NBAA’07 Convention Report

 - November 1, 2007, 6:29 AM

This year’s NBAA Convention was about more than multimillion-dollar deals, flashy exhibits and rows of new business jets gleaming under the Georgia sun. To gauge the true importance of the event, one has to look beyond the scope of sales announced at the show–more than a billion dollars, unofficially–and at the origins of those deals. More than half of the orders placed for business airplanes this year have come from international buyers, especially those in Europe. According to Honeywell’s annual forecast, the industry is expected to deliver more than 1,000 business jets this year, an all-time record. Next year the figure is predicted to climb to 1,300.

“It’s quite remarkable,” said Gulfstream president Joe Lombardo. “In the second quarter our order intake on the international side was 51 percent, with 49 percent domestic. We’ve never seen anything like that before.” The industry, he said, is in the midst of a major expansion as businesses outside the U.S. grow and the weak dollar makes buying a business jet attractive. French manufacturer Dassault noted that from its perspective the trend is even more pronounced, with 70 percent of new sales this year coming from buyers outside the U.S. “I think that’s a fundamental change in the business and I think it’s here to stay,” Dassault Falcon president John Rosanvallon said.

The deals announced at the Atlanta show, held September 25 to 27, came pouring in from all corners of the exhibit halls. Cessna said it finalized orders for more than a dozen Citations in Italy and 30 Mustangs to an undisclosed European air-taxi operator. It also received an order for 30 Citation Xs from California charter operator XOJet. Later in the show Bombardier sold 20 Challenger 300s to XOJet in a contract that included options on 60 more. Piaggio notched $150 million in new sales from fractional provider Avantair, and Grob sold 25 SPn midsize jets to fractional firm PlaneSense. The other major manufacturers added to a final sales tally that could exceed $2 billion if all options are exercised.

Perhaps the biggest surprise at the NBAA Convention, though, was the absence of any really big surprises. Cessna almost launched an airplane program, Dassault said it will by the end of next year and Embraer revealed a pair of concept jets, but that’s as close as any of the major manufacturers came to introducing a new airplane. Still, the event will go down as one of the association’s biggest and best ever, owing its success to the rapidly expanding market for business jets, especially to the first-time international buyers who showed up in Atlanta with deposit checks in hand.

Playing host to 31,343 registered attendees and a record number of exhibits inside the Georgia World Congress Center, the NBAA Convention has grown into one of the eight biggest trade shows in the U.S. In addition to the sprawling exhibition space inside two enormous main halls at the convention center, 115 business airplanes arrived at nearby Fulton County Airport for the static display and 1,152 companies displayed their products and services. “This was an enormously successful convention, and NBAA’s 60th anniversary has been an enormously successful year,” said NBAA president and CEO Ed Bolen.

Rapidly Expanding Market

If airplane makers weren’t introducing new models, they certainly seemed to be having little trouble adding to their already bursting order books. The market surge is leading to production crunches for all of the OEMs, many of which announced major factory expansion plans to cope with long delivery lead times. The focus on production perhaps helps explain why there weren’t any program launches this year, but it doesn’t mean fresh designs won’t be launched soon.

“Had the show been any later in the year, we definitely would have launched the Large Cabin Concept airplane,” said Cessna chief executive Jack Pelton. Cessna began testing the waters for a large-cabin business jet at last year’s convention and has been showing a cabin mockup since then. He said a firm launch decision will come early next year, but “we’re 99.9 percent sure” the LCC indeed will be given the go ahead.

Dassault, likewise, wasn’t quite ready to launch its proposed super-midsize jet contender (codenamed SMS), but the company revealed the airplane will have fly-by-wire flight controls and an advanced glass cockpit. In the spring Dassault selected a Rolls-Royce engine for the airplane, leading observers to assume the official launch would come at the NBAA Convention. Instead, Dassault said it will wait until the end of next year for the official launch.

Bombardier chose not to launch or even discuss a new model, with Bombardier Aerospace president Pierre Beaudoin conceding only that “the Learjet line is next in line for an upgrade.” The airplane he was referring to is thought to be aimed at filling the gap between the recently approved XR revamp of the Learjet 60 midsize and the Challenger 300.

Only Embraer chose to take the covers off future jets by releasing artists’ renderings of not one but two proposed airplanes to fill the gap between the under-development Phenom 300 light jet and the Legacy 600 super-midsize. At the show Embraer started taking $70,000 and $90,000 refundable deposits accompanying “letters of interest” for its proposed midsize jet (MSJ) and mid-light jet (MLJ). The company unveiled a concept mockup representative of the interiors of both aircraft and another mockup of its E190-based Lineage 1000 large executive jet.

Embraer did not formally commit to producing the MSJ or MLJ, choosing instead to present concept designs á la car makers and, as has been the trend more recently, a growing number of aircraft builders. “This is not a launch,” emphasized Embraer CEO Frederico Fleury Curado. However, Embraer has trademarked the names Legacy 400 and Legacy 500, which would fit nicely with the Legacy 600 as well as the smaller Phenom 100 and 300 and larger Lineage 1000 in Embraer’s growing line of business jets. Nevertheless, Curado said, the company is developing a business plan for the new jets and will enter the niche segments if it determines that the models would be “game-changers, not me-too aircraft.”

