It's no secret that large cabin jets have become the mainstay of the global executive jet market. In 2013, buyers took deliveries of a record 280 large jets compared with 256 in 2008 and 237 in 2012. A recent survey by Honeywell Aviation forecasts that between now and 2024, business jet buyers will spend 75% of their budget on large jets. Dassault Aviation (DUAVF +7.55%), partly owned by Airbus (46.3%), builds large and medium sized business jets and has plenty to gain from the rising demand for top-of-the-range aircraft. General Dynamics' (GD 0.47%) aviation arm Gulfstream has taken the industry by storm with its new G650 large jet and increased its revenue by 81% in 2013. What remains to be seen is whether Dassault too can pull off a similar feat. Here's the lowdown.
Dassault Aviation's Falcon 7X business jet. Source: Dassault Aviation
The Falcons
Dassault's current portfolio includes the Falcon 7X, Falcon 900LX, and Falcon 2000 Series.
Falcon 7X: The company unveiled this jet in the 2005 Paris Air Show, and since then it's been its best-selling model. The jet entered service in 2007 and according to The General Aviation Manufacturers Association (GAMA), a total of 211 jets have been delivered till the end of 2013. Priced at $50 million, the 7X offers a maximum operating speed of Mach 0.90 and a range of 5,950 nautical miles (nm). The aircraft can cruise along smoothly at an altitude of 51,000 feet and can accommodate a maximum of 16 passengers. Falcon 900LX: The 900LX was introduced in 2008 as an upgrade to the aging Falcon 900EX and entered service in 2010. It offers a range of 4,750 nm, can reach 51,000 feet, has a speed of Mach 0.87, and can carry 19 passengers. The plane comes for $39 million, and through 2013, a total of 33 units have been delivered.
Falcon 2000 series: This is made up of three jets -- Falcon 2000LX, Falcon 2000LXS and Falcon 2000S. The 2000S is a new shorter range model that the company started delivering in 2013. The F2000LX entered service in 2009 and a total of 103 units have been delivered. Dassault is replacing the LX model with a new Falcon LXS version that according to AINonline, "combines the range and amenities of the Falcon 2000LX with the short field capabilities of the Falcon 2000S." The LX and LXS offer a range of 4,000 nm and are priced at $33 million, while the 2000S has a range of 3,350 nm and comes for $27.1 million.
Face-off with Gulfstream
Dassault and Gulfstream have very similar offerings and price ranges, but in terms of sales, the French aircraft maker has mostly trailed its U.S. counterpart in the last 10 years.
The rift widened significantly in 2013, following Gulfstream G650's entry into service in December 2012. The $64.5-million jet caught the fancy of the world's rich and famous, so much so that they were ready to wait for four long years to own this coveted piece. The G650 offers a range of 7,000 nm, maximum speed of Mach 0.925, is powered by Rolls-Royce twin engines, and can fly at a maximum altitude of 51,000 feet. In 2013, Gulfstream delivered 42 G650s, which drove a 53% increase in the company's total shipment volumes to 144 units. Though Dassault delivered five more Falcon 7Xs in 2013 compared with 2012, increasing deliveries of the jet to 43 units, sales of its new planes such as the Falcon 2000LXS and Falcon 2000S failed to gain traction. The company's total shipments were nearly half of Gulfstream's at 77.
In the first half of 2014, Gulfstream's sales momentum has continued with 77 total deliveries, while Dassault has delivered only 25 planes. However, it's still sticking to its annual forecast of delivering 70 jets.
Business aviation sales and average business jet delivery price. Source: GAMA press releases, chart by author.
How Dassault plans to bridge the gap
Dassault recently announced the launch of two more planes in order to capitalize on the demand for large business jets and take on Gulfstream and other rivals.
The large-cabin ultra-long range Falcon 8X is going to be the company's new flagship product, which will compete with the G650 and its upgraded version G650ER. The 8X will feature the longest cabin space in any Falcon aircraft. Dassault has improved the jet's wing design, which will make the model 35% more fuel efficient than any other model in the ultra-long range segment. Estimated to carry a sticker price of $55 million, the 8X will have a range of 6,450 nm that can be stretched to 7,400 nm, speed of Mach 0.90, and a maximum flight altitude of 51,000 feet. The jet is expected to enter service by the end of 2016.
Dassault's next weapon is the super-midsized Falcon 5X, which according to an Aviation Week report, "will have a cabin cross section that's slightly larger than that of Gulfstream's G650 uber-jet, but it is considerably shorter." Priced at $45 million, it will offer a range of 5,200 nm and MMO of Mach 0.90. Dassault claims that the 5X, which enters service in first half of 2017, will be 35% more fuel efficient than the G650.
Dassault Aviation's Falcon 8X, source: Dassault Aviation
Foolish takeaway
As demand for large jets continues to rise, Dassault is vying for a bigger market share. Gulfstream may have moved ahead with the G650/ER and other offerings, but Dassault is trying to bridge the gap with its fleet of brand new planes. The Falcons make good value proposition in terms of features, fuel savings, and cabin comfort, and could find a good market among the elites.
