Purchasing a New Aircraft from Dassault Falcon Jet

Tony Kioussis (00:33):

Welcome to another Asset Insight podcast, covering the aircraft ownership life cycle. I am Tony Kioussis, President of Asset Insight, and your host. Starting with the Mystere 20 in the 1960s during the early days of business aviation, Dassault has delivered nearly 2,700 Falcons to date. The company’s present range of seven business jets, able to fly from 3,350 nautical miles to 7,500 nautical miles allows the manufacturer to address a wide range of mission and travel requirements.

Tony Kioussis (01:09):

For today’s podcast, we sat with Paul Floreck, Vice President Sales Dassault Falcon Jet. Paul joined Dassault 25 years ago as a sales engineer in the marketing services department following his 13 years experience as an engineer in the military aerospace industry. Since joining Dassault Falcon Jet sales team in 1998 he has held several positions, and today leads the team focused on selling Falcons in North America based out of Dassault Falcon Jets headquarters at the Teterboro Airport, which is their center for sales, marketing, and customer service dedicated to Falcon owners and operators in the Western hemisphere.

Tony Kioussis (01:49):

Since most of us will never experience the acquisition of a new aircraft, we ask Paul to describe what makes the purchase of a brand new aircraft from the OEM a unique experience.

Paul Floreck (02:01):

Good morning, Tony. And thank you first of all for having me, it’s a privilege. You have a great podcast series here. I guess to answer your first question, I’ll ask, who doesn’t like to purchase something shiny and new from the factory, especially when it comes to something like a car or boat and airplanes? Some business jets are really no different. There are many buyers out there who are willing to purchase pre-owned aircraft, but thankfully there are many out there that prefer brand new business jets, and we’re here for them, of course, to see them through the process.

Paul Floreck (02:33):

One of the primary advantages of buying new, of course is that you can spec an aircraft to your tastes. So we’re private individual, they’re business aircraft, where they own one or more often they’re most prized possessions. They use them for business. They use them for personal travel. The way the aircraft are equipped. These are the folks that tend to customize a little bit more and make the interiors to their tastes and often bring designers in to help et cetera. So you have that advantage. You can do that with pre-owned aircraft, of course, but with the manufacturer, you can do a few things more and we can assist, I think, better through the process.

Paul Floreck (03:11):

For corporations, of course, similar, but those are typically flying offices and it’s important that everything works well, that the latest technologies are available in terms of communications and onboard equipment. So the latest out of the box technology is one advantage that we have we’re able to offer and things are best integrated during production. It’s possible the retrofit, many companies do, but having something integrated into the aircraft during the production process minimizes the risks that things won’t work and improves the chance that they will work well, designed as part of the build of the airplane. And so that’s the motivation there as well.

Paul Floreck (03:50):

There’s also guidance from our teams. We have a number of teams that are involved from the very beginning. Of course, the sales team is important to guide a customer through the learning experience. If they’re not familiar with us as an OEM, our sales teams will be the frontline and introduce them to the company and make sure that they understand the product that we offer and the product that we offer works for them. Of course, they’re good competitors out there as well. And so we paint our products in the best light, and it’s important that anybody that buys such an expensive asset knows what they’re getting into.

Paul Floreck (04:24):

We have a marketing services team. These folks support the sales process directly, they provide information regarding technical capabilities. They provide information regarding financial life cycle costs, things that yourself are deeply involved with as part of your company. There’s the spec and design department. This is kind of where the rubber hits the road. Our corporation France build new airplanes, factory fresh, and those come over to the US with no interior, no paint. And we have a separate groups working together, one in Europe, in France, and one here in the United States. And depending on where you are, which hemisphere you are, you work one of those teams and they’ll help you design the interior of your airplane, including everything from onboard electronic equipment to cabin floor plan to styling materials used in the air soft goods to customize the aircraft. And that goes right to the foam in the seats, how dense the foams are, how comfortable the seats are, we have a seat check. These are the folks that really get directly involved with the customers and it’s a very fun process. So you have the guidance of our team there, of course and nobody has built more Falcons than we have, of course, we know that process very well.

Paul Floreck (05:40):

Once the customer or a prospect they’ve decided to go ahead, we have a contracts group that we work directly with in negotiating a contract, making sure the terms are satisfactory to the buyer and of course to us, and those folks will stay as part of that process, the purchase process, right through the time of closing. And they’re responsible really for making sure that we stick with a covenant of our contracts. The contracts team will not only help them negotiate the contract and make sure T’s are crossed and the I’s are dotted along with our legal folks, but make sure that all the obligations are met along the way from the time of signing to the time of delivery. So that’s very important as well.

