What’s Next for the New Business Jet Markets?

When Honeywell released its Global Business Aviation Outlook in October 2023, it predicted strong demand for new business jets, including 8,500 new jet deliveries worth $278bn between 2024 and 2033.

However, strategic decisions behind product upgrades, refreshes, and the launch of new private jet platforms continues to be cautious with many OEMs looking at how to optimize production rates and strengthen new aircraft pricing and residual values.

Ultimately, the way OEMs position themselves in terms of new private jets and product refreshes can impact how quickly they’re able to reposition their portfolios and strengthen book-to-bill ratios during bull and bear stock markets.

What our BizJet Market Segmentation Coverage Revealed

Entry Level Jets: When benchmarking Entry-Level Jet platforms, our analysis showed that the HondaJet Elite II offers the lowest variable cost per hour, per seat mile within the group, closely followed by the Cessna Citation M2 Gen2 – particularly in the 1,500nm mission segment.

Moreover, the HondaJet Elite II showed the highest productivity index score, closely followed by the Cessna Citation M2 Gen2 and the Embraer Phenom 100EV.

We concluded that with the lowest profit margins, it would be unlikely for the OEMs to make any significant investment in new products beyond upgrades, and that has proved to be the case. Embraer subsequently announced the latest version of its Phenom 100 with the Phenom 100EX which offers cockpit and cabin upgrades over to the 100EV.

Light Jets: According to our analysis, the Cessna Citation CJ4 Gen2 offers the lowest variable cost per hour, per revenue seat mile within the Light Jet group.

The Pilatus PC-24 came a close second. We concluded that historically the Light Jet segment has shown the highest volatility to changing economic conditions and the lowest returns, and that many OEMs and potential market entrants consider Light Jets to be a risky investment.

Our analysis suggested that it would be difficult to believe significant new investment would be made within the category beyond periodic product upgrades from the OEMs already occupying the space.

This was certainly the case at Cessna, which announced the Citation CJ3 Gen2 and introduced the 2,100nm, nine-seat Citation Ascend (due to enter service in 2025). To all intents and purposes, the Citation Ascend appears to be a modernization of the existing Citation XLS model, albeit with upgraded engines and a flat-floor cabin.

The big surprise came from Honda which revealed its intention to enter the Light Jet market with the 2,625nm HondaJet Echelon, which it says is due to enter service in 2026.

Mid-Size Jets: Embraer’s Praetor 500 offered the lowest variable cost hr/seat mile as an improvement over its predecessor, the Legacy 450. The story was different when benchmarking the Citation Latitude, which has a slightly higher variable cost (16 cents versus 14 cents per seat mile) than its Citation Sovereign+ predecessor, while also offering less range.

With only two Mid-Size Jets currently in production, we identified a product gap in the market for a 2,800-3,200nm-range jet offering an MTOW between 35,000-40,000lbs, and seating 9-10 passengers. Priced in the region of $20-21.5m, its variable cost would need to be less than $4,000/hr.

With Bombardier exiting the segment when it stopped Learjet production, we felt an opportunity existed for Pilatus to launch a new product (though Embraer may also be tempted to capitalize). Currently, that Mid-Size Jet product gap remains unanswered.

Super Mid-Size Jets: Analysis showed that Cessna’s Citation Longitude currently offers the lowest variable cost per hour, per revenue seat mile among the Super Mid-Size Jets followed by Embraer’s Praetor 600. However, the Praetor 600 offers 15% more range and had the highest productivity index score of the group.

We concluded that the market is ripe for Gulfstream to announce a new model – possibly a shortened G400 platform in the 3,500-3,900nm range bracket, replacing the aging G280 platform. With the Savannah-based OEM currently focussed on certifying various larger models, including its G400, this has unsurprisingly not yet occurred.

Large Jets: Gulfstream’s G500 was found to offer the lowest variable cost per hour, per revenue seat mile, followed by the Bombardier Challenger 650

In terms of our productivity index, the G500 along with Dassault’s Falcon 900LX led the chart (though both have higher purchase prices). Of the lower-cost options in the field, the yet-to-be certified Gulfstream G400 is expected to lead.

In terms of potential future activity, we speculated that this market could provide a sweet spot for both Bombardier and Dassault who have, for many years, been providing upgrades to older airframes in this segment.

We argued both could feasibly keep their investment low with shortened versions of their Global 5500 and Falcon 6X platforms. For example, a future Global 4500 and Falcon 5X/4X could reinvigorate the category if one or both jets were priced right and capable of 4,200-4,750nm range. Both OEMs have other in-development models occupying their attention right now, though.

Super Large Jets: Analysis showed that Dassault’s Falcon 7X provides the lowest variable cost per hour per revenue seat mile among its Super Large Jet peers with ranges below 6,000nm, while the Falcon 8X led the longer-range group. However, the Gulfstream G600 and Global 6500 offer slightly more range than the Falcon 8X.

While Dassault has been busy with its Falcon 6X and Falcon 10X projects, we felt there’s a case to be argued for Dassault turning its focus towards a relatively low-investment enlarged version of the Falcon 6X or a development of its aging Falcon 7X, strengthening its position within this market.

Ultra-Long-Range Jets: As a new market, as we wrote our analysis only the Bombardier Global 7500 was certified and delivering. It was due to be joined by the Gulfstream G700 imminently, while Bombardier (Global 8000), Dassault (Falcon 10X) and Gulfstream (G800) all had further offerings in development.

Once all models hit the market (by 2027), the Gulfstream G800 is expected to offer the lowest variable cost per hour, per revenue seat mile, followed closely by Bombardier’s Global 8000. (As data and performance are still being reviewed during certification flight tests, these numbers are estimates and could change.)

Dassault’s Falcon 10X is expected to offer greater cabin volume – a valuable commodity for jets capable of flying 13-14 hours non-stop.

With the potential to have several strong players in the Ultra-Long-Range Jet segment in the next couple of years, and the bar to non-stop business jet travel being pushed to 8,000nm, the question becomes which is more valuable for future developments – range or speed?

It’s feasible the focus of some OEMs may be on producing jets capable of traveling 10,000nm non-stop, but if a supersonic business jet became a possibility covering the range more quickly (even with a fuel stop), depending on the price of such a jet the impact on the Ultra-Long-Range market could be significant!

In Summary

Across our series of jet market reviews, gaps offering potential for OEMs to fill market niches were found for jets offering 1,200nm-1,500nm, 2,800-3,200nm and 5,900nm-6,600nm range.

With high inflation and high interest rates impacting aircraft financing, it’s possible we could see new aircraft orders begin to favour the lower price segments, helping encourage more focus from the OEMs on those categories in the future.

For example, with business jet flight activity softening a little recently, leading fractional ownership fleet operators could potentially be tempted to shift some of their future aircraft orders for the Super Mid-Size Jets to Mid-Size Jets instead, thereby lower acquisition costs somewhat and preserving their own profit margins.

In short, there’s plenty to keep an eye on regarding future developments in the business aircraft manufacturing industry over the coming years!