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"The Business Jet market will recover by 2016. The competition’s existing designs cannot meet the Regional Jet market need. They have stretched small cabin business jets into regional jets or re-engineered slow cruise turboprops. The competitive Alliance Aircraft design and price ensures that Alliance’s products will be a sought after alternative." |
World market trends present an unprecedented opportunity for a highly qualified management team to exploit the 8,000 to 10,000 aircraft demand in a burgeoning regional jet market with a new "purpose-built" aircraft. The "Right Time For the Right Company" philosophy presents an excellent opportunity for Alliance Aircraft to produce 150 to 180 regional aircrafts per year.
Overview
Trends in transportation now point to an opportunity for a new regional jet ("RJ") manufacturer to exploit the Regional Jet market. Specifically, there is a need for new aircrafts with 70- to 110-seat regional jets in the next twenty years with an aggregate market value of approximately $190 billion.
world market
The growth in the regional jet market over the last ten years has outpaced all previous projections by participants in this market. Each year, the market continues to exceed the expectations of market analysts. At the present time, the growth is approximately six percent (6%) per year.
To meet this growing demand for regional aircraft and to provide flights from smaller airfields, major airlines have developed strategies for regional airlines that include wholly-owned, franchised or both. These new strategies are helping to alleviate some of the operational constraints now imposed on the airlines.
With major hubs becoming overcrowded due to added security measures post 9/11, the flying public is looking for alternative point-to-point transportation with the same comfort and high level of cabin service and catering they now enjoy on long haul flights. Compounding the growing demand for regional jets from the flying public is the need of the airlines to replace their aging lst generation regional jets as they reach their economic service life of 30,000 hours. The airlines are looking to replace this existing fleet with aircrafts having better propulsion, state of the art avionics and fly-by-wire systems that are, now available.
Alliance Aircraft's market analysis shows a market requirement for 8,000 — 10,000 RJ's (Turbofan or "TF") in the market served by 70, 90 and 110+ seat aircrafts through the year 2030. This projection is supported by engine suppliers as well as published forecasts from Alliance Aircraft's competitors.
To meet this growing demand for regional aircraft and to provide flights from smaller airfields, major airlines have developed strategies for regional airlines that include wholly-owned, franchised or both. These new strategies are helping to alleviate some of the operational constraints now imposed on the airlines.
With major hubs becoming overcrowded due to added security measures post 9/11, the flying public is looking for alternative point-to-point transportation with the same comfort and high level of cabin service and catering they now enjoy on long haul flights. Compounding the growing demand for regional jets from the flying public is the need of the airlines to replace their aging lst generation regional jets as they reach their economic service life of 30,000 hours. The airlines are looking to replace this existing fleet with aircrafts having better propulsion, state of the art avionics and fly-by-wire systems that are, now available.
Alliance Aircraft's market analysis shows a market requirement for 8,000 — 10,000 RJ's (Turbofan or "TF") in the market served by 70, 90 and 110+ seat aircrafts through the year 2030. This projection is supported by engine suppliers as well as published forecasts from Alliance Aircraft's competitors.
Fundamental Changes in the Airline Industry Post 9/11
The catastrophic attack on the World Trade Center resulted in a major reanalysis of U.S. and global air transportation systems. The terrorist's use of the largest U.S. airline and aircraft as weapons of mass destruction caused an immediate change in public perception of flying safety immediately followed by the shutdown of the air traffic system to rebuild the security and control elements. This necessary restructuring of the air transportation environment caused massive impacts on the already struggling airlines, aircraft design and other infrastructure systems. This attack accelerated the U.S. economic downturn with major impact to the airlines.
Post 9/11, the aircraft market has seen, and will continue to see, major changes. More than twenty percent (20%) of the airline mainline fleet will be permanently parked including: DC-9s, MD-80s, B737-100s, B737-200s, and F100s. The routes previously served by these aircrafts will be given to Us or go unserved. Fortress hubs will become unmanageable as homeland security increases resulting in a shifting to point-to-point service with hub over-flight. Airlines are now seizing this opportunity to rationalize
their fleets and increase the percentage of RJs in their total fleet. Airlines will fully integrate RJs into their mainline domestic schedule accelerating the orders of new generation RJs in the next ten years.
Post 9/11, the business passenger has been affected as well, with many not returning to the airlines for reasons of safety and service, such as long lines and two hour pre-arrival times. These business passengers are moving to chartered jets and fractional ownership programs. These fractional ownership programs have in fact become Fractional Air Carriers ("FAC"). Quick on the heels of Avolar, and Delta AirElite, United and Delta have entered this FAC market. The successful aircraft design for the 21st Century post 9/11 must address both the RJ and FAC market. In fact, Alliance Aircraft believes it is currently the only producer able to serve both markets with the same SL family.
Post 9/11, the aircraft market has seen, and will continue to see, major changes. More than twenty percent (20%) of the airline mainline fleet will be permanently parked including: DC-9s, MD-80s, B737-100s, B737-200s, and F100s. The routes previously served by these aircrafts will be given to Us or go unserved. Fortress hubs will become unmanageable as homeland security increases resulting in a shifting to point-to-point service with hub over-flight. Airlines are now seizing this opportunity to rationalize
their fleets and increase the percentage of RJs in their total fleet. Airlines will fully integrate RJs into their mainline domestic schedule accelerating the orders of new generation RJs in the next ten years.
Post 9/11, the business passenger has been affected as well, with many not returning to the airlines for reasons of safety and service, such as long lines and two hour pre-arrival times. These business passengers are moving to chartered jets and fractional ownership programs. These fractional ownership programs have in fact become Fractional Air Carriers ("FAC"). Quick on the heels of Avolar, and Delta AirElite, United and Delta have entered this FAC market. The successful aircraft design for the 21st Century post 9/11 must address both the RJ and FAC market. In fact, Alliance Aircraft believes it is currently the only producer able to serve both markets with the same SL family.
Factors Influencing Market Growth
Although market research shows that the hub concept has served the airline industry well in the past, congestion of the airway has created a proliferation of satellite airports which act as feeders. Attempts to use existing passenger jets to serve hub-to-satellite and satellite-to-satellite traffic are fraught with inefficiencies including extraordinarily high fuel usage in the current 70 to 110 passenger aircrafts. Existing aircrafts burn as much as 10,000 pounds of fuel per hour to serve this market, in comparison to the 2,800 pounds of fuel per hour less projected for the Alliance Aircraft SL 200/300 designs. Factors influencing market growth include the following:
- The Regional Jet Coalition, which represent organizations that have determined that their businesses cannot remain competitive unless they create regional jet service, has identified certain hub-to-city routes that could be served by regional jets·
- Continued growth in regional airlines, which, at approximately six percent (6%) per year, is greater than the growth of the major carriers
- Major airlines have developed strategies which include wholly-owned, franchised, or both, regional airlines
- Free flight, use of smaller airfields, operational constraints
- Replacement of first generation 70 to 90-seat regional jets
- Economic service life may be 30,000 hours for current generation regional jets
- Better propulsion, avionics and systems technology are all now available for inclusion in new aircraft
- Demand for airplanes offering passengers more comfort
- Higher level of cabin service and catering is anticipated Fleet size will double to 14,000 aircrafts
- Average size up from 40+ to 60+ seats
- Current load factors: 60% U.S. and 70% Europe
- Load factors on the same routes historically increase 20% to 30% when new jets are introduced
