The need to measure the relative value of the business and commercial aircraft and how the designer/analyst can formulate an initial idea of what should constitute a satisfactory array of aircraft design specifications is presented. This is achieved firstly through the establishment of relevant productivity indexes using key target parameters or macroscopic objective functions. To complement this, a new primal objective function constructs designated as the Airframer Paradigm is reviewed in order to ascertain how much a given set of design specifications are worth to the market. Finally, an overview of how new technologies and utility features affect the value of aircraft as well as an assessment of design philosophies for the present and future are discussed.
In every industry, there exists a need to measure the relative value of the product offerings to better understand the dynamics of the given market. For an aircraft manufacturer, it is crucial to evaluate how its current and foreseen proposals fare when compared to the competition. Several marketing tools, such as surveys, can be used, but a method of quickly evaluating a design is critical. A simple index that measures productivity or relative value can be used for comparison purposes, to identify potential market niches or product improvements, to establish the potential of new or future products, as well as identify customer-preferred characteristics.
In defining an index for measuring the relative value of products, the fundamental question becomes: what is of value to the market? In the case of business aircraft, customers want, as minimum requirements, an aircraft that will allow them to travel the distance they need in an acceptable level of comfort. Reflecting on this conclusion, one of the early attempts at defining an index suitable to the business aircraft market was performed by Timmons1, through the “Comfort Index”, a product of cabin volume and maximum range. However, this Comfort Index did not capture the fact that most business aircraft users also give value in getting to destination as quickly as possible. To that effect, Killingsworth and Wolz2 established a relationship between aircraft price (or market value) and an index that consists of aircraft speed multiplied by range and cabin volume.
Although this inference was a significant step forward, incompleteness in representing accurately the fundamentals of business aircraft value still existed. For example, by omitting TOFL and computing only the product of speed, cabin volume and range, Norris3 predicted a mixed success for the Cessna Citation Sovereign. However, it is clear the manufacturer made a conscious decision to favor excellent field performance at the relative expense of other attributes, e.g. speed. It is believed that this is not an isolated case; field performance is one of the main characteristics that delineates business aircraft. The ability to use secondary airfields and to get out of key airports under hot and high conditions is a crucial argument in favor of business aircraft in relation to commercial transport. TOFL is an appropriate indication of that ability.
Addressing this need, AlliedSignal Aerospace4, in a business aircraft market analysis, introduced what is referred to herein as the “Productivity Index”, or PI, to be defined in the following section. Moghadam and Farsi5 further developed the findings and introduced several new performance parameters in their “Performance Index”. However, this expands dramatically the task of compiling and analyzing required information to a level deemed quite excessive. For instance, the range at maximum payload usually has to be derived from a performance model rather than being found in publications. A higher number of macroscopic objective functions, or MOFs, in an index also makes it practically impossible to understand intuitively the relative influence of each parameter within the overall index value. Fundamentally, the PI will be used in this work as the basic tool to evaluate value, and a new complementary application will be introduced in order to significantly broaden the possibilities of the analysis.
The PI is one of the most useful tools for the business aircraft industry. It covers in simplistic terms what a customer pays for in a business aircraft, that is the MOFs of range, speed and cabin volume normalized by takeoff field length, as described in Eq. (1).
Here, RLRC is the range at LRC speed (payload of 4 PAX for very light to super-large categories, 8 PAX for ultra- long range aircraft6), MLRC represents LRC speed (Mach number), Vcab is the cabin volume (cockpit divider to aft cabin, no baggage volume) and B is the TOFL (sea level, ISA, MTOW). When plotted against price, PI gives an indication of the relative “value-for-money” of aircraft.
It is of particular interest to see how the PI has varied over the last decade or so in relation to price, i.e. how much value for given price is available to the customers. Figure 1 shows PI versus actual market price for in- production business jets in 1990, 1996 and 2002. All data was taken from B&CA’s Planning and Purchasing Handbooks6 (cabin volume was estimated using internal cabin dimensions), and prices were normalized to year 2002 equivalent.
One would expect that as time goes by and technology and solutions improve, potential owners should get more for their money. But this is not exactly what is shown in
Figure 1; in fact, the graph demonstrates that for a fixed PI, prices are for all practical purposes equivalent between 2002 and 1990, although price variations can be observed for particular market segments. This differs somewhat from the results of Moghadam and Farsi5 who showed a slight increase in the Performance Index for fixed price between 1990 and 1995 across all market segments. The relatively constant level in value-for- money shown in Figure 1 can perhaps be explained by the great demand for business jets in mid to late 1990s and early 2000s, hence, has not pressured manufacturers to adopt much lower prices for an improving blend of aircraft characteristics. Looking at specific segments, aircraft priced above $25M appear to be getting more expensive for given productivity. This is attributable to a strong demand for these products and further indicates that the market sets price, i.e. the actual aircraft cost (recurring and/or non-recurring) to the manufacturer is not necessarily the only driver.
On closer scrutiny, the chart also shows that quite a few points for 2002 models lie distinctively on the right side (better value) of the best-fit lines, especially in the $10M -$25M price range. This is tentatively explained by three factors. Firstly, the emergence of “corporate shuttles” or regional jet conversions. These offer a somewhat biased mix of characteristics, typically favoring a very large cabin volume at the expense of range and speed. The design characteristics of corporate shuttles will be discussed in more details later in this text. Secondly, there was the introduction of several new, well-balanced platforms that present higher PI values than older types through incremental improvements in speed, volume, range and TOFL. Finally, the increased popularity and number of offerings in this market segment probably has to some extent forced manufacturers to keep profit margins and prices relatively low, even for the new aircraft models.
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