- 23 Feb 2023
- René Armas Maes
- BizAv Market Insight
Who are the key competitors in today’s Light Jet marketplace? Is there room for additional models to be introduced? And how profitable is the Light Jet market anyway? René Armas Maes explores…
Stepping up from Entry Level Jets, the Light Jet category typically comprises aircraft with smaller cabins that incorporate a lavatory and a compact beverage/snack station. Aircraft within the Light Jet category offer a maximum payload of up to 2,600 pounds, and a range up to 2,165 nautical miles.
For the purpose of this analysis, we have incorporated aircraft typically seating up to ten passengers (excluding pilot seat) and having a Maximum Take-Off Weight (MTOW) between 13,870lbs and 20,330lbs (see Table A, below).
Table A: Light Jet Performance & Specifications Comparison
Between 2018 and 2022 the only OEMs actively manufacturing Light Jets were Embraer (Phenom 300/300E), Textron Aviation (Cessna Citation CJ3+, CJ4 Gen2, and Citation XLS+/XLS+ Gen2), and Pilatus (PC-24).
Table B: Light Jet Shipments (New) 2018-2022)
A look at the General Aviation Manufacturers Association (GAMA) shipment reports between 2018 and 2022 show an average of fewer than 170 Light Jet units being delivered annually (see Table B above). As depicted, the Compound Annual Growth Rate (CAGR) is 2.2%, thanks to the performances of Embraer and Pilatus during this timeframe.
Comparing our field of Light Jets, Chart A shows that the Cessna Citation CJ4 Gen2 offers the lowest variable cost (US$) per hour, per revenue seat mile. That’s because it offers more than 150 additional nautical miles of range compared to other jets in the category.
Chart A: Variable Cost per Seat Mile vs Range
The Pilatus PC-24 comes a close second when considering range capability and variable hourly cost per hour, per revenue seat mile. But that comes at a higher purchase price than the Phenom 300E which is just behind it in third place. The Pilatus PC-24 has the added advantage of a lower balanced field length than the competition.
Although most larger business jets require two pilots, all the jets featured in this field of comparison are single-pilot jets except the Cessna Citation XLS Gen2. In terms of fixed cost, the salaries and related benefits of two pilots required to operate the Cessna XLS Gen2 pushes up its variable cost per hour.
The Citation CJ3+ offers the lowest number of passenger seats in a high-density configuration, and thus trails the competition in this study.
Chart B represents a productivity index for the Light Jets in our analysis. The productivity index multiplies aircraft range (with NBAA reserves, and in a high-density seating configuration), cabin volume, and long-range cruise speed, dividing the result by 1,000,000,000.
Chart B: Light Jet Productivity Index vs Price
The Pilatus PC-24 offers the highest productivity index score of 0.36, followed by the Cessna Citation XLS Gen2, CJ4 Gen2, and the Embraer Phenom 300E.
As per list price (2022 US$), the Cessna Citation CJ3+, CJ4 Gen2 and the Embraer Phenom 300E were priced below US$12m, which will appeal to buyers with more restricted budgets.
However, there are other factors to consider when buying jets, including residual value, service support network, and ability to upsize (if needed) while staying with a favored brand. This latter point favors Cessna and Embraer who both have in-production Mid-Size Jets in their product range.
The Entry Level and Light Jet segments are considered by many OEMs and potential market entrants to be the most vulnerable business jet market with the lowest margins.
Historically they have shown the highest volatility to changing economic conditions and the lowest returns. As a result, many OEMs and potential market entrants consider it to be a risky investment, based on Capex and potential returns.
It is difficult to believe that significant new investment will be made within the Light Jet segment beyond periodic product upgrades from the OEMs already occupying the space. The larger cabin segments are far more lucrative, which was made all the clearer by Bombardier’s moving away from the lower end of the market and focussing on building bigger, more profitable jets.
An interesting question for the future is what Pilatus’ next move might be. With both Cessna (Textron) and Embraer offering step-up options for loyal customers in the Mid-Size arena, could Pilatus be tempted to do the same, particularly with Bombardier recently exiting that market when it ceased production of the Learjet? We’ll explore possible market gaps for such a venture next time in our Mid-Size Jet market analysis… Stay tuned!
Read more articles in this series, including: