Paris Air Show

Embraer Shifts Pitch 'From Price to Value'

 - June 16, 2017, 9:10 AM
Many of Embraer’s business jets, like the Legacy 450 shown here on the Paris Air Show ramp, are manufactured in Melbourne, Florida.

Embraer Executive Jets is making “a strategic shift from price to value” in its positioning and sales strategy, said Luciano Froes, senior v-p of marketing, at the Brazilian company’s U.S. headquarters in Florida before the Paris Air Show. The change accompanies a “refreshed leadership,” with Michael Amalfitano, an aviation finance veteran, taking the helm in March as president and CEO of the business jet unit. (Amalfitano, originally scheduled to deliver the pre-Paris presentation, had a last-minute conflict.)

The three pillars of the value strategy are the brand’s desirability, increasing customer loyalty and new solutions the company offers, Froes said, pointing to several supporting indicators. Among the desirability reflections are number-one rankings in annual customer support surveys (including from this publication) that Embraer has received in recent years, and the fact that its Phenom 300 has been the best-selling business jet four years running. Loyalty rates are “above industry average,” Froes said, based on customer retention and other metrics. He noted the first Legacy made at the Melbourne, Florida, facility was delivered to a two-time Phenom 300 customer who was trading up. Finally, the new solutions component includes not only the span of clean-sheet products and global support, but now, with Amalfitano aboard, finance solutions as well. “We cover every segment except ultra-long range,” he said, “the broadest portfolio in the industry.”

Value notwithstanding, Embraer (Chalet 314, Static C2) sees a challenging global market for new business jets in the near term. “We expect 2017 to be fairly flat year,” with sales around last year’s total of about 650 units, he said. He cited the headwinds, including: exchange rates, “The dollar strengthened over the last few years, and our products are dollar denominated;" preowned inventory levels, “particularly young aircraft available for sale,” and concerns that blunt investment confidence—such as the new administration in the U.S. and Brexit in the UK. “But just because the market isn’t growing doesn’t mean we can’t differentiate ourselves,” Froes said.

Underscoring the strong foundation for expansion: the division’s compound annual growth rate of 19 percent between 2002 and 2016; a 500-percent growth in market share (3.6 percent to 18 percent) in the decade between 2005 and 2016; more than 1,100 jets in service in more than 70 countries; and a global network of more than 70 service centers. Moreover, small and medium cabin jets, its primary products, are taking a growing percentage of business jet sales, Froes noted.

Embraer Executive Jets manufactures the Phenom 100 and 300 lights jets; Legacy 450, 500 and 650E mid- to large-cabin jets; and the Lineage 1000E executive airliner.