The VLJ era

Aviation International News » December 2008
December 1, 2008, 5:15 AM

The VLJ era started with a bang on March 6, 2000, when Eclipse Aviation announced the formal launch of the Eclipse 500, a program “designed to apply technological breakthroughs in creating a series of safe, reliable, low-cost jet aircraft that will enable transformation of the U.S. air transportation system.”

Since that announcement, the VLJ industry has ridden the highs (famous predictions of VLJs’ darkening the skies and causing massive air traffic delays) to the current and more orderly reality of a growing but not terribly large new general aviation market segment. In the past eight years, Eclipse reached a zenith of producing nearly one airplane a day and employing more than 2,000 people. Cessna’s Mustang successfully entered service and the company is building production at reasonable market-driven levels. And Embraer, at this writing, is within weeks of certification and entry-into-service of its first purpose-built business jet, the Phenom 100, which now appears to weigh a few hundred pounds more than the 10,000-pound maximum takeoff weight that roughly defines a VLJ. Meanwhile, Eclipse has suffered massive financial problems; VLJ air-taxi pioneer DayJet is out of business and its Eclipse 500 fleet on the block; Adam Aircraft went bankrupt, was resurrected, then foundered again; and Aviation Technology Group has all but disappeared for lack of money. Perhaps surprisingly, there is another new company, Stratos, announcing plans to build a

new single-engine VLJ.

The VLJ era is here, but it bears scant resemblance to the predictions a decade ago.

VLJ Deliveries

Through early last month, Eclipse had delivered 268 model 500s; Cessna had delivered 125 Mustangs. If Embraer’s plans remain on schedule, it should deliver 10 Phenom 100s this year. The number of VLJs in the marketplace is not overwhelming, although it is respectable for a new category of business/personal jet. Cessna announced in early October that it will ramp up production of the Mustang next year to 150 jets per year, although that number could change and possibly grow. Eclipse’s annual production rate this year is far short of the target of hundreds per year that

it confidently claimed it could achieve. Next year Embraer plans to deliver more than 100 Phenom 100s and 300s (the company has not broken out more specific numbers for the Phenom 100).

Of the VLJs delivered thus far, only the Mustang is fully operational. None of the Eclipse 500s in customer hands has been modified for flight into known

icing conditions. Although Eclipse received FAA approval of that modification this year, the service bulletin to modify customer airplanes had not been completed

as of this writing, and Eclipse has not announced when customers will be able to get their airplanes upgraded. Eclipse is also working on FAA approval of the final

step in the model 500’s avionics configuration, installation of the Garmin 400W navigators. After that, the company expects to be able to obtain EASA certification.

While some VLJ manufacturers have dropped out completely or scaled back, other programs continue, with Honda eying 2010 for certification of the HondaJet and the Spectrum Aeronautical S.40 continuing toward first flight. Single-engine jets are progressing as well, although the Diamond D-Jet suffered a one-year delay in certification plans after an engine upgrade and the necessary redesign and is now expected to enter the market next year. Piper’s PiperJet made its first flight on July 30, following Cirrus’s Vision onto the aviation stage.

Although not by definition a sub-10,000-pound VLJ, Grob’s innovative SPn doesn’t look as if it will achieve certification anytime soon, given the company’s final insolvency filing last month and inability to gain additional funding.

Forecasts

While DayJet’s huge order for 1,429 Eclipse 500s is now off

the table, Eclipse Aviation still claims a healthy backlog of “fewer than 1,000” airplanes. And annual forecasts by Honeywell, Forecast International and Embraer still point to a rosy future for the VLJ market. Honeywell doesn’t include smaller VLJs in its forecast but categorizes jets such as the Cessna Mustang, CJ1+, CJ2+, Hawker Beechcraft Premier, HondaJet and Emivest SJ30 as “very light jets.” In this segment, according to Honeywell, deliveries should average about 400 aircraft per year during the next 10 years.

In what Honeywell labels the “personal jet” segment, the company provides no numbers and explains that “several of these programs have suffered financial and execution issues delaying or in some cases suspending their progress to market.” In this category Honeywell mentions the single-engine jets, the AAI (formerly Adam) A700 and Eclipse 500. Forecast International sees delivery of 5,600 VLJs through 2017, while Embraer projects a smaller number, between 3,500 and 4,400 VLJs in the next 10 years.

