating! worldwide,! according! to!JETNET! databases.! ! Half! of! all! Medium! Jets! in!today’s! fleet! are! in! the! traditional! Mid;size! Jet!category,!including!some!of!the!most!versatile!and!popular! models,! including! the! Hawker!700/800/900! family,! Citation! VII! and! Sovereign,!and!Learjet!60!/!60XR.!!!The! sales! environment! for! Super! Mid;size! Jets! is!expected!to!be!the!most!robust!of!the!Medium!Jet!
segment,!based!on!high;probability! purchase!intentions! as! measured!by! quarterly! JETNET! iQ!Surveys! of! fixed;wing!turbine!business!aircraft!owners! and! operators!over!the!past!12!months.!!Prospective! buyers! who!currently! operate!Medium! Jets! indicate!that! their! most!important! purchase!criteria! are! cabin! size!and! non;stop! range!
performance,! respectively,!and! they! are! clearly! attracted! to! the! new! and!recently! certified! offerings! in! the! Super! Mid;size!Jet! segment,! specifically! the! Bombardier!Challenger! 350,! Gulfstream! G280,! and! Embraer!Legacy!500.!!!Purchase!interest!is!highest!amongst!North!American! buyers,!where! 72%!of! the! Super!Mid;size! Jet! fleet! is! based.! ! Each! of! these! aircraft!offers!a!stand;up!72”+!cabin!and!3,100!nm+!NBAA!IFR! range! with! 4! passengers,! enough! to! meet!virtually! all! transcontinental! U.S.! missions! and!even! the! occasional! trans;Atlantic! crossing! from!the!U.S.!Northeast.!!!
NAVIGATING!360°%ROLLAND%VINCENT%ASSOCIATES,%LLC%
September(2014(
Source:(www.embraerexecu/vejets.com(
Although( new( purchase(intentions( do( not( always( lead(to( actual( purchase(
behavior,(customer(
interest( in( the(new(Super( Mid:size( Jet( offerings( from( Bombardier,(Gulfstream(and(Embraer( is( consistent,( suggesting(that( these(OEMs( are( poised( to( capture( a(wave( of(new( orders.( ( We( expect( that( these( orders( will(position( this( middle( market( segment( for( its( first(year:over:year(growth(in(new(deliveries(since(the(onset( of( the( Great( Recession,( reflecting( a(market(recovery(but(also(the(returns(on( investment( from(product( strategies( that( have( been( years( in( the(making.((((In(the(pre:owned(market,(asking(prices(for(5:year(old( Challenger( 300s(with( typical( levels( of( annual(utilization(are(hovering(in(the(65%+(range(relative(to( 2009( new( list( prices.( ( Just( 6%( of( the( fleet( is(currently( available( for( sale,(with(average(days(on(market( hovering( around( 200( days,( according( to(www.controller.com(and(JETNET.((These(numbers(reflect( an( active( and( healthy( marketplace( with( a(good(balance(between(buyers(and(sellers.(((Customer( interest( in(larger( cabins( is( no( doubt(driven( by( a( desire( for(more( comfort.( Tight( cabins(and( low( ceilings( are(
understandably( commonplace( in(the( light( jet( segment,( where( the(aircraft’s( frontal( area( is( a( huge(component(of(the(drag(calculation.((Nevertheless,( times( –( and(passengers( –( are( changing.((According( to( the( U.S.( Department(of( Health( &( Human( Services,( the(weight( of( the( 95th( percentile( U.S.(male( has( increased( by( 24%,( or(
more( than( 50( pounds,( in( the( 40+( years( spanning(the( era( of( the( earliest( business( jet( designs( to( the(pre:Great( Recession( period.( ( Passengers( are(simply(bigger,(and(missions(are(growing(in(length(and(duration,(so(seats(and(interiors(are(necessarily(evolving(to(meet(these(realities.(((Swiss:based( charter( operator( VistaJet( has(recognized(the(potential(of(the(Challenger(350(as(a(flexible,( long:range( aircraft( with( relatively(attractive( operating( costs( compared( to( its( larger:
cabin(siblings.( ( VistaJet,(with( 20( Challenger( 350( orders(and(20(options,(recently(introduced(a(new(interior(concept( that( offers( 3( lie:flat( berths,( a( bulkhead(door(at(the(front(of(the(cabin,(and(a(forward(galley(flight(attendant(seat(for(additional(privacy.((Textron( Aviation’s( new( $16M( Citation( Latitude,(expected(to(be(certified(in(2015,(will(offer(a(larger(cabin( cross( section( in( the( traditional(Mid:Size( Jet(segment,( although( range( is( targeted( at( a( more(modest( 2,500( nm.( ( Industry( rumors( are( that( the(
Sources:))1960.62:)Weight,)Height)and)Selected)Body)Dimensions)of)Adults,)1960).1962,)US)Dept.)of)Health,)EducaEon)and)Welfare,)NaEonal)Center)for)Health)StaEsEcs)Series)11)No.)8;))2003.2006:)Anthropometric)Reference)Data)for)Children)and)Adults:)United)States,)2003–2006,)NaEonal)Health)StaEsEcs)Report:)Number)10n)October)22,)2008.)
95th%Percentile%Male 1960%1962 2003%2006 Change %/Change
Weight/(Pounds) 217.0 269.1 52.1 24.0%
Height/(Inches) 72.8 73.5 0.7 0.9%
Sources:)1960.62:)Weight,)Height)and)Selected)Body)Dimensions)of)Adults)/)US)Dept.)of)Health,)EducaFon)&)Welfare)/)NaFonal)Center)for)Health)StaFsFcs;)2003.2006)Anthropometric)Reference)Data)for)Children)and)Adults:)United)States)/)NaFonal)Health)StaFsFcs)Report)
Challenger)350)Interior)Source:)businessaircra7.bombardier.com)
Legacy'500'Interior''Source:'www.embraerexecu8vejets.com''
VistaJet(Challenger(350(Interior(Layouts(–(Day(and(Night(Configura<ons(–(Source:(www.vistajet.com(
company( is( currently( evaluating( a( change( to( the(design( of( the( in:development( 4,000:nm( Citation(Longitude,( which( may( include( additional( range(and( cabin( volume.( ( At( some( point( in( the( future,(Textron(Aviation(may(decide(to(offer(a(larger(cabin(light( jet,( but( we( would( suspect( that( capital(approval( is( highly( unlikely( at( this( time( given( the(current(state(of(the(lower:end(jet(market.(((The(Super(Mid:size(Jet(segment(appears(to(be(alive(
and(well,(especially(in(the(relatively(vibrant(North(American( market.( ( This( is( a( welcome( sign( for(OEMs,( aircraft( salespeople,( their( customers,(investors,(and(other(stakeholders,(who(have(been(anxiously( awaiting( good( news( of( better( days(ahead.!((
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surveys of business aircraft owners and operators worldwide are cornerstone features of JETNET iQ.(
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