Paul Floreck (06:20):

We have a group in Little Rock, we call them our customer completion administrators. These are the folks that they actually represent the contracts team in Teterboro, but they’re located in Little Rock and they really represent the customer’s interests during the production process. So these are the folks that our customers will sit with and visit with during completion process. And they will make sure, working with production, and of course, knowing the facility that things are going well. They will accommodate our customers in Little Rock to make sure that the process is going smoothly. They will interface with production where things need to be modified. And just to note, as well, I’ve mentioned Little Rock, a few times, Little Rock is Dassault’s location for completing all aircraft being delivered worldwide. So we’re similar to many of our competitors as an OEM is that we have major completion facility and ours happens to be in Little Rock, Arkansas.

Paul Floreck (07:14):

So the customer completion folks are there to assist the customers during that process. We encourage our customers to come visit the facility as often as they like during the completion process. If there are issues, having them there allows us to catch them early if something’s not quite right, or if they want to change, that’s a big deal. So again, that’s kind of a benefit of working with an OEM.

Paul Floreck (07:37):

We also encourage folks to visit our production facilities in France, both France and Little Rock, of course. Customers also have access to vendors through our facility during the completion. And of course we have a huge customer service organizations. And that early process is the time for introduction of our customers, to the customer service group. These are the folks once the airplane flies over the fence after delivery, that will be there to support them regardless of what happens. And it’s important that those relationships are established early, that we get to know the folks that are our customers, that they get to know us. They get to know how the resources work, how the company works. So we have folks based right there during the process of completion to make sure that those relationships are established to get things off on a good foot.

Paul Floreck (08:28):

Of course also purchasing new, there are programs available. We have tip to tail maintenance programs that we offer. Those can be purchased for pre-owned airplanes as well, but it’s always a little better to do that right from the start. When you’re purchasing a new airplane, the rates are better, of course. We also offer our customers across the board, but more so new customers, new aircraft buyers, a little bit more voice of the customer opportunity. We have an operator advisory board made up of key operators from around the world. These are typically their maintenance or aviation director types, and they guide us through many different facets of our business. We get together with them at least twice a year. And then there are subcommittees that meet more regularly than that, either online or personally during normal times. And these folks provide us input for future products and for improving the products we’re making today. So new buyers typically have a little more voice with us, and that helps us with future products and in strengthening our relationships with the folks that are buying and operating airplanes today.

Tony Kioussis (09:31):

Well, it definitely covers the range of capabilities of the manufacturer and fascinating to listen to how many capabilities are available to the buyer. Let’s go into a little bit of more detail in the aircraft acquisition arena itself. Describe the process that a buyer can expect between the time they first make contact with the OEM through the delivery of their aircraft?

Paul Floreck (09:57):

We have folks coming to us at various levels of experience with owning a business aircraft. Of course, our products are kind of at the upper end market. So it will depend of course, on where they are in that sort of range of maturity and operating business aircraft. I’ll use the example of a customer, either stepping up to a Falcon Jet, maybe from a smaller airplane or completely new in owning and operating a jet. You have buyers that may have chartered and have had some fraction shares in the past, but they’ve never owned a jet and they come to us at different parts of our product lines. Sometimes you are amazed at how some folks go from never owning a jet to owning some of the biggest ones. So that’s clearly a big discovery/learning experience these folks need to go through and we’re here to help them with that. It’s not just purchasing the jet of course, but it’s the operations and need to get their arms around not only the acquisition costs, but the cost of operating the airplane.

Paul Floreck (10:52):

We don’t get into advice on legal or other things, that’s up to them, but we do try to direct them to the folks that can assist with that. That may be to a management company, that may be to a financing organization, that may be to a consultant to assist with the acquisition process. So we obviously understand the players and the influencers in business and those that can assist our buyers. We’ve got great friends in the industry. It’s a great industry to work together with folks like yourself. Of course, learning what the aircraft can do, that’s that’s the product we provide. So how will it serve their missions? Does it have the right range? Is it’s a floor plan they like, is it large enough to carry the number of passengers they want? Do we offer the equipment that they may need for communications or rest or entertainment, wherever they’re going to use the airplane. So we provide them sort of the gamut of what our products will offer.

Paul Floreck (11:45):

Of course, they need to learn how our jets may be better than the competitors, fortunate to sell Falcons, because we have a lot of great selling points. Then of course, as I mentioned before, they need to understand the long-term ownership experience and how they’ll be supported by our company. So, and again, that applies to any OEM. So what’s our service center network look like, what sort of folks do we have in the field to assist with their operating group, their pilots, their maintenance folks, should they do that on their own or even working with management companies. So they have to understand what our service is like, where our spares are located.

