Eclipse 500 on a diet for Aviace ‘jet clubs’

 - April 14, 2008, 10:30 AM

Swiss startup company Aviace is to get a special, lower-mtow version of the Eclipse 500 twinjet for its European “jet club” operation. At EBACE 2002, Aviace announced it ordered 112 Eclipse 500s. The company’s objective is to set up “jet clubs” that should allow members to travel in the microjets throughout Europe. The cost structure is different from both fractional-ownership and air-charter operations.
Aviace CEO Hilmar Hilmarsson last month told AIN that a European variant of the six-seater would have an mtow of slightly less than two metric tons (4,409 lb). This would translate into lower ATC and landing fees. Eclipse Aviation confirmed that it was studying such a version.

Hilmarsson also gave some details on how the jet clubs would work from both a user’s and an operator’s point of view. He said jet clubs are already being formed at a rapid pace, even before the Eclipse’s first flight (scheduled to occur this summer). But Hilmarsson gave few comments on the financial side of the order.

He told AIN that the request for a lower-mtow version came from Aviace. The purpose of this is to keep operating costs low in spite of Europe’s high ATC and landing fee structure, which is based on aircraft weight.

“Under two metric tons these fees are significantly lower,” Hilmarsson noted. A lower-mtow version of the light twinjet would reduce fuel capacity by 140 kg (309 lb), he said. This would make the full-payload range 900 nm instead of 1,300 nm.
He stressed that the Eclipse 550–which could be the name of this European variant–was “the same aircraft as the Eclipse 500,” with “small differences in checklists and runway performance.”

Oliver Masefield, Eclipse’s v-p of engineering, told AIN that the Albuquerque, N.M.-based manufacturer was “looking at” a variant with a lower mtow for European customers. “However, in Europe we intend to certify both the standard and the lighter-weight versions,” he stressed. With a mtow of 4,700 lb, the standard version flies “about 1,300 nautical miles with four people on board” (including the pilot). Typically, the version with a mtow of less than two metric tons would seat “four people, including the pilot, on 1,000-nautical-mile trips,” Masefield said. It would also have “slightly better climb performance.”

Last month, Hilmarsson said he was starting to convert into contracts the memorandums of understanding he had signed with potential customers in the previous weeks. Five “at least” were expected to be signed at press time. “So far I have been focusing on France, Luxembourg, Belgium and the Netherlands, and now I am turning to the United Kingdom,” he said. He expects a contract with Paris-based Euralair to be signed before the first Eclipse 500 is rolled out on July 13.

Asked to elaborate on the number of ordered aircraft (112), the CEO told AIN, “Originally, our intention was to take 50 Eclipse 500s to start operations; then we looked at what we needed and saw that 200 to 300 aircraft would be a better number to begin with. However, to reduce the risk we decided to choose a number in between. The final number, 112, was elected after Eclipse Aviation let us know what they would be able to deliver.”

The first aircraft is to be delivered in May 2004, “but this one is not listed on our Web site because it will be used for marketing purposes only,” Hilmarsson noted. Further deliveries include another three in 2004, eight in 2005 and 100 in 2006.

The order for 112 Eclipse 500s is firm, he said. The nonrefundable deposit is understood to be about $10 million, although Hilmarsson would not disclose the exact amount. He was also reluctant to elaborate on the order’s funding, saying only that most of the money came from the shareholders, and part came from a bank.

Hilmarsson is himself a shareholder in Aviace. Before coming to Switzerland two years ago, he used to run Loft, an air-taxi operator in Reykjavik, Iceland. Other shareholders include Peter Pfister, chairman of Swiss software company Simultan; Heinz Peier, president of ESP Immobilien; lawyer Heinz Schild; Peter Blum, the former CEO of information technology consulting firm Skybow; and Erich Schulthess. All six are both shareholders and members of the board.

Hilmarsson declined to comment on possible exclusivity for Eclipse retail sales or operations in Europe. “But I will be able to tell you something in a couple of months; a lot is happening these days,” he said.

Asked about the basis of aircraft allocation, the CEO answered that each four members account for an aircraft delivery position. “It will be posted on our Web site which club gets which aircraft,” he told AIN. The jets will be registered in the country where they are based.

If someone wants to become a member now, “their membership fee is placed into an escrow account and is released when the aircraft gets FAA certification.” The fee is divided in several payments, spread between now and about six months before the arrival of the aircraft in the club. “The payment schedule is up to clubs,” Hilmarsson noted.

He emphasized that a company that elects to become an Aviace member can expect a tax benefit. “The membership fee appears as a cost on the balance sheet,” he said. It will not appear as an asset as “the member is never registered as the owner.”

Between 60 and 80 percent of Aviace jet club members are expected to be corporate customers. Hilmarsson believes this type of customer will appreciate the ability to use multiple aircraft at a time, which as in fractional-ownership programs is possible with Aviace’s program. “The limit is the number of hours, not the number of aircraft,” the CEO said.

Asked how a member can pull out of the club, Hilmarsson said members cannot return their membership. “The membership fee is nonrefundable; however, members can pass their membership to someone else, either giving it or selling it,” he told AIN.

On the operator’s side there are some rules to comply with. For instance, an executive air-taxi operator that has set up an Aviace jet club is not allowed to charter an Aviace-owned Eclipse 500 on an hourly basis. But it works the other way around. “A company that has bought its own Eclipse jets for its own operations can also offer them to Aviace members to have more aircraft available at a time; we encourage this,” Hilmarsson pointed out.

Jet clubs are also bound to send aircraft where they are needed, depending on demand. “If a Paris-based Eclipse is not booked and the Munich jet club needs an additional aircraft, the Paris jet club has to send its airplane to Munich,” Hilmarsson said.