July 9, 2021, ©. Leeham News: Now that we have done the basic market research we should scope the program. To do this we need to understand what aircraft we will develop and to what certification rules.
Our market research tells us to develop a 19 seat aircraft that can operate as a passenger and/or cargo aircraft outside the US and as cargo aircraft in the US. This enables us to certify it to FAA Part 23 and the equivalent rules of other National Aviation Authorities where we want to sell the aircraft.
Let’s assume our market research has convinced us there is a large enough market for a 19 seat “Green” passenger/cargo aircraft with its predominant markets in Asia, Africa, and South America. It shall replace the many CASA C-212, EMB 110 Bandeirante, and Beech 1900s in these markets. It would compete with the new Cessna SkyCourier (Figure 1) and the Do-228 (figure 2), but also the Viking Twin Otter for certain types of operation.
We estimate we can over 20 years sell 400 aircraft to this market segment if we can get the specification and economics right. We have checked similar projects and understood this is a several hundred million dollar investment before we start to earn money on the aircraft we produce.
To approach investors we need an overall specification of the aircraft with its unique selling points but also a business plan on how we and the investors can regain invested money and get a return on investments.
For this, we need to scope the project in terms of the time taken for different phases and what these phases mean in terms of consumed resources (which also drives our money consumption for each phase).
We need an overall project schedule, with the many tasks of an aircraft project listed and we need to do the first estimate on the resource consumption of each task. Figure 3 shows the result. It’s our first overall Program Plan with the typical activities listed under each phase (click to see the details).
As you see on the top we have a timeline spanning six years before the aircraft is certified and we can deliver our first aircraft.
The Program Plan lists the activities we need to perform under each Program Phase. The overall phases are Pre-Launch, Post-Launch, and Post Certification.
In this Corner and the next, we analyze the Pre-Launch Phase. The following phases we discuss in subsequent Corners.
The first part of the Pre-Launch Phase is our Concept Development period. There we develop the first versions of the aircraft concept which gives input to the first Program and Business Plans.
Input to the specification and plans are continued Market Research, including operator meetings for this aircraft type, and work on the concept of our aircraft. We use modeling and CFD tools to design the aircraft, complemented with first wind tunnel tests.
This gives us an initial specification of the aircraft and how we plan to develop it and produce it. The specification list capabilities, dimensions, overall weights, and needed propulsion system.
Our first performance estimates are firmed up, such as Field performance, Climb, Crusie, and Descent speeds followed by Payload-Range curves, and aircraft economics.
Once we know the overall concept of the aircraft, we start the discussions with suppliers to present the project to them and see if they are interested in participating in the program.
As we continue the refinement of our aircraft it’s time to contact the Certification authorities and prepare for the Certification application.
The result of this phase is a detailed aircraft specification and a worked-through business plan that we can present to potential customers and investors.
After a decision to continue to a formal launch we enter the Launch Preparation phase.
Now we detail the aircraft concept so we can start the process of supplier selection. For this, we need to freeze the overall design and what type of system we shall employ. We now have detailed specifications for the systems with data like power and fuel consumption needs for the engines, capacities for fuel/energy systems, hydraulic and air system specifications, and the avionics we plan to equip the aircraft with.
About six months prior to the formal Program Launch we get the Authority to Offer (ATO) from our supervisory board/Investors.
If we are a new aircraft developer we need to select the tool landscape we shall use. We need a CAD/CAM system with its Product Data Management (PDM) system, the tools to design the electrical system including wiring (EWIS). We also need further down a production planning system. This system shall have Purchase and Quality management capabilities.
The Pre-Launch Phase finishes with a Launch Decision, which puts us into the Post-Launch phase.
The launch decision is important. The project then commits to develop and produce the aircraft. Customer contracts will be firmed up and there are major liabilities for the program towards customers but also suppliers.
In the next Corner, we discuss the Pre-Launch Phase further.
Figure 3 seems to be missing one obvious component – promoting and selling the aircraft, although that likely happens right across the spectrum of time.
Yeah, we are too product and certification-oriented. Typical techies 🙂
I work in an industry where the customer finds us so advertising is not always needed if either price, delivery or placement is right. After market support is a big factor, its probably what has kept the Russian aircraft from wider market acceptance. Cessna’s Skycourier has what the marketers call a USP “Unique Selling Proposition” of being able to carry 3 x LD-3 unit load devices. They may not need much advertising, have good support and of course chose a conservative aluminum structure to ease maintenance concerns. They of course had a customer in FedEx before they launched the aircraft. I find Pilatus the most fascinating. They do their “product placement” very well but their advertising is impressive. They have an amazing customer in the Australian Royal Flying Doctor Service, a beloved charity in Australia funded by individuals, government and some very wealthy mining companies. Yet they also get the high end business market.
