NBAA Convention News

Heavy-iron trends: Big Bigger & Biggest

 - November 13, 2006, 6:18 AM

In the world of private aircraft in the bizliner category there are three subcategories–big, bigger and biggest. After several years in which the ripple of sales activity for bizliner manufacturers was only slightly more impressive than a ping-pong ball dropped into a glass of water, the market appears to be on the rebound. Just how good is the situation now? Think bowling ball and a bathtub.

By contrast, the years from 2001 through 2004 were not good ones at all. Boeing Business Jets delivered 11 aircraft in 2002, seven the next year, three in 2004 and four last year. Airbus, meanwhile, delivered only two Airbus Corporate Jets in 2002, and they went to the French government. The next year saw no ACJ deliveries, and 2004 was more of the same. But sales had already begun to recover and there were nine ACJ deliveries in 2005. (Airbus ACJ delivery numbers include the A318 Elite, the A319 and the A320 Prestige.)

At that time, independent completion centers which traditionally handle interiors on executive/VIP bizliners were battling for contracts. One center, noting that a competitor, after a fierce bidding war, had just gotten contracts to do two Boeing 747 executive interiors, noted with a sniff, “They may have got the contracts, but they’re sure not going to make any money on them.”

But as industry observers like to say, “The business is cyclical,” and it might be more accurate to describe the process as a pendulum–if so, then 2004 was the low point.

All along, at Airbus and Boeing, at Bombardier and at Embraer, market intelligence executives were peering into their high-tech crystal balls, developing new strategies and searching out new opportunities. The idea was to have the hinges oiled and a hand on the knob the second opportunity knocked.

Now it’s late 2006, and a much improved economy and growing demand have brought to reality those new strategies and opportunities.

One of those is the belief that there is a niche market for a widebody executive/VIP airplane that wasn’t what critics would label a “royal barge.” Airplanes that are functional, comfortable and don’t require the purchasing power of roy-lty are the current favorite plumes f those with enough money to play in this territory.

Bombardier is delivering its Challenger 850, based on the CRJ200. The Canadian OEM has selected Lufthansa Technik of Hamburg, Germany, and Midcoast Aviation in East Alton, Ill., to do the interiors. The finished airplane is priced in the $25.2 million range. Current orders stand at more than 20 airplanes. Bombardier is holding 10 to 15 slots a year on its regional jet production line for airplanes to undergo the Challenger 850 treatment.

The A318 Elite Emerges

Sensing a similar niche market for the baby of its airline fleet, the A318, Airbus announced earlier this year an agreement with Lufthansa Technik to do fast-turn-around executive/VIP A318 interiors at a finished price of around $45 million, about $9 million less than the tag on the larger A319-based ACJ.

The airplane comes in standardized configurations, the Elite for 14 passengers and the Elite Plus with 18 seats. Walter Heerdt, the Lufthansa Technik senior v-p of marketing is expecting to go work on the first A318 Elite before the end of the year. Cycle time for the typical Elite interior is expected to be about four months, at least eight months less than the more highly customized ACJ.

The A318 Elite is designed for a regional private jet market. With a range of 4,000 nm, it is a nice fit for European buyers and has transatlantic range. “We see the Elite becoming popular in North America,” said Airbus spokesman David Velupillai. “We’re in double figures with Elite sales already,” he added.

Heerdt foresees a broader worldwide demand for standardized widebody executive/VIP cabins, particularly in such emerging markets as Russia and China. Airbus has sold at least four to Russian and CIS operators over the past several years, and Lufthansa Technik is working on its first BBJ interior for a Russian customer.

The first A318 Elite order came last fall from Zurich-based charter operator Comlux. Two weeks later, Saudi Arabia’s National Air Services ordered five Elites, with options for five more. The Jeddah-based company expects to receive the first airplane in early 2007 and will operate the fleet in support of VIP customers throughout the Middle East and to various European destinations. Clearly, Airbus fortunes in the VIP market have turned around.

Somewhat late into the fray is the Lineage 1000 from Embraer, based on the Brazilian OEM’s 98-passenger E190 airliner. The Lineage program launch came in May and the company has one order to date.

Embraer describes the Lineage as having “as many as five separate ambience features, with privacy for up to 19 passengers.” With a longer cabin than the Challenger 850 or A318 Elite, the Lineage offers the advantage of in-flight access to an aft baggage storage area.

Hosting a modular cabin design concept, the Lineage offers a wide variety of interior configurations that include lounges, boardrooms, aft and forward galleys, showers and as many as three lavatories. The airplane is priced starting at about $27.4 million and, depending on the desired options, may go as high as $34 million.