Paul Floreck (12:23):

For the jets that we sell, we have global operating capabilities. So we need to have spare parts distributed around the world. It’s important that our customers know how we do that, how we approach it, and to make sure that they’re confident that if anything goes wrong, these are big machines. Things can go wrong, that they have parts nearby and folks that will assist in making sure that their aircraft are unavailable at the moment that we make them available as quickly as possible. So that’s part of the process as well.

Paul Floreck (12:50):

Then, not necessarily in the same order, but once they’ve decided to purchase a jet from us, we typically will reserve an aircraft in our production schedule. And that typically is a deposit of a half million or a million dollars. We will negotiate a contract. And once the contract is executed, as I mentioned earlier, we have a covenant, we have certain obligations to provide the aircraft as the specification dictates. And I talked a little bit about that spec process before. So that’s up to us and to make sure the aircraft is delivered on time and squawk free, which is always our goal. And of course, we need to make sure that we’re communicating well with the customer to ensure that things are going well for them. And of course, if there were any issues that come up during production, sometimes things happen, maybe slight delays or other things. So that process continues as well.

Paul Floreck (13:44):

I mentioned the spec process earlier, choosing the materials, the paint schemes. We offer renderings. We have some incredible computerated design techniques and technologies. We can show a customer what the interior of his airplane is going to look like well before we would start building it with great accuracy, photo realistic renderings, and we can change those. We bring customers into our design center and walk them through their cabins. So their aircraft in 3D, applying whichever materials either recommend or they’ve selected, show them, of course, how all of the equipment on board will work. The details of the cabinetry, of the seats, of the floor plan, just kind of what their experience on board will be. Again, well before the aircraft is built. So that’s a pretty neat capability.

Paul Floreck (14:31):

It takes about two years. So once an aircraft has begun being assembled to [inaudible 00:14:36] ready for ferring to our completion facility, there are some key milestones during that process, such as when the wing has made it to the fuselage, the wing mating, that’s kind of considered that the birth of the airplane. There’s also of course, the engine mounting. So when the aircraft together, we love to have people over to see how that process is managed in France and how it occurs. Sometimes folks like to take a Sharpie sign inside the fuselage of the aircraft so they know their signatures in there when they finally have the airplane. That’s always fun. And as a French company, our aircraft are assembled in Bordeaux or near Bordeaux, and there’s some great wine country to visit and some other great sites and brands. So that’s something cool that we have to offer that’s unique.

Paul Floreck (15:21):

Of course, we’ve talked about factory visit in Little Rock as well. The aircraft induction. So when it flies over from France and is inducted into the completion facility, we always recommend that there are representatives of the company there for that process. That’s kind of neat. Comes in green, no interior. We have, of course, a full cockpit installed, maybe some [inaudible 00:15:41] inside of the cabin, but it’s a great opportunity for folks to see the aircraft before the completion process starts. You see how clean everything is, how well-designed and well assembled the aircraft is. It’s kind of a nice part of the evolution of the aircraft to see live. So we recommend that as well.

Paul Floreck (16:00):

We handhold our folks throughout the process, which is important. We’ve provide them updates on the completion status. We do that weekly. Our CCAs do that. They will provide photos if our customers can’t be there with a milestone sort of Gantt chart, if you will, update every week to show how the process of completion is coming along. When it’s finally time to deliver the aircraft, which is usually a week long process, we go through loose equipment inventory. Of course, there’s a very detailed inspection of the aircraft from the interior and exterior. There will be a test flight. Of course, we do our own test flight first after the aircraft is completed. And then we will do our own squawking where, we pair anything or address anything that needs to be addressed, then we present it to the customer. They’ll do their inspection. They will have their own test flight. We’ll call [inaudible 00:16:52] and make sure things work after long periods of time at altitude, have very low temperatures because things change from temperature and professionalization, et cetera. So we will allow our customer to be on board for that process, could be two to four to sometimes longer, depending on the airplane. Then when the aircraft is back, we will address any issues that come up during that, or just even during the walk around.

Paul Floreck (17:17):

Then there’s the process of registering for different services that we provide with the aircraft, subscription services, such as communications or the the flight deck, as well as communication services for the cabin systems onboard. We have vendor representatives available at the facility to help with familiarity with the different systems onboard the aircraft. So during the week of acceptance of the airplane, those folks are there to provide documentation, to walk through the airplane, to give guidance on their specific systems, and includes everything from the avionics manufacturer to the cabinet equipment manufacturer, even to the engine manufacturers, warranties for the engines and [APUs 00:18:01], et cetera, registrations for those services have to be initiated. That happens during the delivery process as well.

