Entry Level Jet Market Update

Have all the gaps been filled in the Entry Level Jet market? How attractive is this arena to prospective OEMs looking to launch new models? René Armas Maes provides a market overview...

René Armas Maes  |  23rd February 2023
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    René Armas Maes
    René Armas Maes

    René Armas Maes, Vice President, Commercial, Jet Link International LLC, is an international...

    Embraer Phenom 100EV

    Over the years, the Entry Level Jet category has been referred to by different names, muddied by marketing labels from manufacturers keen to carve out a niche within a relatively new segment. For example, Eclipse referred to its Eclipse 500 as a Very Light Jet (VLJ). Subsequent aircraft such as Diamond Aircraft’s D-Jet was marketed as a Personal Jet.

    It was clear that a definition was needed, and today, the ‘catch-all’ term of Entry Level Jets prevails. For this analysis, we have incorporated aircraft typically seating between five and seven people (excluding a pilot seat) and having a Maximum Take-Off Weight (MTOW) of less than 12,000lbs into our Entry Level Jet  market review. It is acknowledged that those aircraft at the top end of our Entry Level Jet category could be merged into the bottom end of the Light Jet category.

    At the start of this century, there was a rash of concept designs targeting this fledgling market, made possible through the development of smaller engines. Models such as the Adams A700, Diamond D-Jet, PiperJet, Spectrum S33, VisionAire Vantage, and more, all fell by the wayside – some having even started flight testing.

    Ultimately, the first jet to progress past certification was the Eclipse 500. Other more established OEMs looked at the possibilities of entering the market, and while Bombardier opted against it, Cessna, Cirrus and Embraer later put forward their own concepts, while Honda also entered the fray for the first time as a jet manufacturer.

    Table A: Entry Level Jet Performance and Specifications Comparison

    Entry Level Jet Market Overview

    Between 2017 and 2021, the only OEMs actively manufacturing Entry Level Jets were Cirrus Aircraft (SF50 Vision Jet), Embraer (Phenom 100EV), Textron Aviation (Cessna Citation M2), and Honda (HondaJet HA-420). While Eclipse Aerospace reported delivery of six units of its Eclipse 550 in 2017, no further units have been shipped to customers since.

    The General Aviation Manufacturers Association (GAMA) shipment reports show an average of fewer than 150 Entry Level Jet units being delivered annually between 2017 and 2021 (see Table B).

    The Compound Annual Growth Rate (CAGR) is 5%, entirely thanks to the performance of Cirrus during this timeframe.

    Between Q1 and Q3 2022, 96 Entry Level Jets were shipped. Looking at the Q4 shipments between 2017 to 2021, and after making a few assumptions regarding sales incentives and product upgrades in 2022, it is reasonable to expect the Entry Level Jet segment to reach 169 units for 2022 (14% ahead of the average annual shipments between 2017 to 2021).

    Table B: Entry Level Jet shipments between 2017 and 2021

    Variable Cost per Revenue Seat Mile vs. Range

    Chart A shows that the HondaJet Elite II offers the lowest variable cost (US$) per hour, per seat mile among our Entry Level Jet grouping. That’s because it offers 100 additional nautical miles of range compared to its predecessor, the HondaJet Elite S.

    It also offers one extra potential revenue-generating seat in the case of the aircraft being operated under Part 135 for a charter flight.

    The Cessna Citation M2 Gen2 comes a close second, especially in the 1,500nm mission segment, and offers a lower balanced field length and price, based on 2022 US$.

    Product Gap: Given the speed at which new engine technologies, lighter composite materials and aerodynamic advancements are made in aviation, there could be a potential opportunity to fill a product gap within the Entry Level Jet segment in the future.

    Chart A: Direct Operating Costs (Fuel DOC per Seat vs Range)

    Chart A shows a gap in the 1,200nm to 1,500nm mission segment. This is ripe for an aircraft with the following characteristics to enter the market:

    • MTOW below 10,000lbs
    • Cabin volume ~300cu.ft.
    • Configuration of 1+7 seats
    • Balanced field length of 3,000ft or less
    • Hourly fuel consumption of 100 gallons or less
    • Priced below $6m (in 2022 US$).

    Could this present a tempting opportunity for new OEMs to capitalize on if they are able to align their business goals...?

    Productivity Index

    In Chart B, we have produced a productivity index for the featured Entry Level Jets in our analysis. The productivity index multiplies aircraft range (with NBAA reserves, and in a high-density seating configuration), cabin volume, and long-range cruise speed, dividing the result by 1,000,000,000.

    Chart B: Entry Level Jet Productivity Index vs Price in US$

    The HondaJet Elite II offers the highest productivity index score of 0.2, followed by the much lower-cost Embraer Phenom 100EV and slightly lower-priced Cessna Citation M2 Gen2.

    The price points of the Phenom 100EV and M2 Gen2 will undoubtedly give prospective buyers something to consider. Other factors for consideration might include residual values, support network (or lack of), and for owners exhibiting brand-loyalty the ability to move up to larger platforms within the product line with more range and cabin volume if needed.

    To Summarize...

    The Entry Level Jet segment is considered by many OEMs and potential market entrants to be the most vulnerable business jet market. Traditionally, it has shown the highest volatility to changing economic conditions and the lowest profit margins. As a result, many consider it to be a very risky investment.

    In my opinion, it is difficult to believe that significant new investment will be made in this segment beyond periodic product upgrades from the OEMs currently occupying the space.

    The larger cabin segments are more lucrative, which was made all the clearer by Bombardier’s move away from the lower ends of the market, ending decades of Learjet production to focus on building bigger jets.

    If a move in this market were to be made to fill any gaps, it would likely come from an established player. Cirrus, Embraer, Honda and Textron are all well equipped to fight back against market penetration from a new entrant with comparatively low-cost enhancements to their existing jets.

    Of course, there’s always the prospect that eventually an electric or hybrid-electric aircraft could take a percentage of the customer base from the traditional jet OEMs within this segment. Although that is likely to be several years away, it would be an interesting spectacle to observe.

    Check out the other articles in this series, including:

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    René Armas Maes

    René Armas Maes

    Editor, Buyer Strategy & Finance

    René Armas Maes, Vice President, Commercial, Jet Link International LLC, is an international aviation consultant and experienced C-Level professional. He has built a successful track record for developing and delivering Business Aviation strategies for Fortune 500 companies, Venture Capital firms, and HNWIs.

    René is a regular columnist for Bloomberg (financial), America Economia (business) and a speaker at aviation conferences worldwide.



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