The unabated growth in aircraft deliveries and resulting demand for pilots is fueling record sales of flight simulators and training devices. But the niche remains a buyer’s market for airlines, as aggressive competitors seek to slice into the near-monopolistic share, which has long been enjoyed by the giants of the industry, such as CAE.
Montréal, Canada-based CAE (Chalet B28) closed on 53 full-flight simulator (FFS) sales for its fiscal year, which ended in March (compared with 41 in FY15 and 48 in FY14). The company booked C$1.683 billion (about U.S.$1.3 billion) of simulator and training services sales for the year and enjoys long-term training contracts with about 40 airlines and aircraft operators. CAE is also its own best customer, now operating more than 260 FFSs, including business jet and civil helicopter sims, in its training centers and joint ventures around the world.
CAE also pre-empted a potentially strong competitor last May by the assets of Lockheed Martin Commercial Flight Training (LMCFT), the former Sim-Industries in The Netherlands. CAE President and CEO Marc Parent termed it a “relatively small bolt-on acquisition…to pick up certain useful assets.” LMCFT had made inroads mostly with Tier 2 and 3 aircraft operators, but had also won a Boeing 777 FFS contract in Lufthansa’s rigorous selection process, signed a “frame contract” with Airbus, and established training centers in Brazil and Korea.
Several companies have the technological capability to manufacture a high-end Level D FFS, tipping it toward commodity class, making price the primary driver in a sim acquisition decision. “The competition’s become quite fierce,” said Andrew Morris, market strategy, commercial simulation products for FlightSafety International, which is CAE’s longest-standing rival. (Morris spent 24 years with CAE, including as v-p marketing.)
“There are some new entrants with ambition and some existing players with an entrenched market share. There’s been some undisciplined pricing out there in recent times from a couple of players. There are people who want to be market-disruptive, so I think it’s always going to be a competitive space. But there’s more to selling a simulator than price and competing on the last possible penny in the contract,” said Morris.
The purchase price of a new FFS can range from about $6-10 million for narrowbody aircraft models upwards to more than $20 million for widebody units with a high degree of customization. A primary factor is the cost of the OEM’s aircraft-specific data, which can now account for more than half the cost of the training device.
One of the ambitious new entrants to the simulator market is TRU Simulation + Training, owned by Textron (Outdoor Exhibit L2). TRU was created two years ago following the purchase of Opinicus and Mechtronix, and has a built-in aircraft customer base of Beechcraft, Cessna and Bell Helicopter, all sister Textron companies. But TRU’s simulator engineering expertise has impressed Boeing Flight Services, which earlier this year ordered the first training suite for the new 777X aircraft (777-8 and 777-9) slated for 2020 delivery. Two years ago, Boeing tapped TRU for its 737MAX flight simulators.
Ian Walsh, TRU’s president and CEO since last summer, said, “There’s a lot of market out there. We just want our fair share. There are customers who have simulators from competitors; depending on the situation, they may be looking for a new supplier. There’s a lot of regional Tier 2 and Tier 3 players who are very open and interested and aggressive and thinking about sourcing simulators. Those are the kind of folks who are very interested in talking with us.”
“To be brutally honest, on the procurement piece it’s nasty right now,” Walsh confided. “On the defense side, at least there’s a level of due diligence that is required and audited in terms of a company’s ability to design, build and support product. In today’s commercial environment, it’s really about price, quite frankly. I think the differentiator happens after the sale.”
Another major player is L-3 (Chalet A15) Link Flight Simulation & Training, which inherited the legacies of industry granddaddy Singer-Link and Rediffusion via the acquisition of Thales Training & Simulation’s RealitySeven civil simulation business in 2012. Link’s forte of late has been Boeing 787 devices, most recently for KLM Royal Dutch Airlines at their Schiphol Airport training facility near Amsterdam and for Virgin Atlantic Airways at London’s Heathrow and Gatwick in a 12-year agreement. The Virgin project will feature the first implementation of Rockwell Collins’ (Chalet B14) EP-8100 image generators on a commercial FFS.
A new potential disruptor is Venyo Europe (Hall 1, Stand B10), a Belgian company developing its first FFS, a Boeing 737NG model. Venyo has ambitiously ordered seven SupraVue collimated visual display systems from Florida’s Q4 Services and will offer their devices on a pay-by-the-hour basis. They installed their first commercial trainer, a fixed-based version, in June.
Frasca International, whose traditional strength is in the university and flight school market, is the first to receive CASA Level Dah (equivalent to FAA Level 6 / EASA Level 2) approval in Korea for a Cessna 172S flight training device (FTD) which will be used by KAL for initial pilot training. Frasca is also partnered with Germany’s Grob (Hall 4, Stand H121) for multipurpose FTDs for the new G120TP trainer aircraft.
John Van Maren, v-p, simulation, said FlightSafety is “investing heavily to make sure we stay competitive. The overall level of expectation for a Level D simulator is quite high, and the bar keeps getting raised. The things that used to be a challenge are now taken for granted, so we’re expanding the horizons of what you can do with simulation.”
One current focus at FlightSafety is new algorithms for ground reaction aspects of a simulation scenario involving the nose wheel, tail wheel, even skids on helicopters. Ground reaction cues are important to pilots during rotation and landing, especially cross-wind landings. In the past, simulator ground handling fidelity has been a typical source of pilot complaints.
FlightSafety (which has a training center at Farnborough) and other sim operators are gearing up for a new FAA requirement for Part 121 carriers, which will take effect in March 2019, to provide a statement of compliance that their Level C and D simulators accurately replicate real-world source data for crosswind takeoffs and landings with gusts. This is one of several follow-ons—along with upset prevention and recovery training and more refined simulated icing models—to the 2009 Colgan Air 3407 crash near Buffalo, New York, and National Transportation Safety Board (NTSB) recommendations.
Is the Pipeline Expanding Fast Enough?
According to Boeing’s most recent forecast, an average of 28,000 new pilots will be needed each year through 2034 to fly the estimated 38,000 aircraft to be added to global fleets. It’s questionable whether the pilot pipeline is expanding rapidly enough. There are already shortages in Asia, the fastest-growing region for commercial aviation, and among U.S. regionals, attributable to another Colgan aftereffect, the FAA’s 1,500-hours rule to become a first officer.
CAE’s Leontidis said his company’s Oxford Aviation Academy is graduating more than 1,000 new ab initio pilots a year at locations in Australia, Belgium, India, The Netherlands, the UK, and the U.S. However, he said, “Globally, we need hundreds of thousands in the next 10 years. I wish I were a pilot; it’s a job in demand.”
Apparently interest in the profession remains high. When JetBlue and CAE announced the airline’s Gateway Select program earlier this year, seeking 24 candidates willing to spend $125,000 of their own funds for 42 months of competency-based training (leading to a conditional job offer with either JetBlue or CAE), there were 80,000 hits to the website on Day 1 and more than 3,000 applicants who paid a $200 upfront fee.
CAE provides both traditional airline transport pilot license (ATPL) and ICAO multi-crew pilot license (MPL) training curricula. Some graduates of CAE’s first MPL program in 2012 are now captains with AirAsia.