In the more traditional arena of widebody executive/VIP flight in which cabins are highly customized, often for head-of-state use, Boeing last year introduced its “big daddy” of the BBJ line, based on the 215-passenger Next Generation 737-900 platform.

The BBJ3 is priced at the high end of the $70 million range and has 35 percent more cabin space than the original BBJ and 11 percent more room than the BBJ2. The launch was announced at last year’s Dubai airshow, which Boeing Business Jets president Steven Hill considered appropriate, as the region is a major market for BBJs and half of the BBJ fleet in the Middle East consists of BBJ2s.

The 737-900ER “mother ship” made the first flight of the test program in September this year and certification is expected next year.

New Demand Expected

In coming years, the industry expects to see an exceptional demand for the really big iron, and a major reason is an aging fleet currently in service.

Not including some 80 members of the ACJ family (A318, ACJs and A320s) and about 110 BBJs, the existing worldwide fleet of bizliners totals about 185 executive/VIP airplanes, ranging from Boeing 727s to Airbus A340s to Boeing 747s and a McDonnell Douglas MD-11. Most were conversions of aircraft that had already done time in the airline industry, and most are well past 20 years old.

With the Boeing 747 still in production, customers with a need for very large bizliners seem to have seen little to interest them in Boeing’s newer 777. Only two triple-sevens are currently in executive/VIP service, and that is not likely to change.

Twenty-three 747s are now in executive/VIP service, and Boeing is fielding “serious inquiries” from some of their owners regarding its newest variant, the 747-8. One has been ordered by the government of Qatar. The -8 Intercontinental is a stretch version of the 747-400 with new General Electric GEnx engines, an extended forward upper deck area and a max range anticipated at more than 8,000 nm. When size really counts, said a completion consultant, the most likely replacement for an executive/VIP 747 is another 747.

Boeing announced its new 787 Dreamliner in April 2004 and there was speculation that while its smaller cabin size hardly recommended it as a 747 replacement, the nonstop, point-to-point, anywhere-in-the-world range would make it an attractive head-of-state aircraft. In fact, independent completion centers Jet Aviation and Lufthansa Technik have already been displaying cabin possibilities in the form of cutaway models. And earlier this year, two 787s were sold as executive/VIP models through Boeing Business Jets, though the buyers remain unidentified.

News from independent completion centers would appear to confirm a revival of demand for bizliners.

In Switzerland, Jet Aviation has just won a contract from an unidentified Middle Eastern customer to outfit an Airbus A330-200. The big twinjet is scheduled to arrive at the completion center in Basel in January and the interior work is expected to take about 15 months.

The hangars at Lufthansa Technik are packed. In addition to the Challenger 850s being done for Bombardier, one 747 is in the final stages of completion. And an Airbus A340, a Boeing 777 and an MD-11 also are in for major refurbishments.

Things are sufficiently busy that, according to one completion executive, Miami Dolphins owner Wayne Huizenga recently sent his BBJ to Lufthansa Technik for exterior paint because of the long wait for a slot in a U.S. paint shop.

Then There’s the A380

Finally, there is the Airbus A380, the largest airliner ever built, weighing in at about 1.19 million pounds (some 390,496 pounds more than a Boeing 747-400). If big is what is required–really big–this is the executive/VIP aircraft to end all executive/ VIP aircraft–6,819 square feet of it–about the size of a mini-mansion in a tony New York City suburb. And for $285 million (published price), this airborne pleasure palace comes with wings and four turbofan engines capable of delivering the owner and an entourage of several hundred of his closest friends to destinations 9,000 miles away at speeds better than 500 knots.

Velupillai said Airbus has already had talks with some executive 747 owners about replacing their existing rides with an A380. Without blinking, Airbus refers to the executive/VIP version of the A380 as the “Flying Palace.”

Rumors are that someone who dabbles in the oil business has already placed an order, but that remains only a rumor. Nevertheless, independent completion centers are casting envious eyes on such a cabin completion contract, which will probably exceed $150 million.

If 2004 was the low point, things were decidedly better last year. Demand for aircraft leaped in almost every category, from ACJs to 747s, and OEMs are saying the demand, if anything, has continued to grow through the first nine and a half months of this year.

Boeing Business Jets’ Hill declined to discuss exact numbers, other than to say that for Boeing, “Sales now are at an all-time high, going back to the initial wave that followed introduction of the original BBJ in 1996. We’re sold out for the next three years,” he added.

He further noted that there are more than 20 executive/VIP 747s in service that are more than 20 years old, “and in terms of the future, that begs some fleet replacement.”