NBAA 2010

The 2010 National Business Aviation Association (NBAA) annual convention held this year in Atlanta, Ga., was an event to smile about if you're in the aviation business. There was lots of positive news combined with a generally rejuvenated industry that's had its fair share of bumps and bruises during the recession. Some of the most notable announcements:

Piper announced significant changes to their PiperJet, now renamed the Altaire. The new Altaire boasts a much taller and rounder cabin, with a nine-inch increase in height and four-inch increase in width. With the significantly larger cabin came a redesign of the external aesthetics that, compared to the PiperJet, looks much more like a jet than a modified Piper Meridian. The $2.6 million Altaire is slated for certification and first deliveries in 2014.

Eclipse Aerospace made a splash by announcing their newest investor, Sikorsky Aircraft, with an agreement in principle to become a minority shareholder in the company that's now supporting the Eclipse 500 VLJ. Sikorsky Aircraft is a subsidiary of United Technologies Corporation (UTX), the parent company of Pratt and Whitney, Canada, and the manufacturer of the engines installed on the Eclipse 500 jet.

Net Jets announced that it had signed an agreement to purchase as many as 125 Phenom 300 business jets from Embraer Aircraft, which may be worth as much as $1 billion, includes a firm order for 50 Phenom 300 Platinum and options for up to 75 more.

Garmin announced that it's developing a revolutionary integrated flight deck for the Part 25 business-jet market. The Garmin G5000 is designed specifically for crew-flown turbine aircraft and combines a dual multisensor flight management system (FMS), touch-screen vehicle management units and multipane cockpit displays. These widescreen displays with touch-screen controls give pilots more useful information at their fingertips than ever before, such as worldwide weather, Garmin's synthetic vision technology (SVT), aircraft synoptics, electronic flight charts and more.

Cessna announced the new Citation Ten, a larger advanced version of the world's fastest certified business jet, the Citation X. It also marks the debut of the Garmin G5000 avionics suite and a Cessna-exclusive advanced cabin management system, and it features more powerful and more efficient Rolls-Royce engines.

Bombardier announced the addition of two new aircraft to the top of their product line, the Global 7000 and 8000 aircraft, with the 8000 flying farther than any other business jet with an impressive range of 7,900 nm (14,631 km) at Mach 0.85. It will connect Sydney-Los Angeles, Hong Kong-New York and Mumbai-New York nonstop with eight passengers. The Global 8000 jet will reach a high-speed cruise of Mach 0.90. Entry into service is scheduled for 2017. Cyrus Sigari is president of JetAVIVA and serves as P&P Light Jet Editor.

Light jet market ebbs and flows along with general economy

Despite an active first quarter in the light jet market, the remainder of the year has proven to be a sobering reminder that the world continues to recover from the financial meltdown of 2008 and 2009.

This is not surprising, considering that the light jet market tends to react directly to the general economy as measured by stock -market indices. In April 2009, for example, the Cessna Mustang, CJ1+, CJ2+ and CJ3 pre-owned inventory was at its peak at 123 aircraft for sale, according to statistics provided by -JetNet.

At the end of March 2010, when the Dow Jones Industrial Average was hovering around 11,000, that number had dwindled to 66 jets for sale. By the end of July 2010, when the Dow had dropped to 10,000, the inventory rose to 82 aircraft for sale. Not great news for those who are considering selling for reasons other than upgrading, but good news for those who want to take advantage of the fat inventory of today.

While we look at the impact of the global economy on the light jet market as a whole, micro-economic factors need to be considered for each make and model of light jet to fully understand the landscape.

Despite the aircraft's tumultuous past, faithful buyers and motivated sellers are supporting the Eclipse 500 market with a steady stream of sales of pre-owned models. Buoyed by the support of Eclipse Aerospace, the new parent company of the Eclipse 500 design, and their perceived ability to stay afloat, confidence is slowly being reinforced by the service and support offered by the company. A new relationship with SimCom Training Centers has restarted -simulator training, making insurance underwriters more likely to insure Eclipse 500 operations at reasonable rates.

