More on VLJ Price Fantasies
In a blog last month, I opined on the state of play in the very light jet market, such that a sustainable market really exists for such aircraft. Sustainable is the key word, for at the right price, you can sell anything. But that doesn't mean you can sell enough of it to make a lasting business.
As is the way of the Web, that blog has scrolled off in visibility, but in the background it has elicited some interesting and informative commentary from readers on the nature of light jet aircraft and the engines that power them. It's worth another look here and also another line of discussion, in my view.
By its very nature, aviation seems to inspire a certain dreaminess and edge-of-technology wonder that suggests that waiting in the wings is the next big thing that will change the game. The Eclipse VLJ, with its much vaunted "disruptive technology" was supposed to be an example. The new all-electric airplanes are getting the same treatment. To keep things focused, I'm not thinking here of leaps in performance, but incremental improvements in performance at the same or lower prices than that which went before. Both the VLJ and electric initiatives were and are flirting with this idea. Here's why I think the chances of success are difficult at best.
Technical discussion on engine efficiencies and costs often revolve around the notion that engine development drives airframe development. While that's true, it goes both ways. An airplane concept can spur engine development and, to a degree, that's what happened in the stunted VLJ world. The assumption that a major breakthrough in engine technology would break the market wide open was tested and found wanting.
What was the breakthrough? The Pratt & Whitney 600 series engines developed for the Cessna Mustang and the Eclipse and, one assumes, eventually others. What set Pratt off developing these new, small and light turbofans was that customers were saying they wanted cheaper, simpler engines for a new class of airplanes. Efficiency wasn't the main driver, Pratt executives told me during a visit to the Montreal plant in 2005.
Airplane companies keep exact dollar amounts close to the vest, but my guess is Pratt hit its cost and simplicity goals. During my plant visit, they showed me the assembly line for the 600 series which, as I recall, was barely 100 feet long with something like eight stations. I asked if what I was looking at was a proof-of-concept line and the tour guide said no, this was the real thing. The assembly lines for other engines were four or five times longer, thanks to the fact that the 600 series has 40 percent fewer parts compared to engines of similar pressure ratios. Whether that's a paradigm shift or not is debatable, but there's no doubt it's a significant leap forward.
So why didn't it ignite the VLJ demand that NASA, Eclipse, Pratt, Williams and everyone else expected? This question will be analyzed for years to come, but my guess is bad timing will be a major player when the history is written. Or maybe the engine just wasn't efficient enough to push direct operating costs into some imagined sweet spot. Or could it be that the same harsh economics of engine cost versus airframe cost still rule? For high-performance piston aircraft, the cost of the engine is a small percentage of the total cost of the airframe—under 10 percent. I don't have good numbers for small jets, but I suspect the percentage is somewhat higher.
With a less expensive engine in hand, or at least promised, Eclipse planned to radically simplify construction through clever things like friction-stir welding. In reality, they reverted to what every other airframer does—some automation where possible, but lots of high-skill fitting, hammering, tapping and filing. Airplanes remain a product of handwork, which is expensive. They remain expensive to develop and certify.
Fast forward that idea to the day when some enterprising engine company does what Pratt or Williams isn't interested in doing: Producing a relatively light, relatively powerful, relatively efficient and relatively inexpensive turbofan for a small airframe with low market numbers. The key word is "relatively." As long as these engines burn hydrocarbons, we're unlikely to see more than incremental leaps in efficiency. Just as Eclipse's claims of Baron costs at jet speeds proved a dead end, so will four-place turbofans cruising on piston budgets, or a little more. You want seat-mile efficiency? Buy a Dreamliner, if Boeing gets it built.
That's not to say the four-place (or five) turbofan isn't achievable, either with current engines or new-age more efficient ones. Cirrus is doing it and so are Diamond and Piper. But the point I made in my previous blog is that just as Eclipse found the costs of bringing these airplanes to market more than projected, so will Cirrus and Diamond, in my view. At just over $2 million, Piper's price seems about right.
Aircraft business plans are usually based on the perceived size of the market, which seems always smaller than the companies imagine it to be. Just how price sensitive it is no one really knows because the VLJ market is barely developed, much less mature. My idea of a realistic VLJ or even turbofan four-placer would entail a company selling about 40 to 50 airplanes a year, worldwide. This seems doable and sustainable to me.
But the numbers just don't work. Development costs are so high and demands on investment return so great that it takes twice as many airframes as that to make the project worth the effort. This ups the ante considerably, especially if everyone and his brother in law decides to get into the game. The market can absorb only so many airframes in a given segment and when the world economy turns down—as it has now—the number is vastly smaller.
Giving away the engines for free probably wouldn't change that. So I'm not so sure we'll see the flourishing of the four-seat, everyman's turbofan. To me, it feels like just another version a flying car in every driveway, a persistent fantasy that still excites many.
What will see, in my view, is a steady, incremental expansion of the turbofan market downward, with modest sales numbers. Just as Cessna predicted we would.