Decline of the Air Taxis

Like all marketplaces, the VLJ segment is following the realities of supply and demand and not the hopes and desires of industry boosters. DayJet, for example, suffered lengthy delays getting its business off the ground in part because Eclipse didn’t certify and begin delivering the model 500 per original projections.

In Eclipse’s launch announcement, the $775,000 Eclipse 500 was supposed to be certified in 2003. Although FAA certification finally occurred on Sept. 30, 2006, deliveries did not begin until early last year, but the jet was not in a fully operational condition, with avionics and flight-into-known-icing functionality not yet finished and aerodynamic modifications needed to achieve performance guarantees. By mid-2008, the Eclipse 500 price had climbed to nearly $2.2 million, bringing it closer to the price of the larger $2.766 million Cessna Mustang.

Eclipse also touted the creation of a vast new market for “air limousine” services, which later became known as the air-taxi market. Air taxi is simply another form of charter. According to its purveyors, it is more convenient for passengers, more similar to hailing a taxi on a street than the more formalized arranging of a business jet charter flight. When Eclipse was launched, high-tech guru Esther Dyson commented, “What the PC did for computers, Eclipse can do for mass-market travel.”

The reality of the economy and the aviation market turned out to be more of a traditional charter role for the Eclipse 500, with companies such as Linear Air and North American Jet using the small jet as a low-cost alternative to larger airplanes. DayJet’s collapse followed the postponement in March of Pogo Jet’s planned initial public offering, which was to finance the company’s own venture into the air-taxi market. Pogo Jet had planned to fly the Eclipse 500 as well.

VLJ Manufacturers

With the shutdown of Aviation Technology Group, the suspension of AAI’s A700 certification program and Eclipse’s virtual cessation of activity, there remains a core group of companies targeting the VLJ market. Cessna and soon Embraer, along with Eclipse thus far, dominate the twin-engine VLJ field, and they will be joined by Honda’s HondaJet and Spectrum Aeronautical’s S.40 and later the S.33. Millennium Aerospace’s Foxjet II might be a contender in the twin-engine VLJ field, but whether that program will reach the flying prototype stage remains to be seen.

Spectrum Aeronautical has been working on large sub-element structural tests, materials process development and production tooling for the S.40 twin-engine composite jet, according to Spectrum president Austin Blue. “These activities will lead to first flight of a substantially conforming prototype next year sometime,” he added.

Honda Aircraft remains on schedule for flight of the first conforming HondaJet prototype early next year, followed by FAA certification and first U.S. deliveries in 2010. Both the HondaJet and Spectrum S.40 are powered by the 2,095-pound-thrust GE- Honda HF120 turbofan, and the first certification test engine is under construction, in preparation for testing to begin early next year. Engine certification is on schedule for late next year.

In the single-engine VLJ market, Stratos Aircraft’s composite 714 is a new entrant and will compete against the Cirrus Design Vision, Diamond Aircraft D-Jet and Epic Victory. Eclipse’s model 400 single-engine jet program is currently on hold, pending further funding of the company.

The $2.199 million PiperJet is an interesting contender. While the PiperJet has one engine, its size, performance and price make it more like the twin-engine VLJs than the singles, according to aeronautical engineer Luc Van Bavel of Canada-based Luc Van Bavel Design. “The PiperJet is closer to the Mustang in price, capability and cost,” he said. The PiperJet will cost $150 million to bring to full production, a relatively low figure compared with what other manufacturers spend to design, develop and produce a new aircraft. However, the company still needs $100 million from depositors and outside investors to complete the work, according to Bob Kromer, Piper’s v-p of sales and marketing. The PiperJet is powered by a 3,000-pound-thrust Williams International FJ44-3AP derated to 2,400 of pounds thrust and seats up to seven people. As of early last month, the PiperJet had logged 100 hours. PiperJet certification is expected in 2011.

The first of the single-engine jets to reach the market should be Diamond’s D-Jet, which Van Bavel helped design. Certification and deliveries are expected in the second quarter next year, about a year later than originally scheduled due to a switch to a more powerful engine. The new Williams International FJ33-19 offers up to 1,900 pounds of thrust, but Diamond has not yet announced the certification power output.

