‘Embraer Executive Jets offer outstanding performance’

SP’s ShowNews (SP’s): Could you briefly outline the history and track record of Embraer’s Executive Jet Division as also the models currently operational and under development?

Jose Eduardo Costas (Costas): Embraer entered the business aviation market with the aim of becoming a major player in the segment by 2015 through innovative and differentiating product and service solutions, with added value to customers and shareholders.

Since its entry in the executive aviation market, Embraer has introduced a range of aircraft that span from entry level to ultra-large jets, each one offering more exquisite luxury with unprecedented space and ergonomically designed interiors. Positioned at the top of their categories, Embraer Executive Jets offer ultimate comfort, outstanding performance and low operational cost.

Indeed, with a solid background in designing and developing aircraft for commercial use-what we like to call our ’Embraer DNA’-we’ve delivered more than 500 business jets in the first 10 years since entering the market.

In short, the company has:

• Progressively expanded its product offerings-with seven jets on offer, five of which are in production today and two more expected to come onstream in the next two years. Its portfolio is one of the most robust, with a jet for almost every segment in the market today.
• Steadily increased its market share by deliveries end 2010, almost one in every five jets delivered was an Embraer executive jet, with the Phenom 100 the most delivered jet type in the entire industry, with 100 units delivered.

Closer home, India has also embraced Embraer’s Executive Jets; today a deed, a third of the 40 Embraer Executive Jets in service in Asia-Pacific are based in India.

India is also home to the very first Lineage 1000 ultra-large jet to be placed in service in the region (Asia-Pacific) and where the only entry-level jets in the country are Embraer jets.

SP’s: What is the extent of penetration by the Executive Jet Division and market share in the Asia-Pacific region?

Costas: Since the first delivery of an Embraer Executive Jet in Asia-Pacific in 2004, there are more than 40 Embraer Executive Jets in service in the region; and a third of these are based in India.

Looking forward, with a growing number of Embraer Executive Jets in the country, coupled with the introduction of the first Lineage 1000 ultralarge, sublime jet in India, as well as the only type of aircraft in the entrylevel let segment in the country (six Phenom 100 jets), plus orders for 13 Legacy 650 as well as three Lineage 1000 jets from customers in China, these two countries are only the tip of the iceberg and reflect the confidence in appetite and willingness by customers and prospects in Asia-Pacific, for Executive Jets.

According to CAPA, there are 132 business jets registered in India, of which the organisation expects 127 to be active in service. Compared to this number, Embraer’s Executive Jets comprise over 10 per cent of the fleet in service in India; the first aircraft of which was only delivered in 2005-only six years ago.

SP’s: How do you see the business aviation market developing in India over the next 15 to 20 years and who are the major players in this region?

Costas: Our expectations are robust in terms of sales and deliveries, and naturally we aim to play a large part in that equation.

However, some things remain in need of enhancement, such as the infrastructure supporting the development of the industry e.g. FBO’s airport facilities, and even some of the processes relating to flight permits, etc, as well as greater appreciation and understanding by prospects of the utility of the jets, i.e. they are not mere toys but tools, veritable time machines that can contribute to the productivity of their businesses, and ultimately, in their lives.

Nevertheless, we are confident that this will get better as more and more jets are used and enter service.

As regulation and infrastructure develops/improves, we will see the charter market gain more momentum in India. Today, with few exceptions, we see large corporations and HNWI acquiring private jets for their own use.

SP’s: In your perception, does the Asia-Pacific region offer a large enough market for your company to look at India as a strategic production, marketing and MRO hub for executive jets?

Costas: As the region with some of the fastest growing economies as well as the growing maturity of prospects and jet users, Asia Pacific is definitely a major driver for the executive jet industry.

According to the latest forecast by Embraer, Asia Pacific should account for between 1,363-1,690 or $39.86-$48 billion worth of deliveries of business jets in the next 20 years.

It would stand to reason that the industry with this much potential would naturally ‘pull’ or attract the development of ancillary businesses such as MRO activities, refinement or introduction of business models, such as charter companies’ like Invision Air, which is starting an executive jet charter business in the country, and possibly even the production of parts the IF demand and the business case for it is sound.

SP’s: What is the level of demand for the Phenom 100 very light jet (VLJ) in the Indian market? Do you visualise serious competition from new executive jets in this category likely to emerge on the scene in the next few years?

Costas: In terms of entry-level jets, Embraer practically created this segment of the market in India, where we have six Phenom 100’s in service today.

We maintain a considerable order book for our Phenom jets, which we have begun delivery and we are also continually marketing the product and see keen interest in our product from prospects for our light jets, both the Phenom 100 and Phenom 300 in India

As for competition, there will always be competition but so long as we continue to innovate and create products that exceed the needs of the market, we will have the best product for the market.

We already have a robust line of products and look forward to the Legacy 450 and Legacy 600 jets entering service to underscore our commitment and ambition to be one of the largest players in the business jet industry.

SP’s: What is the level of demand for executive jets in China and whether there are any plans for production of such aircraft at your existing facility in China?

Costas: According to Embraer’s latest forecast for the region, between 1,363- 1,690 or $39.86-$48 billion worth of deliveries of business jets to Asia Pacific in the next 20 years, it is expected that China will account for 522-635, or $17.4 billion-$21 billion of this amount. We therefore expect demand in China to be quite significant.

Regarding plans to produce our Executive Jets in China, Embraer announced in 2010 that together with partner Avic, we are moving forward with the industrial planning for the assembly of Legacy 600/650 jets in China.