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Small Jets Seen As Changing Business Travel, Challenging Industry

Posted on: Thursday, 26 January 2006, 06:00 CST

DALLAS _ A new generation of small jets is on the horizon, and they're expected to shake up how many business travelers fly.

Manufacturers say because these ultralight aircraft are faster and cheaper than traditional business jets, many corporate fliers could conclude they're more cost-effective than scheduled commercial service.

On Jan. 11, Adam Aircraft, a manufacturer in Englewood, Colo., showed off its new A700 model to potential buyers at Dallas Love Field. Like its ultra-light peers, the A700 is still awaiting final certification from the federal government.

But as the approval process reaches its last stretch, customers were eager to look over the pre-production model.

Southlake, Texas, resident Mike Ellis placed his order for an A700 a year and a half ago. For him, switching from his current twin-engine Cessna 310 to an A700 means traveling twice as fast for about the same cost.

"It's a more efficient use of time," said Ellis, an airplane broker who often starts his day in his Tulsa, Okla., office and ends it in Fort Worth, Texas.

Ellis' five-person brokerage uses a mix of its own corporate jet and commercial airlines to do business around the United States.

But for short-haul trips, using commercial airlines simply takes too long, factoring in ground travel to bigger airports, security check-in procedures and the time for loading and unloading a big jet.

"If you look at the cost of flying three or four people at the last minute, it's a lot more efficient than sending them on a commercial airline," he said.

Demand for business jets has been strong for several years.

More than 1,900 business jets are slated for order this year, exceeding a record set in 2001, according to a recent forecast by Honeywell Aerospace, a maker of aircraft components.

And growth is expected to remain strong. Some 9,900 new corporate business jets _ accounting for some $156 billion in sales _ are expected to be delivered between 2005 and 2015.

Honeywell expects another 4,500 to 5,500 ultra-light jets to be delivered by 2015, not including potential demand from air taxi or fractional jet businesses.

Adam Aircraft is one of a handful of companies working to get their ultra-light jets _ also called very light jets _ past their certification hurdles.

So far, none of the ultra-light jets have been delivered to customers.

Adam chief executive George F. (Rick) Adam said demand for ultra-light jets should be strong, once customers compare them to what is currently available.

The A700 starts at $2.25 million, about half the price of a new Cessna Citation CJ1+, one of the lowest-price jets available. Ultra-light jets being sold by competitors are similar in price to the A700.

"We're offering the same functionality at half the price," Adam said.

Industry analyst Robert W. Mann cautioned the outlook may not be so rosy.

Since the segment hasn't operated in market conditions, there are still a lot of unknowns about what the total cost to operate will be, Mann said.

"Testing is going well, but there are all kinds of things that could crop up," he said.

Mann pointed to growing congestion at major airports, which make it less cost effective for business jets to operate.

And start-ups like Adam and Eclipse Aviation in Albuquerque, N.M., face an uphill battle against industry veterans.

"Cessna already has a dealer and service network nationwide," Mann said. "Eclipse and Adam will have to create that."

Adam said that he expects his A700 model to pass its regulatory tests in time to start deliveries at the end of this year.

Ellis doesn't expect to get his A700 until June 2007.

Adam Aircraft, which has been working on the project since 1998, already has taken some 300 orders worth $650 million for the jets. Eighty of them have been ordered by Pogo, an air taxi concept being launched by former American Airlines chairman Robert Crandall.

Adam has some North Texas ties. Hunt Investments Inc. of Dallas is an investor in the company and holds two board seats. Also on the board is Bruce Leadbetter, co-founder of the defunct Legend Airlines and former head of Dalfort Aviation.

Adam isn't alone in the race to market.

Cessna Aircraft Co. of Wichita, Kan. _ the world's largest general aviation aircraft manufacturer _ and Eclipse are also on pace to gain final certification for their own ultra-light jets this year.

Adam said jet owners like Ellis represent a relatively small segment of jet customers. Most users of ultra-light jets would be fractional owners or those operating air taxi services.

"There's tremendous pent up demand to get somewhere without getting on a commercial aircraft," he said.

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(c) 2006, The Dallas Morning News.

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Source: The Dallas Morning News

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