Adam, ATG Making Small Craft that Could Transform Industry

Adam Aircraft and Aviation Technology Group are located about 1,000 yards apart, separated by a runway and several hangars at Centennial Airport.

It's somewhat fitting, then, that they are helping pioneer a new generation of planes expected to enhance the market for private and business jets.

After years of hype - and various delays - the companies have taken big steps forward and are nearing the day when they can begin delivering their advanced, lightweight jets to customers.

If successful, they could create hundreds of new jobs here, attract support businesses to the area, pump more money into the local economy and establish Denver as the center of a potentially lucrative industry.

"Adam and ATG have created many jobs here in a very short period of time, and they're poised to grow quickly" in coming years, said Robert Olislagers, executive director of Centennial Airport, where both of the companies are based. "That job growth will cause lots of (economic) spinoffs, where you have more skilled workers and more people buying homes and automobiles and in turn sending their kids to local schools."

On a larger scale, this new generation of aircraft will let more than just executives and wealthy individuals crisscross the country on small jets. Some models will help open up air service to smaller cities and towns.

Lofty expectations, for sure.

But both Adam Aircraft and ATG face regulatory and competitive hurdles, and some doubt that the jets they and other companies are making will usher in a new age of flying. Others fear that the planes will prove so popular that they'll clog the skies around major cities, creating safety and logistical hazards.

Lighter, cheaper, stronger

Adam Aircraft and ATG are developing an emerging type of aircraft called a very light jet, also known as a VLJ.

VLJs are typically defined as two-engine aircraft that can be flown by one pilot, weigh 10,000 pounds or less and cost from about $1 million to $3 million. The planes are meant to be relatively small, capable of carrying from one to eight people.

What makes them particularly exciting is that they're so different from existing business and private jets - in performance, structure and cost.

Some VLJs, such as those being developed by ATG and Adam Aircraft, are made of or contain parts made from lightweight composite material instead of aluminum. And manufacturing VLJs is faster and cheaper.

"The carbon fiber composites (we use) are much easier to shape, and they're much lighter and stronger," said Rick Adam, founder and CEO of Adam Aircraft. "That gives us a distinct advantage."

The lighter the plane, the less fuel it burns. VLJs also gain lift more quickly, meaning they can use shorter runways and access roughly 5,000 airports across the country. The jets employ the latest cockpit technology and software, which is much cheaper than that found in most similar aircraft today.

"Ten years ago it cost $250,000 for digital displays," said Adam, who served in the U.S. Air Force. "Today they cost $50,000, which is down 80 percent."

All of that adds up to a cheaper plane: about half the cost of the lowest-priced jet on the market.

$1 billion in sales

The market for very light jets is in its infancy, but it's expected to take off in coming years as Adam, ATG and other companies win federal certification and ramp up production.

The Federal Aviation Administration estimates 350 VLJs will come on line next year, and up to 500 per year will enter the market through 2020. That could mean $1 billion or more in sales each year.

The FAA, which used the middle of high and low projections, believes 5,000 VLJs will be plying the skies in a decade, helping fuel an overall rise in corporate and private jets.

"Adam Aircraft and these other companies are going to have a wonderfully hard time keeping up with demand," said Evergreen-based aviation consultant Mike Boyd, who has done consulting work for Adam Aircraft. "These airplanes are going to totally change the mix of businesses and general aviation."

Boyd and others say the new planes will open the door for more businesses to buy corporate jets or participate in fractional ownership plans because they have a much lower price point than current business jets.

VLJs also will serve as the backbone of several upstart air taxi companies, which plan to use them to ferry people between cities.

The jets also are expected to find a sizable market among pilots looking to replace their older airplanes or upgrade to the latest and greatest.

SUV, Ferrari

Adam Aircraft and ATG are not directly competing against each other. Rather, the two companies are targeting different segments of the market.

Adam Aircraft's A700 is targeting small businesses, executives and other travelers who want to bypass the hassles of flying on commercial airlines.

ATG is developing its fighterlike Javelin jets for wealthy individuals who want the flash factor, while also working on a version for the military to train pilots.

One way to look at it: Adam Aircraft's VLJ is a roomy SUV, while ATG's is a sports car.

"The typical business jet has five or six seats like an SUV," said George Bye, ATG's founder and chairman and a former Air Force pilot. "The Javelin is a red Ferrari."

ATG's plane is modeled after a fighter jet, and it has the performance characteristics to match. The $2.8 million, two-seat, twin-engine Javelin can fly as fast as commercial aircraft and reach the same altitude.

Adam Aircraft - which already has developed a twin-piston plane - is expecting big things from its first very light jet.

The aircraft features seating for up to six passengers and two pilots and can reach speeds of 390 miles per hour. It weighs in at just 4,000 pounds, lighter than some large SUVs, and can be configured with a bathroom.

On the runway

The companies have spent years developing their planes and navigating the time-consuming approval process required by the Federal Aviation Administration.

Now, they're nearly ready for takeoff, although they could still face setbacks on the certification front.