Paul Floreck (18:08):

Our customer service group either before or after delivery will provide a nice welcome to the family briefing. If the folks taking delivery of the airplane are not familiar with us, that’s the time when they will be introduced to really what their experience will be going forward after they take delivery of the airplane. And the acquisition and the build of the airplane and the delivery may take two years, but once these folks own airplane, they’ll have it for 5, 10, 20, sometimes many, many more years. So they need to know, at least at this point, if it’s not before delivery or right after what they can expect from customer service, how to communicate with our service team whenever they need something. And that’s a very important part of the process as well.

Paul Floreck (18:52):

We also, for new aircraft buyers, will provide services in the hanger. So that may be a field tech representative who would stay with them or visit them regularly for the first several weeks after delivery, just to make sure everything’s going well, to answer any questions as there always are after delivery. We even provide pilot services. We call it jump seat support. So for the first week, sometimes two weeks as the operator gets familiar with the airplane, we will put one of our demo flight crew onboard the airplane. They will usually sit in the jump seat and just help them with getting used to operating the airplane, answering many, many questions about the flight deck. So that’s really a great part of our easing them into operating the aircraft.

Paul Floreck (19:34):

If they’re a brand new Falcon owner, then obviously our systems are a little different than what they may be used to, or maybe not at all. Usually pilots that are flying jets of this caliber are usually have many hours and they’re familiar with jet aircraft, but there are always certain things that are different than moving from any one particular manufacturer model or even models between a particular OEM. So that’s an important part of our service to new buyers as well.

Paul Floreck (20:00):

Then we have the commercial closing. That’s kind of the culmination of the contract process, at least as far as the completion and delivery go. So that obviously involves attorneys on our side. Our contracts group are usually well-represented and on the side of the buyer, their own attorneys, their internal representatives. The aircraft is registered on the international registry. The FAA Bill of Sale is issued. Wire is transferred and the aircraft officially becomes the property of the new owner. So a very exciting time. And one thing we love to do in Little Rock at the completion center, we will invite all of our customers to a delivery ceremony. Many do participate in that, often it’s a flight department members who’ve been with the airplane monitoring it and getting ready to take it home. But very often we have principals coming as well. Sometimes those are the private owners or CEOs of the company. And we love to bring in all of those folks that at Little Rock have touched the airplane during the completion process. And that can number well over 100 people.

Paul Floreck (21:03):

The airplane is positioned nicely in a beautiful delivery hanger we have, and we’ll have the general manager of that facility come, perhaps folks from the sales team, executives from Teterboro, other executives from the Little Rock facility will have some words to say, hand over the keys, and oftentimes the principal will also say a few words and it’s really a great event to celebrate the culmination of a process that typically has taken one to two years to celebrate the building and delivery of a great machine and something that the buyer will own and operate and cherish hopefully for many, many years, and of course, celebrating all the people involved in a way for us to show our gratitude. It’s a people business as much as a technical business and that’s all part of the longterm relationship.

Tony Kioussis (21:51):

I’m always impressed at the range of capabilities and solutions and abilities to help the client that the OEM can marshal. Let me ask you a slightly different question, because I know this would come to mind for a lot of the listeners, when you’re purchasing a new aircraft, there’s an acquisition premium compared to buying a pre-owned aircraft. So tell me the added value. And I know you went through a lot of the capabilities, but what is the added value that purchasing a new aircraft direct from the manufacturer offers as opposed to purchasing a young pre-owned aircraft from the same manufacturer, one that might be less expensive to acquire, and then perhaps retrofitting that aircraft after you buy it with a suite of similar equipment?

Paul Floreck (22:46):

Obviously there are choices out there in the market. And the pre-owned market the last couple of years has been very robust. That means that the supply has been wendling a little bit. New aircraft are obviously as you mentioned, and a little bit of a premium. For a younger pre-owned aircraft, prices are still close, but there is a depreciation for sure after an aircraft is delivered [inaudible 00:23:11]. But what you get with the brand new aircraft of course is first of all, brand new equipment, brand new equipment. So more reliable, less time on it. The buyer is confident that the aircraft has not been abused, even over a short period of time, if it’s a younger pre-owned aircraft. There were no questions about the way the aircraft has been maintained or where it’s been operated, what kind of environment it has been operated, et cetera.

