Embraer establishes dedicated sales team for business aircraft

 - October 2, 2006, 9:02 AM

Just months after announcing plans to manufacture two new business jets, Embraer has begun modifying its sales department to sharpen its focus on the executive aviation sector. Before making the modifications, the company had a single sales team for both the regional and executive jet markets; it will now have two sales teams, one dedicated to business aviation and the other to commercial aircraft sales.

“The modifications are a result of our new focus on business aviation,” Luis Carlos Affonso, head of the company’s executive aviation division, told AIN.

“We believe that business aviation is an important productivity tool. With globalization, business aircraft are no longer luxury items; they are essential for doing business,” he added. In fact, he noted that business aircraft are filling a niche the airlines once filled. “Worldwide, airlines are serving fewer and fewer small cities, and business aviation has become the only option,” Affonso said.

Bullish on Business Aviation

Embraer is increasingly bullish about the potential of the business aviation market. The company projects that 3,000 light, very light and entry-level jets will be sold in the next 10 years. With its new product offerings, which include a very light jet (VLJ) and a light jet, the company hopes to capture one-third of the market in the future.

Affonso is confident that Embraer will have a series of advantages over its competitors in the VLJ market, including cabin size, availability and performance.

“Our VLJ cabin will be the largest in the category, which is a big differentiator,” said Affonso. He added that Embraer recently signed a deal with German auto manufacturer BMW to work on the interior design of the aircraft.

Other factors include the aircraft’s high utilization and availability rates. “Based on our experience in commercial aviation, we believe that the low maintenance and high availability of our VLJ will be an important selling point,” Affonso said.

Embraer has been pleased with the market’s response to the new VLJ, which will be priced at around $2.75 million and should be certified in 2008. “We believe that the price tag on the VLJ is competitive, and the market has also responded positively to our entry into this market,” said Affonso. The light jet, which should be certified in 2009, will cost roughly $6.5 million.

While the VLJ is still in the design phase, Embraer is already in the process of pre-marketing. The company expects the U.S. market to account for 70 to 80 percent of all sales. Embraer is seeking to accommodate owner-pilots as well as air taxis and fractional ownership groups with the aircraft. “We are preparing for single-pilot operations and making the aircraft easy to fly,” he added.

In addition to the new aircraft, Embraer is also working on improving the Legacy, its only business jet thus far. Since the aircraft was first certified in 2002, Embraer has improved the interior and performance. The aircraft now has better fuel capacity, longer range and improved runway performance.

Legacy sales are expected to be responsible for 11 percent of Embraer’s revenues this year, up from 7 percent last year, when the company delivered 13 of the aircraft.

The Brazilian manufacturer is also developing its service network for business aviation. “We are trying to establish the architecture for our customer support network,” said Affonso. After a thorough review of the current infrastructure for servicing the Legacy, the company is expanding and improving the network. Affonso said that the company could announce new partnerships soon.

In addition to the valuable experience that Embraer has acquired from the Legacy, the company will also build on what it has learned with the 170/190 line of airliners. The engineering and development team that worked on the regional jets is slowly being transferred to the business aviation division. Affonso added that the development of the VLJ and light jet is similar to the development of the 170/190.

“We developed the Legacy using an existing platform, the ERJ 135,” said Affonso, adding that the new Pratt & Whitney Canada-powered aircraft will be the first business jets that the company will be designing from scratch. As was the case with the development of the 170/190, the company will be working with a variety of partners on the VLJ and light jet project. Embraer has earmarked $235 million for the new project.

Affonso said that the company expects to announce other suppliers–and the names of the two new jets–in the coming months.