The V-tail Cirrus Vision should be next, with a goal of certification in late 2010, but that could change. A major change is a switch from two doors to one, according to Cirrus chairman and CEO Alan Klapmeier. The wing’s position on the fuselage could change, too, as flight testing of the first prototype continues. “The purpose of flight test,” he said, “is to find out what’s wrong and needs to be changed. So far it’s going really well and we’re having a lot of fun with it.”

Epic Aircraft, which has flown two VLJs–the single-engine Victory and twin-engine Elite– announced at the AOPA Expo last month that its first FAA-certified airplane will be the single-turboprop Escape. The Escape fuselage is basically the same as the Victory’s, so the Victory may be next as Epic gains experience with the certification process.

Whither the VLJ Market?

Engineer Van Bavel said he remains busy with VLJ design projects, despite the current economic turmoil, because projects he is working on now aren’t expected to hit the market for several more years. The projections for 500 or so VLJ deliveries per year might not be sustainable, he said. “It depends on how quickly we go through the recession. If the economy gets back on track, 500 is doable.”

The real market for VLJs, Van Bavel believes, is for pilot-owners who are willing to give up some performance in exchange for lower purchase and operating costs. That sweet spot is being targeted specifically by the Diamond D-Jet and Cirrus Vision, both of which have secured hundreds of orders.

Eclipse targeted both the owner-flown and air-taxi markets, and despite that company’s current financial troubles, the model 500’s “fundamental design is very good,” Van Bavel asserted. Eclipse did have a huge effect on the VLJ market, Van Bavel said, by distorting the perception of how big the VLJ market was going to be and how much it truly costs to develop a modern twin-engine light jet. “For potential investors who are interested,” he said, “that was not encouraging.

“There may still be one or two VLJ programs getting canceled because of lack of financing,” Van Bavel said. “In the long run, the ratio of the number of players versus the market size is sustainable. It all depends on the financials.”

AAI Applies Brakes to A700 Certification

The A700 very light jet program appears to be in jeopardy again, following AAI Acquisition’s late October announcement that it has suspended all A700 certification and flight-testing activity and laid off 177 of 209 employees. AAI Acquisition was formed by Russian investment companies Industrial Investors Group and Kaskol to purchase the assets of bankrupt Adam Aircraft Industries in April. The investors paid $10 million for the assets, which included the A500 type certificate and all the A700 hardware and intellectual property but none of the debts owed to suppliers or A700 deposit holders.

Before taking over officially, the investors started paying some of the key Adam Aircraft employees that they wanted to retain. Once the deal was done, AAI Acquisition quickly began ramping up the employee ranks and hired Jack Braly as president and CEO. Braly was previously president and CEO of Sino Swearingen Aircraft and president of Beech. AAI received final approval from the U.S. Department of the Treasury for the purchase of the Adam assets in July.

The immediate plan was to get the A700 certification program back on track, and Braly announced that the new goal was FAA approval by early 2010. The FAA allowed AAI to retain much of the already completed certification test results because the company rehired many of the same engineers who had worked on the original certification program. Since restarting A700 activities, AAI has flown A700 number four 15 times, logging 70 to 80 more hours of testing.

The state of the economy, however, has affected AAI’s plans, and on October 28 AAI announced a “strategic realignment,” which included layoffs of 177 employees, leaving 32 core personnel to keep the company open.

“Worldwide conditions have taken almost everyone by surprise,” said Steve Patrick, vice president of flight test and program management, “and it’s having an impact on our business plan. We’re taking the opportunity to step back, reassess and set a new strategic plan.”

Braly remains president and CEO, but Jan D’Angelo, the former director of international and fleet sales and a key player in the AAI Acquisition purchase, was part of the group that was let go. Also leaving AAI was Chester Schickling, recently hired as marketing and sales chief and also a former Sino Swearingen and Beech employee.

The 32 remaining AAI employees, Patrick said, include engineering, manufacturing and certification personnel who will help retain “the intellectual value of the company, making sure we are in a position to move forward once we’ve had a chance to look at the strategic plan.” –M

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