In 1968, two Cessna jets piloted by Singapore Air Defence Command trainees landed at Seletar Airport, marking the beginning of military flight training in Singapore. More than 40 years on, the airstrip in northern Singapore is still host to Cessna planes, albeit civilian ones. And if Cessna Aircraft Co executive Bill Harris has his way, even more will be zooming up and down the Seletar runway.
Harris, vice-president of sales for Asia and Asia-Pacific at the company that makes utility planes and business jets, has spent the last 11 months in Singapore organising the opening of Cessnaâ s new facility at Seletar Aerospace Park, as business in the region is expected to grow. Cessna and sister company Bell Helicopter, both subsidiaries of US industrial conglomerate Textron Inc, have joined forces to operate a 160,500 sq ft service centre for the maintenance, repair and overhaul (MRO), as well as customisation, sales and distribution of aircraft.
The aerospace park sits on 320ha of land and JTC Corp and the Economic Development Board (EDB) have worked on the project since the development of the aviation and aerospace hub was first announced in 2006.
Bell and Cessnaâ s $30 million facility, built in two short years following an agreement signed with the EDB in June 2010, sits across the street from Rolls-Royceâ s â campusâ , which houses its aircraft engine assembly and test unit and wide chord fan blade manufacturing facility. Meanwhile, Bellâ s and Cessnaâ s rival, Canadian aircraft manufacturer Bombardier, is set to build next door. Seletar is already home to the Hawker Pacific, Fokker and Jet Aviation facilities.
Cessnaâ s and Bellâ s facility is what the companiesâ executives call â built for growthâ , with around a quarter or more of the current gross floor area left for future expansion. It is already equipped with hangars for helicopters and fixed-wing aircraft, as well as overhaul and maintenance shops and warehousing.
As Harris explains, the facility will help the companies improve their customer-service operations and secure more business in the region. Where Cessna is concerned, he says there are already a good number of aircraft based in Asia-Pacific. â Maybe a centre of excellence is a good way to put it. We have the ability to work on the airplanes, as we continue to develop our capabilities here. Not only that, we are putting the spare parts closer to where the people are so that there is less downtime. If we excel here, it will help us [grow] and maintain our ability to sell and service airplanes throughout the entire region.â
Indeed, Cessna expects to tap the growing demand for small aircraft in Asia-Pacific, as corporate travel and private flying increases with growing business activity and affluence. Harris says Cessna customers are typically in the natural-resources sector, although there are planes sold to property and IT entrepreneurs as well. â Name me a business and I guarantee you we have sold an airplane to those people.â
Cessna utility planes are also the workhorse of small airlines and aircraft charterers. In India, for instance, air-charter-service provider Deccan Charters is starting shuttle services within Gujarat to key secondary cities such as Ahmedabad, bypassing Mumbai and Delhi. The service, run by G R Gopinath, who founded the countryâ s first budget carrier Air Deccan in 2003, will use Cessnaâ s 12-seater Grand Caravan. â Weâ re not exceptionally new [in Asia-Pacific], but weâ re new here to really make the investment and to grow as the region grows,â Harris says.
Downdraughts
Cessna has already authorised service facilities for jets in Australia, Thailand and China. But its move to ramp up its investment and presence in this region is timely, given the economic growth here. Business aircraft makers are particularly vulnerable to the impact of economic downturns as executive travel dries up or when owner-flyers fall on hard times and are forced to give up their jets.
According to a survey conducted by aviation industry specialists Flightglobal, demand for business jets stagnated last year owing to the troubled economies of the US and Europe even as it failed to recover from the 2008 global financial crisis. There was only a 1% growth in the number of active corporate aircraft in the global market in 2011. Flightglobal noted that sales of light business jets have plummeted to the lowest levels in years as typical customers such as small companies and owner-flyers stopped buying planes.
