The image of private jets has taken a bit of a bashing of late. Those suffering in the global economic downturn don’t like to see well-paid executives riding high in corporate jets. But in reality those CEOs and other executives are making smarter use of their time than many people think. “There are still a lot of companies that firmly believe in the financial and time efficiencies that business jets offer them,” says Doug Oliver, director of communications for the Cessna Aircraft Company.

“Rather than have their CEOs spend time commuting through the airport and going in a day early to make a morning meeting, there are still a lot of companies that rely on their business aircraft, not just the jets but props too, to keep their business going. They can see the efficiency as they can go to two or three business locations in a day and be back at home that night,” says Oliver.

“There are still a lot of companies that rely on their business aircraft to keep their business going.”

Oliver’s statement is born out of data released by the National Business Aviation Association (NBAA). “The vast majority of companies using business aviation, about 85%, are small and mid-size businesses and other entities including non-profit organisations. For every Fortune 500 company that relies on business aviation, there are several small businesses that also need their airplane,” says a spokesperson for NBAA.

Furthermore, particularly in industries such as energy, companies rely on aircraft to get employees from site to site.

Not surprisingly, however, today’s economic climate is leading to many companies putting their private jets up for sale, which Oliver admits has made the market more difficult for Cessna. “The industry-wide percentage of the used aircraft inventory is growing,” he says.

However, JPMorgan analysts have been reported as saying that the asking price for used jets actually rose by 3.4% between November 2007 and 2008. So, while many for sale signs are genuine, some media reports suggest that companies want to be seen trying to sell their jets but in reality they have been making sure the price is too high to attract a buyer.

Cyclic conditions

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Six months ago, Cessna was hiring. More recently the company, like many others, has shed jobs and has looked to make efficiencies. “[Business is] declining worldwide,” says Oliver. “Orders are down and we’re reducing our production for 2009, which is in turn causing job reductions.” Nonetheless, Cessna has been in this position before and the events of the past have meant that lessons learned then have to be applied again now.

“Today’s economic climate is leading to many companies putting their private jets up for sale.”

“It’s been reported that some of our capital building projects are being pushed to the right a little bit,” says Oliver. “The construction of the Citation Columbus assembly facility has not been impacted and it’s important to note that even in a down market we continue to invest in new product development. We found during the last downturn between 2002 and 2003 that even though there were more than 3,000 people laid-off, money continued to be invested in new product development programmes like the XLS, XLS plus, CJ3, CJ4 and the Mustang. The products that were developed during that downturn are 60% to 70% of the backlog now.”

Even though jobs have been shed Cessna is actively seeking to retain its best people and invest in training, efficiency programmes and also the most innovative production technology. “We continue to work with a process called metal bonding and that’s probably the closest that we get to real composite work,” he says. “It’s bonding metal materials together without riveting them, essentially the same process that you might go through with composites.”

Future forecasts

Private jet manufacturing numbers so far are good. According to the General Aviation Manufacturers Association (GAMA), 990 business jets were manufactured in the nine months up to November 2008, a 30.1% increase over the previous year’s figures. “Even though there’s been an economic downturn for some time, it’s only just hitting this market and likewise the rebound will lag just a bit. Everybody sees a bright day ahead. As an industry, we’re probably still going to deliver more than a 1,000 jets this year. We’re still way up there compared to past years. We’re just not growing now as was originally forecast,” says Oliver.

“Even though jobs have been shed Cessna is actively seeking to retain its best people and invest in training.”

As the private jet manufacturing industry lags economic conditions it’s a good idea to look at another related sector for signs of movement. Executive Air arranges air charters for its clients from a range of private aircraft owning associates. Jeffrey Menaged, Executive Air’s chief executive, regards the charter business as an early indicator for when a recovery is on its way as company executives look to charter rather than own.

While such a recovery hasn’t materialised yet, Menaged says that he is, “neutral to cautiously optimistic,” about the future.

Cessna is now pinning its hopes on the upcoming Skycatcher light sport aircraft and with it a crucial push to get more people licensed to fly again under a less complex licence needed to fly it. Great hopes also lie with the Citation Columbus collaborative project. “When the market turns around we have new products ready to go into service,” says Oliver. “We found that was very successful [in the past] and its something that our leadership in Textron and Cessna have both reiterated. We’re not going to jeopardise or sacrifice the future of the company.”