Eclipse Aviation Corporation

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Eclipse Aviation Corporation

FIRST FLIGHT IN 2002

CERTIFICATION IN 2006

TECH BACKGROUND

Eclipse Aviation Corporation was formed in 1998 by Vern Raburn. Raburn had a degree in industrial engineering and more than two dozen years of experience in the information technology industry; he had led Microsoft Corporation’s first consumer products efforts, and later was CEO of the Symantec virus protection software company and the pen-based computing business Slate.

Raburn also knew flying; he had accumulated more than 5,000 hours in his pilot’s logbook, some of them while flying a business jet as head of the investment company of Microsoft cofounder Paul Allen. It was during this time that he conceived an idea for an economical business jet powered by a new class of small engines under development at Williams International.

Such a craft would be able to spare owners the frustration of traveling on major airlines through congested hubs. Instead, the personal jets could be piloted among thousands of secondary airports. If he could keep the costs down, he could reach a vast, untapped market of middle managers dissatisfied with commercial aviation but unwilling or unable to spend the $4 million or so to buy a traditional business jet.

Other savvy businesspeople agreed with the concept. One of the company’s angel investors was Bill Gates, Raburn’s best man at his wedding to another early Microsoft employee, Dottie Hall (she also went to work at Eclipse). Other influential backers included company Chairman Harold A. Poling, former CEO of the Ford Motor Company.

Eclipse Aviation was incorporated in Delaware on December 2, 1998. It set up a temporary base in Scottsdale, Arizona, but after an extensive search settled on a new home at Albuquerque’s Double Eagle II Airport. New Mexico, a sparsely populated, rural state with few large companies, invested $15 million in the enterprise.

Within a couple of years, Eclipse had lined up 160 customers, each paying $155,000 deposits. This required a large leap of faith; the Eclipse was not only yet to achieve certification, but the engine was unproven. This turned out to be a classic risk/reward scenario: some of the original buyers were able to sell their deposits, and positions in the order book, for up to three times their original investment several years later, before the plane even entered production.

In 2000 the planned price was $837,500, or about one-quarter that of the most inexpensive existing business jets. Eclipse raised its asking price to $1.5 million by 2006. Deposits were not Eclipse’s only source of funds. It raised more than $600 million from private investors in its first several years.

A parallel industry was evolving alongside the new VLJs in development, even before they had taken to the air. This was air taxis; a number of operators were planning to use VLJs to shuttle corporate travelers point-to-point for a price comparable with full-fare airline flights. Some of these ventures were quite speculative. In September 2001 Florida’s Nimbus Group Inc., once an Internet auction firm, ordered 1,000 of Eclipse’s planes for use in a massive air taxi service. However, this deal collapsed within months as Nimbus’s share price fell.

The company originally aimed to deliver its first aircraft in 2004, but this date would be pushed back due to difficulties encountered in the daunting process of aircraft design. Since World War II, only a couple of new manufacturers (Lear and Robinson Helicopter) had successfully entered the U.S. market for factory-built aircraft (as opposed to experimental or kit planes).

FLYING IN THE FACE OF CONVENTION

By starting with the proverbial blank sheet, Eclipse was able to incorporate the latest technologies into its aircraft, such as just-in-time manufacturing and electronic instruments. Digital flight and engine controls reduced the complexity associated with flying jets. In addition, the Eclipse 500 would be much less expensive to operate than even its turboprop-driven rivals.

The manufacturing was as revolutionary as the aircraft itself. According to Industrial Engineer, the company looked for inspiration to Lexus automobiles, Dell computers, even Carrier air conditioners rather than the staid, reactionary assembly lines of the OEM aircraft industry. In the process, the company introduced new techniques to aviation, such as friction stir welding, which replaced the rivets that had been holding metal planes together since before World War II.