Embraer’s executive v-p for executive jets, Luis Carlos Affonso, said the vision for the new concept jets was to allow customers to stay with the Embraer brand no matter what size business jet they required. Like Embraer’s Phenom 100 and 300, the new airplanes would share the same fuselage cross sections, but Affonso said this pair will have 90-percent commonality, with the MSJ measuring about 4.5 feet longer than the MLJ, but having the same wing.

The MSJ design calls for eight-passenger capability with a range of 2,800 nm at a high-speed cruise of Mach 0.8 and 3,000 nm with four passengers. Takeoff field length at mtow is expected to be 4,500 feet and the aircraft is believed to have a ceiling of 45,000 feet. According to Embraer, that combination would allow the MSJ to reach city pairs of New York to Seattle or New York to Dublin.

After Embraer, Bombardier made the biggest splash at NBAA’07 by introducing the long-awaited replacement avionics system for the Global Express XRS and Global 5000 models, the Pro Line Fusion cockpit from Rockwell Collins. Switching from six “old-fashioned” CRT screens to four large-format LCDs eventually will allow Bombardier to add synthetic vision, enhanced vision, electronic charting and other advanced capabilities to its top-of-the line models, not to mention match the market head starts of its chief rivals, Gulfstream and Dassault. The Bombardier Global Vision cockpit will also include an LCD head-up guidance system from Rockwell Collins and a CMC SureSight enhanced-vision system, as well as leather cockpit seating and an ergonomically more friendly layout.

NBAA’07 will likely also be remembered for the company buyouts and strategic partnerships announced at the event. New investors arrived with news that they had acquired majority control of Sino Swearingen and are finalizing plans to resume production of the SJ30 business twinjet, and Cessna revealed plans to purchase troubled lightplane maker Columbia Aircraft.

But the really big news began unfolding months before the show and half a world away. Flush with a $200 million cash infusion from Indian billionaire Vijay Mallya (principal owner of Kingfisher Airlines) and a $170 million order book, turboprop and VLJ developer Epic Aircraft announced that it has begun initial talks with Airbus on a technology- and knowledge-sharing agreement that will likely give the company a much needed boost as it works toward certification and production of its designs.

After initially proclaiming that the value of the Airbus alliance would equal or exceed Mallya’s investment in the company, Epic CEO Rick Schrameck backed away from that assertion at a joint press conference on the show’s second day. Arnaud Martin, Airbus vice president of corporate and VIP jet programs, characterized the discussions as “very preliminary” and declined to elaborate further. Schrameck expected a delegation from Airbus to visit the Epic factory in Bend, Ore., last month. He added that Epic would benefit from an Airbus alliance in terms of better understanding European aircraft certification requirements and that Airbus could be interested in Epic’s composites technology.

Charter Industry
Besides Kingfisher Airlines, Mallya owns 60 businesses, including the United Beverage Group and Air Deccan. Kingfisher has 127 new aircraft on order, mostly with Airbus. Mallya’s investment in Epic is being made with personal funds and his ownership stake was valued at 50 percent, according to Schrameck. However, the billionaire’s investment in Epic is apparently being managed by Hitesh Patel, Kingfisher’s executive vice president. Patel said he planned to hold talks with the Indian government to explore the possibility of building Epic aircraft in India at a government-owned Hindustan Aeronautics facility.

Another trend that emerged at the show was the move by large charter operators to change the composition of their fleets, namely by purchasing (as opposed to managing) the aircraft they operate. Obviously there were the huge orders by XOJet for 50 airplanes and another 60 options, but a number of other charter firms got in on the action at NBAA’07. Charter operator VistaJet, headquartered in Baar, Switzerland, announced an order for three Airbus ACJs, bringing the privately owned charter operator’s total investment in bizliners to more than $1 billion. Later at the show, a new U.S. charter operator, Pegasus Elite Aviation of Kinston, N.C., announced it had begun operations just six weeks before. It already has 10 aircraft in operation and 25 on order, all financed with an investment of $400 million by Merrill Lynch and the Pegasus Blue Star Fund.

Not far behind the charter operators were the charter brokers. CharterMatrix and Skydini.com introduced Web-based services for booking charter flights online, while a group of former Avjet executives headed by Rebecca Posoli-Cilli announced the creation of a new venture with Freestream Aircraft UK to form Freestream Aircraft USA based at New Jersey’s Teterboro Airport.

For many, the most fulfilling part of the show didn’t happen at the convention center or static display, but rather at a local elementary school where about 500 volunteers spent the Sunday before the start of NBAA’07 building an aviation-theme playground for underprivileged kids. NBAA partnered on the project with Home Depot and KaBoom, a nonprofit organization that helps provide safe play areas in poorer areas. With a total price tag of around $160,000, the playground at Fain Elementary School ranked among the most ambitious of the more than 1,200 that KaBoom has overseen. Home Depot donated $50,000 for the project and NBAA kicked in most of the rest.