Business Jets Are Like Ferraris Billionaires Want The Latest & Greatest
Billionaires will have their pick of business jets as Embraer and Cessna roll out shiny new models in a bid to woo buyers to a market that is struggling to recover from the Y 2008 slump.
These companies are hoping the new mid-size planes, on display next week at the Latin American Business Aviation Conference and Exhibition in Sao Paulo, are enticing enough to captivate those who may have held back over the past 7 years.
Competition is stiff in an industry that saw total business jet shipments decline 4.1% in 1-H of this year as weaker demand from Crude Oil-dependent countries in the Middle East, as well as Russia and Latin America, compounds the light orders from US and Europe.
As the economy gains steam in the US (if it is gaining steam) it should prompt executives and wealthy individuals to go jet shopping again, said Jens Hennig, vice president of operations at General Aviation Manufacturers Association (GAMA).
“With the US doing better, that’s where we’re going to see the light- and mid-size segment have an opportunity to come back,” said Mr. Hennig. “When our manufacturers bring new products to the market, there is a natural stimulation for customers to buy.”
This year should see about the same number of business jets delivered as last year, when 722 aircraft were sold, according to GAMA. That’s down from a high in Y 2008 of 1,317 jets.
The rivalry between the Latitude and the Legacy, combined with few customers from emerging markets, could put pressure on margins.
Textron is seeing “opportunities” in Brazil and Latin America, said Bob Gibbs, vice president Latin America and Caribbean for Textron.
Embraer is well-positioned to gain market share because it is introducing a brand-new model. Textron rushed to come up with the Latitude to thwart competition from the Legacy 450 and the 500, which came out last year.
The Latitude “cannot really be called a brand-new airplane like the 450/500 can, so that’ll be a competitive strength for the 450/500 going forward.”
The company is counting on the Legacy jet having the same impact on the mid-size market as Embraer’s Phenom has in the light segment. The Phenom 300 has a 57 percent market share after being introduced five years ago, he said.
Both the $17-M Legacy 450 and the $16-M Latitude jets claim 6-ft high cabins. The Legacy 450 has 2 club seats that recline to create flat beds and optional belted-toilets, while the Latitude has a double, side-facing couch and seat-mounted Internet and entertainment units.
Business jet customers are demanding, and they want it all and the latest model.
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Have a terrific week.