Paul Floreck (23:36):

Obviously, brand new aircraft and meet all the latest regulatory requirements. Things are more reliable and the aircraft is typically more available to you. We’ll offer the latest hardware, the latest software available for any of the equipment on board, of course, and a big piece of it is warranty coverage. So for our aircraft, we offer a depending on the model 10 to 20 years on the airframe itself, the primary airframe components. We’ll offer five years of secondary airframe and just about all other components on the aircraft, including avionics. We offer labor coverage as well. And we also, for certain customers that are properly [inaudible 00:24:19] allow them to do warranty work in-house, which saves them costs, saves them the requirement of having to perhaps repositioning aircraft.

Paul Floreck (24:27):

So ideally when an airplane is brand new, you shouldn’t expect a lot of maintenance the first several years, and typically you don’t, but it’s good to have that manufacturer’s backup. And there is value to that. We’ll see that on our long-term operating costs analysis, and that goes direct to the direct operating costs of the aircraft are almost always lower for a brand new aircraft. And it’s really largely due to the warranty coverage. And again, engines are more efficient when they’re brand new, tolerances are tighter, et cetera. So that gets into fuel burn and fuel is typically very large portion of operating costs. You have a longer period between the time you purchase and pick up the aircraft and your next major maintenance required. So we have major inspections for some of our models every six years, for other models every eight years. So you have that peace of mind that you won’t have to have the aircraft down for a period of time anytime soon, and you can operate it basically without having to contend with a maintenance event such as that.

Paul Floreck (25:34):

Of course, the relationship with the OEM is important. We listen carefully to all of our customers and solicit their feedback. But as I talked about earlier, with the relationship that you build during the process of buying for the OEM, you have just naturally I think a little stronger voice. And also, as I mentioned earlier, when you integrate a component during production, you build it in, you put it in when it’s most appropriate to install it, for instance, a piece of communication equipment. If there’s an antenna, you need to maybe access under side of the aircraft. You prefer to do that before all the cabinetry is built into the airplane. These things can be done and are done all the time at maintenance facilities, MRO facilities, even our own, but it’s always a little less risky to have that sort of equipment installed during production. Just the flow is more efficient and veteran and there’s less risk of something going wrong or something being damaged, cabinetry item or whatever, if it has to be taken out of the aircraft or moved. So just little things like that.

Paul Floreck (26:36):

I think in sum total, when we do life cycle cost analysis all the time, depending on the pre-owned aircraft that’s being compared to, but often just through operating costs and availability, et cetera, over the life cycle, buying a new aircraft is as cost effective as buying a pre-owned aircraft over the longterm, especially if there’s major investment in a pre-owned aircraft after acquisition if a buyer wants to make that his or her own and do major refurbishments, et cetera.

Tony Kioussis (27:06):

The point that you made regarding life cycle costs is really very important, especially for a lot of the first time buyers. We do quite a bit of work along those lines with first time buyers and they’re always surprised that the additional cost that a less expensive aircraft will have, they view the acquisition cost as the primary cost of the aircraft. And then when you get into it with them and run through the life cycle cost of an aircraft, it surprises them how inexpensive the new acquisition can actually be. I think that’s a really important point that you raised.

Paul Floreck (27:44):

Yes. Thanks for reinforcing that. And I know your company gets deep into that and you’re right, it is surprising to many buyers that buying new, and I think many buyers want to justify buying new. They just see the upfront cost, obviously as being much lower for pre-owned airplanes. So the enlightenment process is important. Something we do, but also folks like yourself. And we appreciate that. Obviously there’s a place for every buyer and pre-owned airplanes need to go somewhere as well. So it’s all just part of the industry machinery. And of course our job is to sell new products. So we obviously spend our presentations to make sure that’s well understood.

Tony Kioussis (28:21):

I think the cost versus benefit analysis is an important one when it comes to deciding whether or not you want to go with a new aircraft as opposed to purchasing a pre-owned aircraft. I don’t think there’s anything wrong with going in either direction, but I do think that you really need to go into it with your eyes open. And a lot of people just really don’t realize how much value there is in buying new. They view the acquisition cost again, which could be lower depending on how the market is moving. It could be lower for a pre-owned aircraft, especially if the aircraft’s been flying for a while, but the overall cost of a new versus used is a lot different than most people realize.

Tony Kioussis (29:03):

Let’s talk about something you mentioned about the relationship between a buyer and manufacturer, specifically the long-term relationship between the buyer and the OEM. Can the buyer of a new aircraft from the OEM expect the different experience in terms of support, relative to a buyer of a pre-owned aircraft?