As the aircraft has gone through numerous upgrades since the first production unit entered service in late 2006, pricing of the for-sale fleet varies significantly. Aircraft equipped with the original Avidyne cockpit suite and lacking the extended tip tank (ETT) configuration are trading in the $500,000 range.

Pre-owned Avio NG/ETT Eclipse 500s are trading just below $1 million. Those modified with Avio NG 1.7 are bringing approximately $1.25 million.

Meanwhile, Eclipse Aerospace is marketing its Total Eclipse -factory refurbished Eclipse 500s at more than $2 million. It is unclear how many jets the factory has sold at those prices. With the availability of pre-owned Citation Mustangs within 10 percent of the purchase price of a Total Eclipse, questions remain as to the market size for a $2 million-plus Eclipse 500.

Cessna Citation Mustang
The Mustang continues to be the darling of the light jet market with more than 300 flying after only four years of production. A mix of owner-pilots, commercial operators and corporate flight departments rave about the aircraft's efficiency, capability and the support offered by Cessna. Despite the success the company has had with the Mustang, the realities of the global economic environment continue to dampen company ambitions as the Independence, Kan. factory has slowed production of new units.

In July, with hopes of breathing new life into the product, Cessna announced the availability of the new High Sierra Edition Mustang featuring a modified interior, a new paint scheme and synthetic-vision technology, electronic charts and locking fuel caps as standard equipment, as well as prepaid maintenance.

Demand for Mustangs will be directly affected by how the pre-owned market continues to perform. Since the beginning of the year, the Mustang pre-owned market has stayed consistent with about two airplanes trading hands per month. The strongest demand continues to be for lightly used (100 to 300 hours) machines, with historical prices ranging from the low- to mid-$2 million range depending on options, hours and pedigree. Like-new aircraft are trading in the $2.5 million to $2.7 million range. Factory invoice on a new Mustang delivered today is about $3.1 million.

Cessna CJ/CJ1/CJ1+
CitationJets (1993 to 1999) are trading between $1.3 and $1.8 million, CJ1s (2000 to 2005) between $1.9 and $2.5 million and CJ1+s between $3 and $3.8 million. The combined CitationJet/CJ1/CJ1+ markets continue to see downward pressure influenced both the Mustang and Embraer Phenom 100 markets. The newer technology and relatively low acquisition price has attracted most new entrants into the world of jet ownership down the path of the Mustang or Phenom 100. As a result, a buildup of inventory has made the purchasing landscape attractive for individuals looking for a proven CitationJet at a bargain price.

Cessna CJ2/CJ2+/CJ3
The arrival of the CJ4 has had a direct impact on both the CJ2/2+ and CJ3 markets. The CJ3 market saw the largest increase in the for-sale inventory of all of the aircraft types discussed in this report. Inventory increased 76 percent from the end of March to the end of August, with for-sale aircraft increasing from 17 available units to 30 units. Many of the current sellers are reporting the need to sell their CJ3s to prepare for a future CJ4 delivery. CJ3 prices range from the mid-$4 millions up to the low $6 millions.  CJ2s are trading in the high $2 millions to mid $3 millions and CJ2+s are trading in the low $4 millions to low $5 millions.

Cessna CJ4
The CJ4, Cessna's flagship single-pilot jet, was certified earlier this year. The OEM has been aggressive in promoting the new product, a significant step for the factory as it moves from maintaining its order book of early adopters to creating new orders. Year-to-date deliveries of the CJ4 appear to have been tempered as compared to publicly announced forecasts, with the FAA registry showing just a handful of aircraft having been delivered thus far. Current pricing on typically equipped CJ4s delivered in 2010 is approximately $9 million.

Embraer Phenom 100
Embraer continues to attack the light jet segment with its entry-level  Phenom 100, with more than 150 of the model delivered since the end of 2008. As a -natural part of the maturing of the Phenom 100 market, the pre-owned market has grown along with the total Phenom fleet. Delivered Phenoms that are priced at or near the original invoice price remain untouched by buyers. However, when sellers accept the actual market value of their assets, aircraft are consistently selling in 15 to 45 days. Factory invoice on a new Phenom 100 delivered today is about $3.4 million. Lightly used Phenom 100s are trading just below $3 million.

