Business (Jets) Still Booming, And For Many Strong Reasons

The business aircraft sector has now surpassed military aircraft in its importance to the world aerospace industry, behind a boom due largely to a new customer access and affordability scheme-fractional ownership-that has brought corporate aviation to a vastly greater number of users. Simultaneously, business jets have come to be perceived as business tools-not as a luxury but a necessity.

Business aircraft are now significantly cutting into the airlines' business, notes Richard Aboulafia of the Fairfax, Virginia-based Teal Group. "They are actively leaving scheduled air service," he says of high fare-paying business travelers. It's gotten to the point where airlines are entering the fractional field themselves-United Airlines last month confirmed plans to operate approximately 200 business aircraft by 2005.

Several business jet manufacturers have established their own fractional ownership initiatives: Bombardier has a program called Flexjet, Cessna has CitationShares, and Raytheon has Travel Air.

Business aircraft have climbed in performance and size (and cost, often exceeding $40 million a copy) to the point where Airbus and Boeing have entered the fray, bringing their perennial rivalry to a new aviation sector. And in these days of general business austerity and cost-cutting, there is even a new trade show, EBACE, the European Business Aviation Convention & Exhibition, which drew upwards of 3,000 to Geneva just two months ago, well above projections for the first-time event.

Manufacturers of regional jets are using their airframes as the bases for spacious business jets, too. Bombardier and German-American Fairchild Dornier are examples, as is Brazil's Embraer, which entered the business jet market at Farnborough last summer and expects to have its new Legacy jet certified late this year (more than 60 have been ordered).

Skeptics have cited the relatively large number of relatively small business jet players as a weakness for the sector, as such companies lack the critical mass needed to effectively compete in the aerospace world. Even that may be beginning to change now however, as witnessed by this spring's announced acquisition of Israeli- and U.S.-owned Galaxy Aerospace by General Dynamics, which bought Gulfstream in mid-1999 (the two buys incidentally mark a near-complete turnaround for GD from military to civilian aerospace activity).

News of the $330 million GD deal came just as Galaxy notched a $2 billion order for 50 Galaxy Jets (with an option for 50 more) from Executive Jets, Inc., the Berkshire Hathaway/Warren Buffett operator of NetJets, which began the fractionals boom in the mid-1980s. NetJets has been the launch customer for numerous new business jets, and claims to have alone accounted for a third of all the business aircraft ordered over the past four years. It operates more than a dozen aircraft types, ranging from seven-passenger Cessna Citations in Europe to the Boeing Business Jet worldwide.

France-based Dassault FalconJet notched 90 orders for its premium aircraft last year, "prolonging the strongest period of sustained sales in the company's history." Of those, 78 were non-fractional, and 20% were first-time business jet buyers, "a very healthy sign for the long term," says FalconJet president John Rosanvallon.

But Dassault is benefiting from the fractionals trend too; NetJets disclosed a $1 billion order for 25 firm and 25 optional Falcon 2000EX aircraft at the EBACE show in April. Dassault is emphasizing the new aircraft, which brings its product line to five, here in Paris as well. The 2000EX has PW308C engines from Pratt & Whitney Canada. It's also the launch aircraft for FalconJet's new EASy cockpit, a highly intuitive arrangement of instruments aimed at improving situational awareness while it reduces pilot workload.

If you're wondering about that next EBACE gathering, it's slated for May 28-30, 2002, once again at the airport-adjacent Palexpo Center in Geneva.