““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Sizing up your choices
Very light jet. Super-midsize. Ultra-long-range. These are just some of the names that manufacturers, analysts and aviation journalists use to try to pigeonhole business jets into market niches. But with so much fragmentation in the field and a blurring of traditional lines, such attempts at classification are becoming harder than ever.
Marketers emphasize a product's best attributes, which may explain why we have "very light jets," not "small slow jets." Analysts and market forecasters need to compare models, so they're more likely to group aircraft by selling price than range or size. Journalists strive for accuracy and simplicity, but as manufacturers continue to add derivative models, easy classification is becoming all but impossible.
There are many ways to categorize today's business jet, including price, weight, cabin size and range, all of which are important. Speed might be considered too, but until supersonic business jets join the fray, we'll leave that off the table. Obviously, no one attribute will be most important to every buyer. Some will give priority to range, others price and still others will demand sleeping quarters or the ability to take off and land on relatively short runways.
Perhaps this helps explain why business jets makers now offer models to fill seemingly every conceivable market segment. Consider that where the Gulfstream IV and V used to suffice, now we have the G300, G450, G500, G550 and the G650. Likewise, where buyers once had the Hawker 800XP, today Hawker Beechcraft sells the Hawker 750, 850XP and 900XP-all are essentially the same airplane, but with different range profiles and prices. Dassault Falcon has split the 900 and 2000 into DX, EX and LX models, while Cessna sells the CJ1, CJ2, CJ3 and CJ4 (in addition to six other Citation models). Embraer, meanwhile, is fast expanding from a stable that includes just one certified business jet, the Legacy 600, to a family of products spanning six models.
Interior Volume Matters Most
So just what are the generally accepted categories into which all these business jets are expected to neatly slot? BJT has adjusted the criteria to group jets primarily by interior volume, judging this attribute to be the most important. Personal jets like the tiny Diamond D-Jet are on the bottom rung, compact jets like the Eclipse 500 are next, followed by small, midsize, super-midsize and large-cabin jets and, finally, bizliners. Classifications by weight are used to further define each category, but size is becoming the truest measure for buyers, and for good reason.
Take Grob's composite-construction SPn, for example. By cabin volume, the airplane lands in the middle of the midsize category, but by weight it is a light jet. Increasing use of composites in manufacturing will only blur the lines further, experts say. The new Learjet 85, for example, will have a 657-cubic-foot cabin, putting it well within the range of a super-midsize jet, but its gross weight is expected to be closer to that of a typical midsize airplane.
The Teal Group, an aerospace market research firm based in Fairfax, Va., traditionally has classified business jets based solely on published prices, but that strategy is changing. "It used to be you'd have this cluster of airplanes in the $11 million to $14 million range, and then you'd have a cluster in the $18 million to $22 million range," noted Teal chief analyst Richard Aboulafia, "but now you have all these models within a million dollars of the next one. It's virtually impossible to make a cutoff."
Weight is a Starting Point
To determine where specific models fit in its list of categories, Honeywell's market forecasters work with the Transportation Research Board, a private nonprofit group. The TRB bases its classifications primarily on weight, which generally provides consistent grouping of airplanes. "Weight is a good place to start," said Charles Park, director of market research for Honeywell. "We generally find that maximum takeoff weight correlates with other attributes, such as range, size and price."
But if weight is so important, why are business jets often categorized by cabin size? Anyone who has ever watched potential buyers climb aboard an airplane can answer that. The first thing they do is take a seat and imagine what it would be like to spend several hours in that cabin. Size and comfort aren't the only factors that go into the purchasing decision, of course, but they are often near the top of the list and, as is the case with weight, interior volume also correlates well with other attributes such as price and range.
Park agreed that cabin volume is a top attribute, and said it will become even more important as additional composite-construction airplanes enter production. Honeywell forecasters, in fact, would tend to put a light, composite airplane that has a large cabin in the higher category even though it might technically meet the definition for the lower weight group, he said. Likewise, Dassault's fly-by-wire Falcon 7X is lighter than other airplanes it competes with, but Honeywell puts it into the higher category because of its cabin size and range. "Like most things in life, this isn't cookie-cutter work," Park said. "A bit of art and judgment goes into everything we do."
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