â The whole industry has been going through a down cycle, but we see a lot of positives right now,â Harris says, adding that sales have improved compared with the year before. â Weâ re even selling planes in Europe, with all the turmoil thatâ s going on there. Orders have firmed up in the US and in Latin America.â
He points out that prices of used aircraft have also ticked upwards while inventory has fallen â " both indicators of the industryâ s improving prospects. â Weâ ve switched from a buyerâ s market. When prices start to firm up on the used [aircraft] market, our prices in the new [aircraft] market firm up as well. So, things are going in the right direction.â
Harris sees more opportunities ahead, particularly in markets where there are still comparatively few small planes. In 2011, there were less than 150 private planes in China, or less than 1% of similar aircraft in the US. â In the US, there are many more companies that own aircraft. They see the benefit of using business aircraft as a tool for several different things,â he notes.
And itâ s just a matter of time before new orders from Asia-Pacific start coming in. â Any market tends to start to develop with large, transcontinental aircraft, and then work its way back into what we believe is a more sensible solution for going 500 or 800 nautical miles,â he says. â Why fire up a large aircraft for three people? Why not size the aircraft right for your mission and be more economical in your choice?â
Harris readily acknowledges that Cessna would not be able to compete with the large and luxurious executive jets made and sold by Gulfstream, for example. â So, we pitch the value. Itâ s right-sizing the airplane, itâ s good cost of operations, itâ s highly reliable airplanes and good customer service to go along with that. So, we [add] all those things up and say [to the customer] â this is the set of value propositions that you are going to be buying intoâ .â
For Harris, gauging the marketâ s readiness and needs comes after some 20 years of selling planes. He was a former US Air Force F-16 pilot who exhibited a natural flair for selling aircraft even while still a fighter jet pilot. â I happened to run into a guy one time who sold airplanes, and I said â hey let me show you my airplaneâ ,â he recounts. â I started showing him the aircraft, and he said â you know what, you could sell airplanes like thatâ .â
Asian century
According to Harris, the bulk of Cessnaâ s aircraft in this region are business jets such as the Citation Sovereign, with space for nine passengers and a range of around 2,800 nautical miles; or the (CitationJet) CJ series in Australia, which are smaller planes with a slightly shorter range.
But whatâ s clear, though, is that new products matching the needs of the businesses in the region would be key to Cessnaâ s expansion in the region. To that end, the company has launched its largest jet yet, the super-mid-sized Longitude, with a range of 4,000 nautical miles, which is able to fly from Singapore to Dubai non-stop. â That will really open up what you have [in terms of business travel] in Asia Pacific,â Harris says. The first deliveries to customers in the US and Europe will be in 2017.
Worldwide, Cessna delivered 689 planes, including 183 of its Citation business jets, and contributed nearly US$3 billion in revenues to the Textron group in 2011. Demand for Cessnaâ s planes has been strong in Indonesia, China and Australia, according to Harris, although he declines to reveal just how many aircraft have been sold in the region. He says that overall, airplane manufacturers saw a 16% growth in sales over the last five years.
Nevertheless, significant opportunities lie ahead. â We look at how the skies will start opening up in China and how it will start developing its aviation sector. That is why we see growth in this area.â
Indeed, Beijing is said to be spending RMB1.5 trillion ($294 billion) to build 10 new airports every year to 2015, which industry observers say will be conducive to the growth of business jet travel in the country. Other aircraft manufacturers such as Bombardier and Gulfstream have already positioned themselves to capitalise on the opportunities on the horizon.
Gulfstream is opening a service centre later this year, in a joint venture with Deer Jet and Grand China Aviation Technik, and is the first business jet maker to offer factory service in China. Meanwhile, Bombardier is collaborating with Chinese state-owned COMAC to develop the C919 narrow-body passenger plane that will compete against Boeing and Airbusâ single-aisle aircraft.
Now, Cessna will work with Chinese airframe maker AVIC, to develop general and business aircraft. Earlier this year, the two companies signed strategic agreements which will see them cooperate on manufacturing and certifying business jets, utility turboprops and piston aircraft in China. â Thatâ s part of a three-pronged effort that we have. Weâ re not only going to try and increase sales but weâ re also leading with customer service. Part of the agreement with them is to develop their customer service aspect of general aviation, because thatâ s our philosophy in selling airplanes,â Harris says. â Weâ re going full steam ahead with our plans here and in China because thatâ s where the growth is going to be.â
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