Embraer Phenom 300
Actual deliveries of new Phenom 300s from the factory remain in the single digits. The delivery position market has been relatively flat, with only a handful of transactions. Several positions are for sale on the secondary market for aircraft delivering in the next 12 months. The delivered price of more than $8 million puts the Phenom 300 in competition with lightly used midsize jets.

Flight Plan

Purdue Alumnus Magazine - January | February 2010

By Brian Hudgins

When Ben Marcus was growing up in Santa Monica, California, a vivid picture of his future was on display daily and located the length of a football field away from his home.

"I got interested in aviation because I grew up 100 yards from a runway at the airport in Santa Monica," Marcus says. "I was fortunate enough to take my first flight lesson at age 10. I made a deal with my parents that they would pay for one hour of flight training a month as long as I kept my grades up."

Marcus (T'02) continued that path of learning until he was eligible to fly solo at age 16. He then paid for an increase in training hours by working various jobs.

That deal with his parents was not the only arrangement Marcus had set up. He and his best friend Cyrus Sigari tried to start their first airline-based business when they were both 14. However, their dreams of being budding business tycoons would have to wait until their educations were complete. Sigari's father had obtained his private pilot license years ago. That helped spark the same interest in Sigari (AAE'03).

The friends who first met at the Santa Monica airport when they were 12-years-old continue to work together today as co-founders of jetAVIVA, a company that serves as a light jet sales and acquisition firm along with providing Experience Light Jets for jet owners. Very light jets are designed to be smaller and have a lower price and operating cost than conventional jets.

"We decided to start our business based on a need in the marketplace," Sigari says. "We had a good first pitch and we then had to adapt to the marketplace and fit what our customers were looking for."

Marcus and Sigari started jetAVIVA nearly four years ago based on new light jets coming into the consumer market.

Cyrus Sigari (AAE'03) and Ben Marcus (T'02) are young entrepreneurs who have helped hundreds of people go through the process of plane ownership.

"When I graduated from Purdue, I got into airplane sales," Marcus says. "I was hired by Eclipse Aviation in New Mexico. When we were both at Eclipse, we realized technology was bringing the price down and more people got into it who couldn't afford it before. There was a gap on what was needed to educate people on ownership and flying. The company could build cheaper planes, but what to do after delivery?"

To turn that initial idea into jetAVIVA, Marcus and Sigari relied on the combination of their business savvy and the technical knowledge gained at Purdue.

"I can't stress enough how much my time at Purdue helped me in my career," Sigari says. "Being on the aerospace engineering student advisory council, I realized that getting volunteers to work for you for free was hard but a rewarding challenge. You have to motivate through fruits of labor. The rigors of the curriculum helped me solve problems and learn how to best optimize resources. It wasn't an easy experience academically."

Sigari's original timetable for graduating and entering the workforce was affected by a position that became available within Eclipse Aviation.

"I had to graduate early in 3 1/2 years because they could wait a few months but not eight months. One of the main reasons I got the job right out of school was due to fellow Purdue alum Ken Harness. My experience at Purdue helped me get a foot in the door and take an opportunity and run with it."

Marcus' first work opportunity in sales came after he graduated. When he started his first sales job with a Cessna distributor, he quickly became a student of sales.

"I had not sold a piece of fruit or clothing. I had not sold anything until I sold my first airplane," Marcus says.

Marcus worked at his sales skills by buying a book on the subject and examining the steps involved.

"It is a stretch for my personality," Marcus says. "I think of it as a process or a procedure. When you start with a lead and do a sale, it's a cool process. We have a long-term relationship with clients. We help them with the technical aspects and training. Most of our business comes from word of mouth. It's important we do a good job with each client."

In addition to the work Marcus put in to sharpen his sales skills, his client communication ability is aided by being trilingual in English, Hebrew, and German. Sigari is also able to speak three languages: English, Spanish, and Farsi.

