In the interest of being avant-guardish, meta and all those things I learned from watching “Community,” I’ve decided to write about the birth of a product. We are beginning to tie together disparate sources of data so that a banker, an aircraft owner, prospective owner, operator, or simply an industry analyst, can see how actual raw data bears out the truth about an airplane: Is it hot or not? Or better yet, how will it fare in 5 or 10 years, given our limited crystal ball toolset?
Which made me think:
Airplanes may have absolute limits, but nothing beats seeing their current relative strengths and how that affects owners, lessors and operators.
Nothing spells relevance better than having your arms around data and being able to talk about it qualitatively once you’ve been through the pain of the quantitative part. (Don’t worry, I’m surrounded by a pit of left brained sharks that keep my intuition honest, and there’s always the data…)
So in the interests of being a little more like present day Iranians, we’ve pulled back the curtain a bit on our secret program.
But the question remains, how do you take all the data (sales, trends, FAA operations) and compile it in such a fashion that it has meaning to those seeking to make decisions about aircraft based on the aggregate of the data?
We took measurable, findable things and then put them in columns next to each other:
- Depreciation related: What is the trend on the type? This can be driven by how the world is feeling, credit markets, corporate earnings and more, but ultimately it also says something about the airplane when compared with its colleagues.
- Population and launch success: How many airframes are out there? This affects parts prices, after market solutions and the general critical mass / ubiquity effect that makes buyers feel better. Or, put another way: “I’m in the hi-fidelity first class traveling set… And I think I need a Lear jet” (Pink Floyd circa 1973) Seems like a joke, but take a look at the success, production run and sheer numbers of Lear 35s built. 676 were made between 1974 and 1993. They ought to also get a staying power award. Anyway, you get the idea – good design, good marketing and bingo, massive market acceptance.
- Carrying capacity: A simplistic mind will love this one. Only because it allows us simple minds to talk shop with the engineers who built these things. Take the payload and divide by the max take off weight (MTOW). If you were to design an airplane, you’d want as little metal or composite weight as possible to be in the air vs. the stuff it is holding up in the air. Design, elegance and all the trappings of doing that better, should come out in this number. Any doubt about this co-efficient? Go back to WWI and see what the payload to weight was like for early designs.
- 3rd Party Affinity: How many aircraft are operated for hire (charter, fractional, etc.) vs. the total population. This simple ratio tells us a host of things, but most importantly that someone, somewhere, with a calculator, put operational fitness for on demand business jet operations ahead of any pure luxury play. Keep in mind, most biz av marketing is around the luxury and specialness (and how few there are that you might be lucky enough to own) but the reality tells us something else – if operators want them, they know they can satisfy your luxury needs and make money, product balance sheet downside and more.
- Efficiency: Specific range is an often neglected, though universally understood number. How many miles per gallon does your car get? That matters to you since at some point the commute becomes silly when your paycheck is erased by the gas you put in the private jet. A big dynamic that runs up against this inefficiency vs. efficiency number are older aircraft – are they fully depreciated and are you getting a ton of limousine category airplane for your dollar? Well, our bet is that you are likely not scoring high relative to the efficiency of its colleagues.
- Cabin comfort co-efficient: How much volume was afforded and how well did the designers use it? A raw calculation that pits volume vs. design – i.e. how much of space allocated is actually useable.
- Life-cycle location: Thank god for people like the Teal Group. If it weren’t for them I’d say all airplanes last forever, since, on paper they do these days, but there are fancier ways to really look at where an airframe, its engine and avionics suite lie on the spectrum of the realistic life span. In its day the Lear 35 was quite something, but as a jet owner or underwriter, you might want to know: “How many years before this old horse starts to stink up the hangar?”