Chief executive vows Diamond has great chance to shine
Nov. 16, 2011, London, Ont. - Diamond Aircraft has its D-Jet back on a flight path, but it just might be in for a rough ride, says a leading aviation analyst.
November 16, 2011 By The London Free Press
There's little competition remaining in the light jet market for the five-passenger, personal jet to be manufactured in London, since competitors have either gone out of business or their plans are on hold.
That should raise a red flag, as there may not be much of a market for the jet, said Richard Aboulafia, vice-president of analysis for the Teal Group, an aviation consulting firm near Washington, D.C.
"This market segment is largely theoretical, it has not existed before. The idea of a single-engine light jet – there have been concepts, but they have not gone anywhere," said Aboulafia.
"I have always thought the odds are against Diamond. It is very difficult to get into the jet marketplace for newcomers."
Diamond's London plant, which employs about 200 and makes two- and four-seat propeller aircraft, has been sold to Medrar Financial Group out of Dubai, in the United Arab Emirates.
The new owner has pledged to fund the D-Jet program. The Canadian government in the spring turned down a $35-million loan for the company, needed for the D-Jet program, which ultimately forced the sale.
The sale has been well received in the aviation industry, and in London, since Dubai is serious about growing its aerospace sector and finding global markets for the D-Jet.
Peter Maurer, Diamond's chief executive, has countered criticism of the D-Jet's potential, saying the jet will be the first to market and offers a low-cost alternative to larger jets.
"I don't agree that an aircraft like the D-Jet has no market and neither do all the customers who had put their money down," said Maurer of the 200 orders, worth $350 million, the D-Jet has received.
"(Aboulafia) is a very good and respected analyst, but analysts are also sometimes wrong."
Honeywell Aerospace, in its recent business outlook publication, agreed, saying "the emerging personal jet segment has strengthened modestly. This portion of industry demand has been centered on the emergence of very light aircraft priced below $2.5 million."
Over the next 10 years, 750 to 1,250 light jets may be sold, Honeywell's report said.
The D-Jet, which will sell for $1.5 million, will take two years to bring to market and others in that same segment have crashed, figuratively, and never come to market, said Aboulafia.
• Piper hit the market in 2007 with 180 pre-orders of a light jet, but that's now "on holf," said Aboulafia.
• The Eclipse 500 was hit by company bankruptcy but a new owner has surfaced, saying it'll assess whether there's a market for the personal jet.
• The Cirrus Vision is the most direct competition to Diamond's D-Jet, but it is "in limbo," Aboulafia said.
The personal jet segment of the industry is seeing more direct competition from the Cessna Mustang and Embraer Phenom, which sell for more money, but are proven, Aboulafia said.
Still, he praised Diamond, saying the London manufacturer makes "very good planes. But I am not aware of anyone making the leap from propeller to jet."