Paul Floreck (29:26):

Upfront, I’d like to say that all of our customers are important to us and the mission of the customer service team, no matter what Falcon we’re talking about and whether it was purchased new or used is to maximize the availability of every aircraft that we support. And of course, another pillar of that is to maintain and enhance the value of all Falcons out there. So we are here for all of our customers. We take great pride in that, regardless of whether the aircraft was purchased new or purchased pre-owned on the pre-owned market. Of the 2,700 or so Falcons delivered, 2,100 plus are still on service, just under 30% of those aircraft are Falcon 10s, Falcon 20s, Falcon 50s, models that we do not build today, but certainly are great in number. So it’s incumbent upon us to make sure those airplanes are well supported. We want our customers, and it helps new aircraft buyers to know that they can keep their Falcons for many, many years and we will be there for them.

Paul Floreck (30:26):

There are Falcon 20s that were delivered in the 60s still out there in operation. We treat all customers as equal as possible. As aircraft get older? We have to make sure that we have the parts available. Sometimes those are available new to us. That’s important for buyers. As aircraft get older, sometimes it becomes more difficult, but we certainly do our best to maintain spares.

Paul Floreck (30:49):

And just a quick overview of our support network, which is huge. As you can imagine, we have Falcons in 89 different countries. So we have to be all over the globe and we are, and our larger, farther reaching Falcons travel around the globe. We need to be there for them. We have over 100 field technical reps in 35 different offices around the world. We have $900 million plus in spares inventory, those spares are at 16 different distribution centers. There are four major distribution centers for parts in the US alone.

Paul Floreck (31:21):

We have a lot of stock and inventory as the Falcon fleet grows. And as I mentioned, we have two new airplanes that will be entering services decade. The first would be the Falcon 6X, which should be certified by the end of next year and the Falcon 10X coming to us in the middle of the decade. So we’re continually building our inventory for those two new airplanes. We’re getting parts at least for the 6X now on the shelf, and it won’t be long until we start doing the same for the Falcon 10X. So the inventory value and part numbers will certainly continue to grow.

Paul Floreck (31:52):

We have 24/7, 365 support both for technical support in the field and also for spares ordering. So you will call Falcon Jet and you will get a live person no matter what time of the day, no matter where you’re calling from. We have different command center locations around the world. So we kind of follow the sun. We don’t want you to get an answering machine when you call us. It’s not what you need to hear if you have an aircraft on the ground and you need support quickly. We also have a Falcon airborne support aircraft. In fact, we have two of those. They are Falcon 900s, one based at the Teterboro, one based at [inaudible 00:32:29], and those aircraft are there to quickly deliver parts, maybe technicians as well to an aircraft that’s on-ground, AOG situation, where we need to quickly get to an airplane to assist the operator on fixing it. And those aircraft they’re also set up with nice cabins so that if a principal is inconvenienced and we need to get him to the next destination, we’re able to do that in the Falcon 900.

Paul Floreck (32:54):

There are at least a dozen during normal times, M&O seminars held around the world every year. Some of those are in fact dedicated specifically to our legacy aircraft, the older 10s and 20s, Falcon 50s. So we do pay a specific attention to our legacy aircraft owners in that way. And many of those were purchased pre-owned, some bought and sold many times.

Paul Floreck (33:17):

Now for new buyers, of course, a couple of things may differentiate somewhat the level of service, and it should be expected by a new aircraft buyer that they receive a little bit more attention to us. Of course, we have the warranty coverage, which is important as we talked about for direct operating costs and making sure the spares are available to them when needed under warranty coverage. We have certain maintenance programs we offer. We have tip to tell programs that help balance the cost of operation. Those will take an operator through the 1C check or the 2C checks sometimes if they opt for that, and those programs are available to new buyers, they’re available to pre-owned buyers as well. But in those cases, there are buying costs. So for a new buyer, a little easier to sort of budget for that process.

Paul Floreck (34:01):

And then as I mentioned, the Falcon Airborne Support aircraft, those assets are there for us to use. We have other assets of course, to get spares to our customers as needed, and the Airborne Support Aircraft, we do give priority use of those to new aircraft buyers. And of course the rates for us to do that maybe offered free or to a lowered rate, just depending on the situation and the customer. And of course, as I mentioned before, the relationship we build with a customer during the sale process, the spec and design process, the delivery process, that’s very important. Obviously the better we know a customer, the better we can support them, the better we understand their needs. Big picture. We here for all of our Falcon operators, and we’re proud that over the last three years, we have been number one rated and one of the two industry surveys for customer service and we’ve averaged number two ranking in the other survey that’s out there. Those are the most recognized as the industry benchmarks and that’s something we’re proud of and we intend to continue to do for many years going forward.

Tony Kioussis (35:05):

Tell me what you see as the role of the OEM in the industry relative to what used aircraft sellers offer on the used aircraft market?