Adam Aircraft is the closest of the two. The company landed big money recently - $93 million in venture capital - and cemented a deal with a company to provide maintenance and repairs in Asia. It hopes to receive final FAA approval of its A700 this year or in early 2008 and begin delivering planes shortly thereafter.

And it says an initial public offering is a "strong possibility," perhaps even next year.

ATG is looking about two years out. But it has made significant progress lately, having cemented several key distribution deals. The company also is testing its prototype jet and recently set up manufacturing and testing operations at Front Range Airport.

If initial interest is any indication, both ATG and Adam are primed for success.

Adam Aircraft has 325 orders for its A700 from business owners, private pilots and air taxi companies, totaling $700 million in sales. ATG has orders for 150 jets from such high-profile executives as Oracle CEO Larry Ellison.

The initial orders "obviously are a huge endorsement of our product," Bye said.

Along the way, the companies have pumped millions of dollars into the Denver-area economy. Combined, Adam Aircraft and ATG employ more than 700 workers in Colorado. And both are committed to growing their presence here for the foreseeable future.

Another upstart company with a presence in Colorado, Maverick Jets, is developing VLJs as well and could bring more jobs here down the road.

Competition, congestion

Even if Adam Aircraft and ATG win FAA approval, carving a niche in the VLJ market won't be easy.

There are roughly a dozen companies developing VLJs, ranging from well-known names such as Embraer and Cessna to newcomers Eclipse and Diamond Aircraft.

ATG insists it has no direct competitors and says its market is among current aircraft owners who want to add a sportier plane. At the Javelin's price point, there's nothing else out there like it, the company says.

Perhaps its biggest hurdles will come on the military side, where the company will have to cut through plenty of red tape.

Adam Aircraft competes in a more crowded field, in which one company, Eclipse Aviation, already has started delivering VLJs to customers.

Aside from competitive challenges, VLJs could take a hit if insurers increase rates for the new planes.

Perhaps the biggest concerns: VLJs could create headaches for commercial carriers and air traffic controllers. The Air Transport Association - an industry group for U.S. airlines - said the planes could get in the way of commercial operations. Although experts say many VLJs will be used at smaller airports and cities, other projections say they often will fly into larger markets.

"We're concerned that you could have a significant number of airplanes all of the sudden injected into the nation's air space," said Basil Barimo, ATA's vice president of operations and safety. "And these are not turboprop planes operating off the radar screen. These are planes operating in the 25,000-to-30,000-foot range."

Centennial Airport's Olislagers, though, believes the concerns over -VLJs are overstated. Predictions are that VLJs will, at most, make up about 25 percent of general aviation aircraft sales in coming years.

"If you're concerned about the VLJs," Olislagers said, "you should be more concerned about all the other general aviation airplanes coming into the system."

INFOBOX

Aviation Technology Group

Headquarters: Arapahoe County

Founder/CEO: George Bye

Founded : 1998

Operations: Headquarters in Centennial; manufacturing, assembly and testing at Front Range Airport in Watkins.

Employees: 102

Why buy? ATG'S JAVELIN AIRCRAFT*

The high-performance plane can fly faster than a commercial airline and is modeled on a fighter jet, bringing a glamorous new look to the world of private planes.

Speed: Up to 600 miles per hour

Range: 1,150 miles

Maximum altitude: 45,000 feet

Space: Room for one pilot and one passenger

Price: $2.8 million

Demand: Has deposits for 150 jets

OTHER STATS

Wingspan: 25.1 feet

Height: 10.5 feet

Weight: 6,000 pounds

Fuel capacity: 280 gallons

Baggage space: 12.5 cubic feet

Timeline: ATG hopes to receive FAA approval of its Javelin jet in 2009 and begin delivering planes to customers later that year.

*The company is making a version for individuals and for the

military. Stats above are for the individual version.

Source: ATG

Adam Aircraft

Headquarters: Arapahoe County

Founder/CEO: Rick Adam

Founded :1998

Operations: Headquarters and final assembly plant at Centennial Airport; engineering facility in Pueblo; five smaller operations at Centennial and in Ogden, Utah.

Employees: 650, including 600 in Colorado

Why buy? ADAM AIRCRAFT A700

The A700 weighs about as much as an SUV, has better aerodynamics than other private jets, and features two engines on its fuselage, an unusual double tail and space for up to six passengers.

Speed: 390 miles per hour

Range:1,400 miles

Maximum altitude: 41,000 feet

Space: Room for up to two pilots and six passengers, depending on configuration.

Price: $2.2 million

Demand: 325 orders from business owners, private pilots and air taxi companies.

OTHER STATS

44 feet

Wingspan: 9.6 feet

Weight: 4,000 pounds

Fuel capacity: 330 gallons

Baggage space: 25 cubic feet

Timeline: Expects to receive FAA certification by late 2007 or early 2008 and begin filling orders immediately after. Recently began shipping its A500 twin-piston propeller plane and has more than 60 on order.

Source: Adam Aircraft



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