Eclipse aimed to outdo the traditional manufacturers in customer service as well. In 2005 it announced a program called JetComplete, which offered aircraft access at a fixed rate per flight hour, including maintenance (fuel and insurance were extra). Other customer amenities included Iridium satellite communications as a standard feature and Avio flight planning software. The company had begun to establish service centers within an hour’s flight of nearly all its customers in the mainland United States. It signed up ETIRC Aviation Europe to handle sales and service in Turkey and the former Soviet Union.

FIRST FLIGHT IN 2002

Creating from scratch was a risky business, however, as illustrated in the company’s experience with the 500’s engine. The Eclipse 500 made its first test flight on August 26, 2002. However, problems soon emerged with the engine originally chosen for the design, leaving the company with what Raburn called “a million-dollar glider.” Eclipse found Williams International’s lightweight EJ-22 jet to be inadequate in power and reliability.

COMPANY PERSPECTIVES

We knew it was a tall order. When we set out to create the Eclipse 500 jet aircraft, we weren’t taking advantage of an existing opportunity, but creating our own. But together with some of the best thinkers, doers, and design engineers in the jet aviation industry, and quite a few of the smartest people we know outside the industry, that’s exactly what we did. Throughout the creation and refinement of the Eclipse 500, we’ve approached every goal with the determination to always take things to the next, higher level. Exactly where the world’s first very light jet should be.

This was a huge setback; in fact, the Williams engine was what had originally inspired the Eclipse concept. The plane’s design had relied on getting 770 pounds of thrust out of the 85-pound EJ-22, which had originally been developed for cruise missiles.

In early 2003, Pratt & Whitney Canada agreed to produce a replacement engine. Though based on its PW600 series, this required an investment of at least $10 million on Pratt & Whitney’s part. Lining up such an established name as the venerable engine maker gave a huge boost of credibility to a company that had yet to certify a plane, Raburn told a local business journal. However, the change of plans delayed not just the plane’s entry into full scale production; the building of a $75 million manufacturing plant at Double Eagle II was put on hold at the same time.

CERTIFICATION IN 2006

The Federal Aviation Administration (FAA) issued type certification for the Eclipse 500 in September 2006. This was a major achievement, signifying the agency found it to be a safe aircraft. Certification of the company’s production line, allowing Eclipse to manufacture and deliver planes without having each one individually inspected, was the next step.

A couple of minor mechanical issues were discovered in what Raburn called “the most extensive testing process in the history of general aviation,” but these were soon resolved. Eclipse officially delivered its first aircraft on January 4, 2007. The company had big plans, and by early 2007 had ramped up its employment to 1,000 workers. It was aiming to eventually have up to 2,000 employees producing 1,000 planes per year.

By early 2007, Eclipse had orders for 2,600 aircraft. It had started adding buildings to its Double Eagle II campus, with plans to start on a new assembly line after three years. Eclipse’s economic impact was not limited to New Mexico, however. In 2006 the company made an initial $10 million order with wiring harness manufacturer LaBarge Inc., which had plants in Arkansas and Missouri. Other vendors included Fuji Heavy Industries, which made the wings, and Mecaer Group, supplier of landing gear.

As Eclipse’s first jet cleared more of the obstacles leading to full-scale production, it became the focus of much economic activity. A small hub of aviation-related industries began to gather in New Mexico, prompting talk of a regional cluster to perhaps one day rival those in Kansas (Cessna’s home base) and Florida.

A consulting firm hired by Eclipse predicted the total market for VLJs to be worth $6.5 billion a year by 2017. The FAA expected roughly 5,000 VLJs to be flying by 2016, most of them as air taxis.

Frederick C. Ingram

PRINCIPAL COMPETITORS

Adam Aircraft, Inc.; Cessna Aircraft Company; Piper Aircraft Inc.

KEY DATES

1998:: Vern Raburn forms company to produce a very light jet, the Eclipse 500.
2000:: Headquarters are established in Albuquerque, New Mexico; preliminary jet design is completed.
2002:: The Eclipse 500 begins test flights.
2003:: Pratt & Whitney agrees to develop customized engine for the Eclipse 500.
2006:: Eclipse 500 receives FAA type certification.
2007:: First aircraft is delivered to a customer.