Learning to fly

When the two friends were working together at Eclipse Aviation, Marcus stayed focused on a goal that had formed in his mind when he was a volunteer for Angel Flight during middle school and high school.

Angel Flight is a charity organization made up of pilots. Its purpose is providing free air transportation for medical patients in need. Patients are usually traveling for surgery, chemotherapy, dialysis, or other treatments.

Seeing the older volunteers in action gave Marcus a view into their world when he was a teen. It is a volunteer activity he has continued as an adult.

"For me, the biggest eye-opener was when I was a volunteer for Angel Flight. All of the volunteers rented or owned aircraft. I went on many flights as a co-pilot. I realized all the people I was flying with were entrepreneurs and not employees. I aspired to own my own plane."

Sigari and Marcus took the first steps of entrepreneurship by setting up a business plan. They also developed a financial plan and discussed risk management.

"At the beginning of the company as we envisioned a management service, we had a lot of infrastructure development and we split up the outward and inward duties. Cyrus was responsible for marketing the brand and I handled the inside stuff — finance and legal affairs. Our business plan has changed. You have to respond to what markets demand. All our risk factors from 3 1/2 years ago materialized," Marcus says with a laugh.

Sigari appreciates the freedom and adrenaline rush that is part of flying. His reaction to the task of developing jetAVIVA contained a wide range of emotions.

"It was challenging, exciting, scary, fun — every emotion," he says. "There were a lot of unknowns, but with those unknowns came opportunity."

Marcus and Sigari's light jet inventory at jetAVIVA includes Cessna Citation Mustangs, Citation Jets (CJ1-CJ4), and Embraer Phenom 100 models along with a handful of other jets. Considering the current economic climate, the company's clients do maintain a degree of consumer - independence.

"We specialize with owner/pilots," Marcus says. "They are on their own and they see the opportunity to upgrade and get a good deal. That has catapulted us into a larger aircraft market. These $2 to $8 million dollar jets we deal with, they (pilots) transition into the next step."

With the investment by the owner being a few million dollars, Marcus feels his education at Purdue gives him a solid ability to help jet owners get the most out of their money spent.

"One of the keys to our success is the depth of technical training we got," he says. "We got our start in that at Purdue. That led the way to us being at Eclipse and knowing the technical details of planes in and out. Owner/pilots look for technical descriptions of a plane. They want to really know how the plane works. Purdue gave us that technical foundation."

Plenty of pursuits

Aside from discussing the technical aspects tied to jets, Marcus and Sigari enjoy the travel opportunities that come with their work commitments. That includes delivering planes back to the United States from abroad. They also have an interest in competitive aerobatics.

Marcus shows a Phenom 100 to a potential buyer.

"I enjoy surfing and spending time with my family," Sigari says. "But if I don't fly, I start getting antsy. I have been able to travel and see good places. It is work with a vacation worked into it. Flying has been a big part of my life and it's important for Ben and me to do that on a regular basis."

The original joy Marcus first experienced as a teenage pilot is still strong today.

"Flying is a different experience now and I have never stopped loving flying," Marcus says. "The sights and sounds change because I am in a different aircraft now. I started in a single-engine 118 horsepower plane. Now I'm in jets with two engines. It's different altitudes and a different view."

While the dynamics of flying have changed for Marcus, some things have remained constant during his career.

"I still very much love flying and interaction with customers. I'm very excited to go to work every day and glad to grow my friendship with Cyrus. In my experiences since I have graduated, Purdue grads have proven to be good people to work with."

Within a work environment that calls for Marcus and Sigari to sell themselves and counsel jet owners, Sigari says the social skills he picked up while at Purdue play a big part in daily life.

"As I look back, that 3 1/2 years at Purdue was a significant enabler. Each organization helped me develop my social skills."

That growth served as a catalyst for Sigari's work within jetAVIVA, a company that has helped hundreds of pilots make the transition to jet ownership. The company history includes more than 100 jet transactions totaling more than $300 million.

"There are risks, but we have been able to get rewards," Sigari says. "There were times we each questioned our decisions, but we were able to lean on each other and look forward. I wouldn't give it up for the world."