This $300 million airliner is the hottest new trend in private jets

This$300millionairlineristhehottestnew
trendinprivatejets
http://www.businessinsider.com/boeing-787-dreamliner-bbj-kestrel-private-jet-2016-6?r=DE&IR=T
BenjaminZhang
Jun.17,2016,10:58AM
Boeing787-8BBJ.KestrelAviationManagement
InJuly,China'sHNAAviationGroupwillwelcomeashinynewBoeing787-8Dreamlinertoitsfleet.
Thisplaneisspecialbecauseitisthefirst787Dreamlinertobebuiltpurelyasaprivatejet.
HNA'snewDreamlinerissymbolicofahotnewtrendinprivateandcorporateaviation—longrange,mid-size,wide-bodyairliners.
"It'sanemergingmarketthatdidn'treallyexistinthepast,"KestrelAviationManagementCEO
StephenVellatoldBusinessInsider.Kestreloversawthedesign,engineering,andfabricationof
HNA'snewDreamlinerwhichhasanestimatedtotalcosttopping$300million.
AirbusandBoeinghavelongofferedversionsofitsairlinerstoprivatecustomersundertheir
AirbusCorporateJetandBoeingBusinessJetprograms.However,buyersoftheseairliner-based
privatejetshavelonggravitatedtoeitherfour-engine,jumbojetsliketheBoeing747orsmaller,
narrow-bodyjetssuchastheAirbusA320.
"Themarketistraditionallyseparatedintotwobuckets,"Vellasaid."ThebigBoeing747sand
AirbusA340sprimarilycateredtoheadsofstatewhilethesmallerAirbusA320andBoeing737s
arepopularcorporaterunaboutsaswellassecondaryplanesingovernmentfleets."
Boeing787-8BBJinterior.KestrelAviationManagement
Althoughtwin-engine,mid-size,wide-bodyjetssuchastheBoeing767andtheAirbusA330have
longbeenavailable,theyneverquitecaughtonwiththeprivatejetcrowd.
However,inrecentlyyears,ultrahigh-endprivatejetcustomershavebecomeincreasingly
interestedinthenewgenerationmid-size,wide-bodyplanessuchastheDreamlinerandAirbus
A350.
What'schanged?
AccordingtoVella,severalfactorsledtotheshift.
First,leadingbusinessmenandheadsofstatearegenerallypressedfortime.Asaresult,theyprefer
betoabletoflyanywheretheyneedtogonon-stop.Untilrecently,thissimplywasn'tpossibleina
twin-enginedjet.Thetraditionalthinkingintheaviationdictatesthatthere'ssafetyinthenumber
ofenginesaplanehas.
RegulatingbodiessuchastheUSFederalAviationAdministrationhaveevenplacedlimitsonwhich
ultra-long-rangeintercontinentalroutestwin-enginejetscanfly.Asaresult,governmentand
corporateclientslookingforaplanewiththerangeandcapabilitytogoanywhereintheworldhad
toturntofour-enginedjumbos.
However,withtheincrediblereliabilityofmodernturbofanengines,theregulatorylimitationson
twin-enginedjetshaveessentiallybeenwipedout.Now,planessuchastheA350andthe787can
flyanywheretheownerrequires,butinaslightlysmallerandmoreaffordablepackage.For
instance,HNA'snewstate-of-the-artcompositeBoeinghasarangeof9,800milesevenwhen
packedwithpassengers,luggage,andfuel.AsimilarlyoutfittedA350ACJwillbeabletodelivery
thattypeofperformanceaswell.
"Youcanflybetweenvirtuallyanytwopointsontheglobe,"VellasaidoftheDreamliner.
JapanesegovernmentBoeing747-400.REUTERS/JasonLe
Secondly,thepriceofcrudeoilhasfallendramaticallyoverthepasttwoyears.Eventhoughcheaper
fuelmakesbuyingandoperatingathirsty,four-engined,jumbojetmuchmoreattractive,lowcrude
priceshavealsocutdramaticallyintotheincomeofMiddleEasterngovernments.Unfortunatelyfor
the747BBJ,theyarealsosomeoftheplane'sbiggestcustomers.
AccordingtoVella,allmajorMiddleEasterngovernmentssuchasSaudiArabia,operatelargeroyal
fleets,manyofwhicharejumbojets,forelitemembersoftherulingfamilyandofficialstouse.
Overthenextdecadeorso,thesefleetswithneedtobeupdated.Vella,whosecompanyhasbought
andsoldmorethan$50billionworthofcommercialandprivatejets,believestheMiddleEastern
clientelearereadytodosomebelt-tighteninganddownsizetosmallerplanes.
Finally,anotherfactorthathasbenefitedtheDreamliner-sizedjetistheincreasingpublicsensitivity
towardspoliticallargess.UnliketheUS,wheretheplanethatoperatesasAirForceOneisheldin
highesteemandseenasasymbolofnationalpower,thepublicinmanycountriesviewalarge
presidentialaircraftasasignofpoliticaloverindulgence.
AccordingtoVella,thisisaparticularlysensitiveissueinEurope.However,asmalleraircraftwith
theperformancecapabilitiesofajumbo,butinalessattention-gettingpackageisareasonable
alternative.
"Themid-sizejetshavelessramppresence,"Vellasaid."Theyoffertheownermuchmore
discretion."
KestrelCEOStephenVellainsidetheBoeing787-8BBJ.KestrelAviationManagement
Afterall,it'shardtoarrivediscretelyinajumbojetnomatterwhereyougo.Evenattheworld's
busiestinternationalairports,anaircraftthesizeofa747orAirbusA380isconspicuous.
Butallofthisrequiressomeperspective.Eventhe"smaller"787BBJisstillanabsolutelymassive
aircraft.At186ft.long,evenDonaldTrump'sconvertedBoeing757isdwarfedbythenew
Dreamliner.Andwith2,400sq.ft.oflivingspace,itoffersthesameamountofroomasanaverage
Americansuburbanhome.
What'scoming
Accordingtothelong-timeaviationexecutive,overthenext15-20years,demandfromjustthe
MiddleEastforBoeing787-sizedprivatejetswilltop30aircraft.Thatmaynotsoundlikemany
planes,butatmorethan$300millionapop,that'sabout$10billioninbusinessfromjustahandful
ofcustomers.
Infact,VellabelievesdemandfromEastAsiawillbejustasintenseoverthatperiodoftime.
"Becauseofthehighnumberoflongdistanceand(trans-oceanic)flightsthecustomersmake,these
aretheperfectplanesforAsia,"Vellaadded.
Whetherthemarketforthesemid-size,twin-enginewide-bodyprivatejetsactuallyskyrockets
remaintobeseen.Butwiththeunprecedentedlevelofadvancedtechnology,luxury,and
performanceitcanoffer,theyareanundeniablyattractiveoptionfortherightbuyer.