Very Light Jets with a huge potential
The European market has a high potential for manufacturers of Very Light Jets (VLJ). The expected number of total deliveries adds to about 439 VLJ’s by 2018, which average a market potential of about $ 1 billion. The current backlogs in Europe are from air taxi companies, which intend to be operational in the next two to three years.
The Very Light Jets Market is a new concept that has been developed off late to fill a gap in the end user segment of the market. In the air transportation sectors the commercial airlines and the charted flights were predominant. The gap was developed due to the connectivity problems of the commercial airliners and the high cost of the charted flight operators. This lead to a product called Very Light Jet, also called Microjet or Personal Jet.
The basic definition of a Very Light Jet (VLJ) is an aircraft with maximum take-off weight less than 10,000 lb. VLJ’s also need a maximum run way range of 3400 feet and are capable of transporting about three-four passengers on average. VLJ’s can take off from or land on runways which another aircraft cannot. Another advantage of the VLJ is the operating cost of the aircraft; the average pricing is about US $ 2.5 Million. Also operating costs are very low, the total overhead cost of ownership is approximately US $ 3 to US $ 4 per mile. Cessna Mustang is expected to hold 31 per cent of the market share in the period 2008-2018. Embraer Phenom 100 is expected to have 23 per cent of the market share in Europe alone.
A focus on the component suppliers market reveals that the market potential for the small component suppliers for VLJ market is huge. However, for supplier companies planning to enter the market the best strategy would be to partner with already established suppliers in the market to minimise risk. The most potential can be derived from the VLJ models moving into production in the near future. Potential investors could also look at the emerging supplementary markets which support the Very Light Jets Market.
Europe accounts for 31 per cent of the global HNWI (High Net worth Individuals), which are the potential end-users for the VLJ market. It is estimated that there are approximately three Million HNWI in Europe. One per cent of three million are classified as Ultra HNWI, meaning they hold more than $ 30 million in wealth.
The operating cost and safety would be the priority for air taxi companies; however individuals or corporations would look at a few more factors. For example, studies revealed that female passengers prefer to travel in a VLJ with lavatory. These factors will shift according to the type of buyer. VLJ’s have also positioned themselves according to its usage. The Honda Jet and the Cirrus Jet have positioned themselves as a VLJ for personal use rather than an air taxi. Potential investors could look into the specific support markets for investments. Other support markets would include secondary airport development activities.
This is a potential business to venture into, because the VLJ market is in its introduction stage and the capital required to enter into this market would be very low. The Air Taxi business is well developed in North America and is at its growth stage in Europe. There are about 15 emerging air taxi companies in Europe. Air taxi companies are operating from secondary airports, but connect between all major cities across Europe. European operators are also planning to move into the Middle East and Asia Pacific to commence their operations. This market is expected to reach saturation in approximately three to four years.
Investors should look at suppliers
Despite the impacts of the economic slowdown, the Very Light Jets Market with a potential of about US $ 1 Billion in Europe alone looks promising. Investors interested in entering the market, should look at component manufacturing for upcoming VLJ models as well as the emerging supplementary market. – John Siddarth, Research Analyst, Commercial Aviation, Frost & Sullivan -
Major VLJ-market players
There are about 17 players in various stages of development, however only Embraer and Cessna are the VLJ-models under production currently. Adam Aircraft A500 and Eclipse 500 have declared bankruptcy in 2008. Other evolving competitors with significant capital and order backlogs are Honda Jet, Diamond Jet, and Cirrus Jet. Cessna Mustang is the clear market leader with about 40 aircrafts delivered in 2007 and about 100 aircrafts delivered in 2008 globally. Cessna Mustang is also the first VLJ to be fully FAA certified. Whereas Diamond Jet is expected to commence its delivery in 2010, Honda is expected to start operations by 2011.
German Summary
Auf dem europäischen Markt gibt es einen hohen Bedarf an Minijets oder Very Light Jets (VLJ). Die bis zum Jahr 2018 erwartete Zahl der Auslieferungen beläuft sich auf ca. 439 VLJs, was einem Marktwert von ungefähr einer Milliarde Dollar entspricht. Die gegenwärtigen Auftragsbestände gehen in Europa auf Lufttaxiunternehmen zurück, welche die VLJs in den nächsten zwei bis drei Jahren in Dienst stellen wollen. Es gibt ungefähr 17 Anbieter von VLJs. Zur Zeit werden jedoch lediglich bei Embraer und Cessna Modelle produziert. Für den Zeitraum 2008 – 2018 wird für die Cessna Mustang ein Marktanteil von 31 Prozent erwartet. Und für die Embraer Phenom 100 wird allein in Europa ein Marktanteil von 23 Prozent prognostiziert. Der gesamte deutschsprachige Beitrag ist nachzulesen auf www.aerotec-online.com
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