Paul Floreck (35:15):

There is a place for everybody in the industry, of course, and it’s a great industry. I love it. I love the people, which is to me just as important as the fantastic technology that we offer. Not to sound arrogant, but I think the OEMs in our business are really at the top of the pyramid. And we drive the technology development. It’s our investments in research and development that lead to new products, new capabilities. Our vendors are obviously very closely aligned with us in those sorts of things, development of major avionics and engines. So all of that obviously keeps moving the industry forward and we take the risks. There are huge investments in developing new aircraft and developing new engines. We’re in the midst of that as an OEM right now. we’re test flying Falcon 6X, which we will start delivering next year. We’ve announced a new product for delivering the decade, which we’re very excited about. And as you see the technology’s there, you understand that it’s really up to the OEMs to continue to push the industry forward and to adopt the things that other industries throughout the world that are building things that apply to aircraft and aviation have to offer.

Paul Floreck (36:22):

We’re a huge part of the infrastructure. We’re major employers, of course, all of us, all the airframe OEMs, even in the military side, big employers of folks with advanced capabilities, advanced degrees or high tech jobs, they’re important jobs, they are great for the global economy, for the national economy. That’s important too. Skilled craftsmen, even on the production line, et cetera. If you go to our facility in Little Rock, they’re just such a wide spectrum of skills required from engineering and design all the way through the craftsmen that build the final product.

Paul Floreck (36:57):

We ensure, of course, the viability of the supply chain. We’ve all recognized what something like the pandemic can do and the importance of the supply chain. We make sure that the engine manufacturers, the avionics manufacturers, seat manufacturers, they have long-term orders so that they remain viable as well. Obviously in our business, we compete sometimes with the airline business, but it’s all good, it’s all part of the same big machinery. We consider ourselves, obviously just as important part of the larger aviation industry.

Paul Floreck (37:28):

Again, in my view, we kind of get the ball started. We build an airplane and then many, many things happen. And there’s an old saying that nothing happens until someone sells something. So when you sell a brand new product, lots of things take place from there. Now obviously the great confidence our customers have in buying new from us. [inaudible 00:37:48] we wouldn’t be able to do what we do, but once we do a lot of tasks are set in motion. A lot of other companies benefit from it, big machine, but obviously wouldn’t happen if no one was building new airplanes. We take the risk, again, that’s part of the premium of our product. We do have to amortize our costs for developing, but the whole industry benefits from that. And of course, we try to make sure that the buyer of a new airplane has the value in addition to just helping us to free our costs of making sure our planes are as high-tech as possible.

Tony Kioussis (38:19):

I was thinking, as you were talking about some of the things that we do in this industry that we kind of take for granted because we’ve done them for so long and they’re so common to us, but the average individual who’s either never written on a private aircraft. And certainly the average individual that’s never bought a new aircraft would have no idea of the detail that is involved from a customer servicing standpoint when it comes to a new aircraft acquisition. There’s whole aspect of the seat fit that we do for clients as an industry. And I know you folks at Dassault do it as well. And it’s the level of detail that the OEM invests in providing a new aircraft for client that’s specific to that client.

Paul Floreck (39:08):

The primary interface of any passenger on any vehicle, but of course, a business jet is the seat. That’s where you spend the most of your time. You want to be comfortable. These aircraft, some of them can fly 12, 14 hours nonstop. So you spend a lot of time in the seat. Of course, the seats, not only our place to sit, they’re a place to dine, they’re a place to relax and sometimes even sleep.

Paul Floreck (39:29):

So, first of all, having seats that are versatile, that can do many different things, move, rotate, change positions, scooch up to the dining table, perhaps, or push away, turn sideways, leg rest, ease of movement. That mechanical part is important in itself, and of course the seats need to be as lightweight as possible. So we work with the manufacturers very closely and making sure that they work well, but they also are as lightweight as possible. Weight is everything on an airplane. But even down to the comfort itself, as I mentioned, we have some great craftsmen in Little Rock, and many of those are folks that will, so the letter and our designers can offer a number of different stitching patterns and even head rests designs. We offer a couple of different ones.

Paul Floreck (40:17):

So the look and the feel of the seat, just getting into it, the texture of the leather, the softness of the leather, or even cloth. And within the seat itself, we offer obviously foam cushioning. And what we will do, especially for the principal, be that the CEO of the company or high level executives or in private owner, we will do our best to contour the seat to their physical stature. And we will also offer different layers of foam within the seat itself and can shave or ulster a little bit. We have different densities and different shapes. So all of that is sort of built into the seat together so that once they’re on board the aircraft, they feel like it’s theirs. They feel their seat is their comfy chair. They’re happy being in it for hours and hours at a time, perhaps, they have the ability to perhaps lay back and rest.