Business to Business transactions happen out of the public eye with only mentions in the specialist press of new campaigns. Existing major customers become part of the new production definition with their ‘wants list’
Note that Cessna has an airplane widely used in commuter and courier work – the Caravan. And a record of producing. Strong assets.
And markets emerge – Viking sells many Twin Otters into the Maldives, to fly people from its large airports out to cottages along strings of coral atolls.
With politics a big factor for predictors – climate catastrophists claim the Maldives will be under water soon, but its government is building more airports to bring more tourists in. (Perhaps ensuring the new airports are a few feet above seal level, can’t get much higher on those islands.) Some South Pacific islands embraced alarmism to get money from countries like the US.
Yes, ‘seal level’ as they are a surface swimming ocean creature. :-o)
Need Design Organisation Approval and Production Ogranisation Approval as well.
Thanks, we’ll add it and discuss it in next week’s article.
Lilium discussed it and hinted it will be expensive.
Sans a really good base customer like FedEx (which also made the Caravan into a success vs marginal) its a tough gig and its no wonder it happens so seldom.
As someone said, if you want a good tax write-off buy a boat or try to build an Aircraft!
I was just reading promotional material for a proposed new airliner for the 1960’s, a 350 PAX double deck VC10. Amongst their assumptions in providing predicted DOCS was the figure of 14.4 cents per US-Gal for fuel. I burst into tears…
Just applying inflation to those numbers ( it got pretty bad from 70s to 90s) might just make those fuel costs much more like those of 5 years ago !
What would have really grown is development and certification/ test flying costs
True. 14.4 cents equates to $1.21 in 2021 money. Jet A is currently going for close to $5.00 a gallon and heading higher and the value of a dollar inexorably heading lower.
As interesting as this series is, I think what is left un said, and to your point is just why the burden of certification a new transport type is now what it is.
I would like to comment on several issues raised in part 10 and 11.
The 15-19 seats bracket:
– As you stated, there are 2 different segments: utility and commuter.
– It is a shrinking overall market, with expected sales of some 630 units in 20 years.
– There are several companies selling current in production aircraft (Twin Otter,
Do-328, PZL M28, Aviocar, Let Turbolet) and one under development (Cessna).
All this aircraft fall in the utility segment (high wings, fixed undercarriage, not pressurized). My guess is that all this companies are supplying now some 20 to 30 units per year.
– There are no aircraft in production or development in the second segment (commuter). What will replace the Beech 1900, Jetstream 31 and Metroliners?
There is no simple answer.
– The marketing target for a new company to sell some 400 units is totally unrealistic
(+60%!!. of the total market).
– A market share of 10% to 20% is more realistic.
– If several hundreds of million dollars are needed to bring a new aircraft to the market, no business plan can support such an investment.
The 20-40 and 40-60 brackets:
– I prefer to call them the 29-46 pax bracket. There are no a/c in service with less the 29 seat and few with more than 46 seats (Saab 2000, DCH-8/300, Fokker 50).
– There is only one type in production – ATR42, a 35+ years old design, with many improvements.
– There are various old types not in production that need to be replaced very soon: Saab 340, Brasilia, Jetstream 41, Do-328, DHC-8/100 and 200.
– The market is stable: some 1100 units are flying now, some 1100 units will be needed in the next 20 years. Only the 60+ seats bracket is expected to grow significantly.
– ATR is not expected to fill 100% of the demand.
– Therefore, I suggest that it will be more interesting to analyze this bracket instead of the smaller a/c.
Under Bjorn’s size is interesting – Tecnam’s 2012 aircraft is in airline service now in the [brain fade – far northeast US maritime-oriented states]. https://www.flyingmag.com/story/aircraft/cape-air-100-tecnam-p2012/
Not saying there’s a huge market, but its launch is a good start. (Cape Air is replacing a gaggle of low-wing Cessna twins and assorted other airplanes like B-N Islander. Should be a much better pax experience than the Cessnas, and easier to load/unload.
The Twin Otter is interesting, in one sense a niche airplane – simple and rugged for the frontiers of the world, indeed designed for that as an outgrowth of the single Otter. Turbine reliability and ease of starting was key, it goes into the High Arctic and Anatarctica. But if was eagerly adopted by airlines for commuter service – then replaced by larger. On floats is a big market for it, even without the Maldives, Viking and affiliated subsidiaries of parent Longview support the product, including with a level D simulator of operation on floats.
But replacement of the Twin Otter for commuter service is a story of failed prediction. deHavilland Canada went big with the Dash 7, four engines and STOL performance, besides the frontiers it was pitched for facilitating in city airports. Did not come to pass, only 113 built, it is a niche aircraft – mostly used for special missions like aerial surveys, only a few in commercial service now. deHavilland recovered with the successful Dash8 commuter twin.
(Obscure factoid: the Dash 8 deliberately has a different nose than the Dash7, for lower production cost and better aerodynamics and styling. Seems like Dash7 development was too hasty. I see that in the automotive world, in assembly, servicing, and styling.)