"Very light jets poised for aviation stardom?"

["Stephen Irwin" <stepheni@xxxxxxxxxxxxxxxxxxxxxx>]

Monday, November 6, 2006

Very light jets poised for aviation stardom?
By STEPHEN MAJORS
The Associated Press

 
Business jets have traditionally been the domain of the super rich and
high-powered corporate executives who don't have time or patience for
getting frisked at airport security checkpoints. But a new smaller aircraft
could make private air travel more available for less-wealthy folks.

Very light jets have travelers, corporations and commercial operators
buzzing about the "perfect storm" of technology that could revolutionize the
way people get places by plane.

The jets cost between $1.5 million and $3 million, weigh under 10,000
pounds, seat about seven people and can fly over 1,000 miles at speeds
approaching 460 mph. The cheapest cut the price of existing business jets by
more than half, although they generally are slower and fly shorter
distances.

They could be an addition to a corporate jet fleet, an individual's
plaything, or the savior of the nascent air-taxi industry. Yet no one knows
if they will be any of these. Critics say there's a bubble about to burst.

Only two companies have received Federal Aviation Administration
certification for the jets so far and are set to begin making deliveries.
They are privately owned Eclipse Aviation, whose second-largest investor is
Bill Gates, and Cessna Aircraft Co., a unit of Textron Inc.

But the industry has quickly become crowded. Brazil's Embraer SA, an
alliance by Honda Motor Co. and Piper Aircraft Inc. and others are seeking
certification and deliveries in the next few years.

"They're the greatest growth market the aviation industry has seen in a long
time," said Richard Aboulafia, a Teal Group aviation analyst. A
self-described "enthusiastic skeptic" of light jet mania, he believes the
market capacity will be 250 to 300 orders a year worldwide, with a heavy
concentration in North America.

"The real danger is when a group of people start banking on the market
growing at 1,000 aircraft a year," Aboulafia said. "Then you get financial
carnage."

Cessna has received 250 orders for its Citation Mustang, which costs $2.6
million. Eclipse plans to deliver 515 Eclipse 500s, priced at $1.5 million,
next year.

Eclipse has received 2,500 orders. The company said customers generally pay
10 percent down on the purchase price - about $150,000.

Leonard Goldberg, president and owner of Fort Lauderdale-based charter
company Gold Aviation Services, put a refundable deposit down on two Eclipse
light jets in 2001 and is scheduled to get them next year. Goldberg said
aviation critics are overly skeptical.

"Aviation is such a conservative market," Goldberg said. "Everyone else said
it can't be done, it won't be done. Now it's clear that it's a viable market
that will do well and everyone is paying attention."

Eclipse has invested $500 million in development, and DayJet, an air-taxi
company to start up in Florida early next year, placed 239 firm orders for
Eclipse jets beginning in 2002. The companies declined to reveal how much
DayJet has paid for the planes.

"It could really open up air travel to a whole different group of folks,"
said Vern Raburn, Eclipse's chief executive, who used to work at Microsoft
Corp. with Gates. Eclipse was founded in 1998 and its sole business is the
small jets.

While the buzz at October's National Business Aviation Association
conference in Orlando focused on the jets, Goldberg said the consensus on
the floor about Eclipse was pessimistic.

"I think everyone still thinks Eclipse is going to fail," he said. "It's
easy to pick on the brand-new manufacturer."

Raburn's high expectations hinge largely on the air-taxi industry, a large
portion of the company's projected sales - 60 percent of which are targeting
the commercial market. Air-taxi proponents say that with the low-cost
technology of the new jets, there is a great opportunity to bring
businesspeople who normally drive into short-haul jet travel.

DayJet plans to fly over 300 Eclipse jets in two years. The company wants to
expand into Georgia, and throughout the Southeast after that.

DayJet is basing its franchise on snatching business travelers from the
highways by providing on-demand travel between smaller airports. The cost
will be equivalent to a standard airline ticket, plus the cost of an
overnight stay - which DayJet will render unnecessary, Chief Executive Ed
Iacobucci said.

"This is for the middle-niche, middle-tier of travelers that don't have any
options," Iacobucci said. "New people will be coming to the plate that
otherwise wouldn't have been flying."

Still, Cessna doesn't believe the air-taxi industry is feasible, and so it
didn't develop its jet planning to sell a high percentage of them for
commercial aviation.

That's the main marketing difference between the two companies with the
earliest start in the market. Cessna doesn't need success with the jets to
survive, because it is a subsidiary of Textron, which makes everything from
jets and helicopters to golf carts and surveillance systems.

"Most of the hype on the VLJ is based on the air-taxi market emerging
quickly and we do not subscribe to that," Cessna spokesman Bob Stangarone
said. "This industry is evolutionary not revolutionary, so we're not going
to see an immediate incorporation of thousands of these airplanes into the
infrastructure."

Cessna believes it will corner much of the market on sales for corporate
travel and individual owner/operators.

If the air-taxi industry stumbles, jet makers will have to depend on
existing corporate fliers, or hope their low prices bring in new aviation
customers.

That could mean trouble for high-end business jet producers like Gulfstream
Aerospace, which sells aircraft ranging from $13 million to $46 million. But
the unit of General Dynamics Corp. isn't concerned.

"We have no intention of getting in (the market)," Gulfstream spokesman
Robert Baugniet said. "The more people who appreciate the utility and value
of business jets the more happy we are because they will probably grow and
we can help them."

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