Paul Floreck (41:10):

The seat center aircraft just about all of them will [inaudible 00:41:14], which means they’re able to lie flat. And sometimes you’d put two seats together. You may rotate 180 degrees, scooch it up next to the seat directly across from that, if it’s a club seat design, you now have basically a bed. We’ll do that with our, we have a dining group as well. We have two sets of seats facing each other. So side-by-side seats. A table in the middle and other facing set of side-by-side seats. You can lower the table and make a bed out of that zone as well.

Paul Floreck (41:44):

We also offer couches on the airplane or at the vans as we call them. These are used just as couches typically, but can be extended out into the aisle way sometimes together in the back of the aircraft, even to make it a big, huge bed. We offer that on several of our models. We offer two lavatories on just about all of our models so that you can have a private compartment in the back of the airplane and then a separate lavatory upfront for folks that are either sitting in the forward section of the cabin or crew so that the folks in back don’t have to be disturbed. So you have a little private state room back there.

Paul Floreck (42:18):

So obviously the interface with the airplane is very physical. Noise levels are important as well. We do our best to minimize noise levels in the cabin. We go to great lengths to insulate against noise. The way we mount our engines and other components is all designed to minimize noise and vibration. Cabin pressure altitude is another consideration. So a lot of different things go into how an aircraft is designed. The systems are implemented to make sure that the passengers are comfortable and ready to go refresh to their meetings. But the seat shop is really interesting. There are videos online of many of our manufacturing facilities. Any of your listeners are interested, I recommend you go watch a one or two minute video. It’s enlightening, and again, the craftsmanship is really amazing. And yes, we will contour the foam so that your tush feels great after 12 hours of sitting in the seat. That’s all part of the process.

Tony Kioussis (43:13):

And it’s something you can’t get when you’re acquiring an in service aircraft. It’s it’s unique to the new aircraft acquisition, isn’t?

Paul Floreck (43:22):

Absolutely. There are MRO facilities that can do that, but we take pride in and certainly doing it best.

Tony Kioussis (43:29):

Let’s talk a bit about Dassault, and what you offer, particularly with respect to new aircraft. What makes Falcons unique in the market and also about your company’s philosophy toward building and selling Falcons?

Paul Floreck (43:46):

We at Falcon Jet don’t necessarily build the most or the least expensive aircraft for that matter. Although they are very competitive, price competitive, and our objective is to offer our customers value for what they paid for. So we focus on building what we believe are the best aircraft. And I think anyone that understands our business and understands the Falcon product line knows that from a design standpoint, from a manufacturing standpoint, from an efficiency standpoint, from a versatility standpoint, Falcons are just really incredibly well balanced and well built and designed airplanes. There are those in our business who approach aircraft as a commodity product. We think that does a bit of a disservice to the industry itself. Every OEM offers a little bit different value proposition. So ours is unique as there are those of our competitors, but we at Dassault Aviation, we’re really a two-pronged business. We build gen four plus military aircraft, company has have been building military aircraft for years and years.

Paul Floreck (44:49):

We’ve now been in the aviation business since 1963, when the first Falcon 20s were delivered to [inaudible 00:44:55] and business jets. And there’s a lot of cross communication and cross technology interplay between both sides of our house. So we have that military aircraft development side, and a lot of the things that we do on that side make their way to our business aircraft. And the technology and Falcons benefits from that, we do feel we offer a huge value proposition and we have very loyal Falcon customers. Once folks are in a Falcon, they tend not to go to anything else. We’re very proud of that.

Tony Kioussis (45:26):

We’ve covered a lot of ground and thanks so much for that. I think our listeners will appreciate it. Is there anything else you would like the business aviation community to know about Dassault, it’s products or services?

Paul Floreck (45:41):

Well, just another note on the company. We’re still privately owned company. So the Dassault family are still major shareholders, makes us a little bit unique in the way we approached the business. We’re not necessarily beholden to public share price. So we have a very stable approach to our business, to our pricing model and our customers appreciate that. We have a very loyal, mature and competent employee based years and years of experience, customer centric thinking. We have very loyal family of Falcons owners. We appreciate what we in Falcon Jets offer to their ability to conduct their business. And of course, we’re very grateful for that.

Tony Kioussis (46:21):

This has been another Asset Insight podcast covering the aircraft ownership life cycle. Please visit our ever-growing podcast library at assetinsightpodcast.com, and select from any number of topics discussed with business aviation industry experts. This is Tony Kioussis, and as always, thank you for listening.