This$300millionairlineristhehottestnewtrendinprivatejetshttp://www.businessinsider.com/boeing-787-dreamliner-bbj-kestrel-private-jet-2016-6?r=DE&IR=T

BenjaminZhangJun.17,2016,10:58AM

Boeing787-8BBJ.KestrelAviationManagementInJuly,China'sHNAAviationGroupwillwelcomeashinynewBoeing787-8Dreamlinertoitsfleet.Thisplaneisspecialbecauseitisthefirst787Dreamlinertobebuiltpurelyasaprivatejet.

HNA'snewDreamlinerissymbolicofahotnewtrendinprivateandcorporateaviation—long-range,mid-size,wide-bodyairliners."It'sanemergingmarketthatdidn'treallyexistinthepast,"KestrelAviationManagementCEOStephenVellatoldBusinessInsider.Kestreloversawthedesign,engineering,andfabricationofHNA'snewDreamlinerwhichhasanestimatedtotalcosttopping$300million.AirbusandBoeinghavelongofferedversionsofitsairlinerstoprivatecustomersundertheirAirbusCorporateJetandBoeingBusinessJetprograms.However,buyersoftheseairliner-basedprivatejetshavelonggravitatedtoeitherfour-engine,jumbojetsliketheBoeing747orsmaller,narrow-bodyjetssuchastheAirbusA320."Themarketistraditionallyseparatedintotwobuckets,"Vellasaid."ThebigBoeing747sandAirbusA340sprimarilycateredtoheadsofstatewhilethesmallerAirbusA320andBoeing737sarepopularcorporaterunaboutsaswellassecondaryplanesingovernmentfleets."

Boeing787-8BBJinterior.KestrelAviationManagementAlthoughtwin-engine,mid-size,wide-bodyjetssuchastheBoeing767andtheAirbusA330havelongbeenavailable,theyneverquitecaughtonwiththeprivatejetcrowd.

However,inrecentlyyears,ultrahigh-endprivatejetcustomershavebecomeincreasinglyinterestedinthenewgenerationmid-size,wide-bodyplanessuchastheDreamlinerandAirbusA350.What'schanged?AccordingtoVella,severalfactorsledtotheshift.First,leadingbusinessmenandheadsofstatearegenerallypressedfortime.Asaresult,theypreferbetoabletoflyanywheretheyneedtogonon-stop.Untilrecently,thissimplywasn'tpossibleinatwin-enginedjet.Thetraditionalthinkingintheaviationdictatesthatthere'ssafetyinthenumberofenginesaplanehas.RegulatingbodiessuchastheUSFederalAviationAdministrationhaveevenplacedlimitsonwhichultra-long-rangeintercontinentalroutestwin-enginejetscanfly.Asaresult,governmentandcorporateclientslookingforaplanewiththerangeandcapabilitytogoanywhereintheworldhadtoturntofour-enginedjumbos.However,withtheincrediblereliabilityofmodernturbofanengines,theregulatorylimitationsontwin-enginedjetshaveessentiallybeenwipedout.Now,planessuchastheA350andthe787canflyanywheretheownerrequires,butinaslightlysmallerandmoreaffordablepackage.Forinstance,HNA'snewstate-of-the-artcompositeBoeinghasarangeof9,800milesevenwhenpackedwithpassengers,luggage,andfuel.AsimilarlyoutfittedA350ACJwillbeabletodeliverythattypeofperformanceaswell."Youcanflybetweenvirtuallyanytwopointsontheglobe,"VellasaidoftheDreamliner.

JapanesegovernmentBoeing747-400.REUTERS/JasonLe

Secondly,thepriceofcrudeoilhasfallendramaticallyoverthepasttwoyears.Eventhoughcheaperfuelmakesbuyingandoperatingathirsty,four-engined,jumbojetmuchmoreattractive,lowcrudepriceshavealsocutdramaticallyintotheincomeofMiddleEasterngovernments.Unfortunatelyforthe747BBJ,theyarealsosomeoftheplane'sbiggestcustomers.AccordingtoVella,allmajorMiddleEasterngovernmentssuchasSaudiArabia,operatelargeroyalfleets,manyofwhicharejumbojets,forelitemembersoftherulingfamilyandofficialstouse.Overthenextdecadeorso,thesefleetswithneedtobeupdated.Vella,whosecompanyhasboughtandsoldmorethan$50billionworthofcommercialandprivatejets,believestheMiddleEasternclientelearereadytodosomebelt-tighteninganddownsizetosmallerplanes.Finally,anotherfactorthathasbenefitedtheDreamliner-sizedjetistheincreasingpublicsensitivitytowardspoliticallargess.UnliketheUS,wheretheplanethatoperatesasAirForceOneisheldinhighesteemandseenasasymbolofnationalpower,thepublicinmanycountriesviewalargepresidentialaircraftasasignofpoliticaloverindulgence.AccordingtoVella,thisisaparticularlysensitiveissueinEurope.However,asmalleraircraftwiththeperformancecapabilitiesofajumbo,butinalessattention-gettingpackageisareasonablealternative."Themid-sizejetshavelessramppresence,"Vellasaid."Theyoffertheownermuchmorediscretion."

KestrelCEOStephenVellainsidetheBoeing787-8BBJ.KestrelAviationManagementAfterall,it'shardtoarrivediscretelyinajumbojetnomatterwhereyougo.Evenattheworld'sbusiestinternationalairports,anaircraftthesizeofa747orAirbusA380isconspicuous.

Butallofthisrequiressomeperspective.Eventhe"smaller"787BBJisstillanabsolutelymassiveaircraft.At186ft.long,evenDonaldTrump'sconvertedBoeing757isdwarfedbythenewDreamliner.Andwith2,400sq.ft.oflivingspace,itoffersthesameamountofroomasanaverageAmericansuburbanhome.What'scomingAccordingtothelong-timeaviationexecutive,overthenext15-20years,demandfromjusttheMiddleEastforBoeing787-sizedprivatejetswilltop30aircraft.Thatmaynotsoundlikemanyplanes,butatmorethan$300millionapop,that'sabout$10billioninbusinessfromjustahandfulofcustomers.Infact,VellabelievesdemandfromEastAsiawillbejustasintenseoverthatperiodoftime."Becauseofthehighnumberoflongdistanceand(trans-oceanic)flightsthecustomersmake,thesearetheperfectplanesforAsia,"Vellaadded.Whetherthemarketforthesemid-size,twin-enginewide-bodyprivatejetsactuallyskyrocketsremaintobeseen.Butwiththeunprecedentedlevelofadvancedtechnology,luxury,andperformanceitcanoffer,theyareanundeniablyattractiveoptionfortherightbuyer.