Sound economics, Italian flair

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Piaggio’s new production line will be efficient and ‘green’, just like its aircraft. But customers don’t have to sacrifice style

Construction is well underway at Piaggio’s new €100 million manufacturing plant in Villanova d’Albenga near Genoa, which is scheduled to come on stream at the end of 2013. The project marks out Piaggio as one of very few aircraft manufacturers with the confidence to be investing in additional production capacity, the company’s general manager, Eligio Trombetta, told the NBAA conference in Las Vegas back in October.

Piaggio claims to be the only company in the world active in the design, manufacturing and maintenance of both aircraft and aero engines. Under a joint venture with Pratt & Whitney, the company expects to turn out around 100 engines this year.

The new 49,300sq metre facility will back right on to Villanova d’Albenga’s small general airport and will thus have direct access to a 1,500 metre runway. It will produce parts and subassemblies for the P180 Avanti II aircraft as well as manufacturing and repairing engines.

The factory will replace a plant in nearby Finale Ligure, though final assembly will continue at a separate plant in Genoa, 30 minutes away. Piaggio is aiming for greater process efficiency and has designed the new line on lean manufacturing principles for improved production flow and speed. Aircraft parts will travel 450 metres instead of 3km as they do at present. Taking into account other features such as reduced energy use, Piaggio will seek ISO 14004 environmental certification at the new site. It will also create a museum telling the story of the company from its foundation in 1884.

Fourteen aircraft were delivered last year, up from nine in 2010 and well within current production capacity of 38 aircraft per year.

“We will be able to produce up to 50 aircraft per year at the new plant, but it won’t be a case of flicking a switch,” says John Bingham, president and CEO of Piaggio America and chief marketing officer worldwide for Piaggio Aero Industries. “We will ramp up as demand requires. We won’t build for stock, unlike a lot of our competitors.”

Crosshead: Bottom-line bonus

The Avanti II is the world’s fastest turboprop, with a maximum speed of 745kph (402nm per hour) and a range of 2,780km (1,500nm) that puts it in the same ballpark as most light and mid-size jets. Updated P&WC PT6A-66B engines have improved performance and cruise speed, and the aircraft can operate out of smaller airports with landing and takeoff distances that no jet of comparable size can match.

The full stand-up cabin is the biggest by some way in the mid-size jet and twin-engine turboprop class. Good sound insulation and sea-level pressurisation contribute to an unrivalled standard of cabin comfort, Piaggio claims.

With more than 200 aircraft in operation worldwide, there is no such thing as a “typical” Piaggio customer, Bingham says. The prospect of fast, spacious travel with low environmental impact is equally attractive to wealthy individuals, private and public corporations, especially businesses keeping an eye on the bottom line. “To own a turboprop is a far more sensible business proposition, saving 35-40% on acquisition and operating costs,” he says.

There may have been a time when turboprops were perceived to lack glamour, but Piaggio’s high-profile ownership surely counteracts this impression in the minds of potential customers.

The company’s shareholder structure comprises Tata Ltd, the UKL arm of the Indian Tata Group; Mubadala Development Co, the investment company helping drive the economic diversification of Abu Dhabi; and two Italian families, Ferrari and Di Mase. The aircraft display Ferrari’s instantly recognisable prancing horse livery and the Scuderia Ferrari racing team is happy to have the Avanti II as its business aircraft due to its style as much as its state-of-the-art technology and performance.

The build-to-order strategy and a continuing production backlog means distress marketing during the downturn, Bingham emphasises.

“When the market went south, we decided on a different, aggressive approach. We wanted to end up bigger on the other side of the recession. With a bigger facility coming, it was a question of how we would use this new capacity. We decided to look at new markets that we were not in, to supplement the North American and European markets when these returned to full health.”

This quest to broaden the potential customer base led to type certifications in several emerging markets, principally the BRIC countries. India certified the Avanti in 2009, followed the next year by Brazil and Russia. Piaggio entered the Australian market in 2011 and announced at NBAA that its aircraft had received certificate from China’s Civil Aviation Authority, permitting registration and operation throughout mainland China and in Hong Kong.

“This opens the way for the Avanti II in one of the most promising markets of the world,” said Piero Ferrari, Piaggio chairman. “The low operating cost gives us a unique advantage in the market and allows us to offer Chinese customers economics, performance and operation that were not previously available. China and Hong Kong represent big potential markets for the aircraft in both its executive and special mission versions.”

Bingham says: “All these are huge markets with significant numbers of business people, and we’re now able to sell in all of them. We’ve picked up two orders in Russia, with five more to come. We’re waiting to conclude an order in Australia and are awaiting our first business from China.”

Piaggio was especially keen to penetrate the Brazilian market, where it believes its product is well suited to the challenging local topography. “It’s a robust aircraft with everything set high up,” he comments. “You can look after passengers effortlessly cross-country in the spacious cabin.”

The company appointed Algar Group last August as exclusive distributor and service provider for the Avanti II in Brazil. The first delivery to a Brazilian customer was made the following month and a second order quickly followed.

The aircraft’s low fuel consumption and small carbon footprint is expected to play well in a market that is increasingly attentive to ‘green’ issues and Piaggio will use Brazil as a springboard into other South American markets, Bingham says.

Crosshead: Maybe, one day, a jet

Despite the numerous advantages Piaggio cites in both environmental and commercial operating terms for its turboprop over jets of similar size, the company is not definitively ruling out developing a jet of its own. In response to continuing media speculation, Bingham says: “As soon as we have a clearly defined package, we will open up.”

Meanwhile, various enhancements are understood to be under development for the existing Avanti, including propellers, brakes and air conditioning. However, he is reluctant to go into specifics at this stage, commenting only: “We’re looking to see the potential benefits and we would want anything we introduce to be retrofittable. But nothing is certified, and major improvements don’t always come to market.”

Piaggio offers a variety of interior layouts. The fact that the aircraft is single pilot certified gives the option of an eighth passenger seat if required, in addition to a double divan, a single seat facing forwards or sideways and a club four.

“Once they have specified the base seat layout, owners are pleased that they can specify their own materials and finishes. It’s not just a cookie cutter process.”

Piaggio has a co-marketing agreement with yacht maker Benetti, but this does not extend to crossover of design or internal fit-out. It simply means the companies sharing exhibition stands on the basis that they are targeting similar customers.

Investment in its North American service centre network has corrected what Piaggio admits was a competitive weakness. Customers now have 18 facilities available, up from just seven two years ago.

In Brazil, full back-up was in place from day one thanks to the selecton of Algar as local representative. The company has existing facilities in Belo Horizonte and Uberlandia, and could add another three in Sao Paulo, Brasilia and Manaus as the customer base builds.

But there are other ways of tackling service issues, Bingham says. “Algar has a truly amazing approach and flies mechanics to wherever the problem is, rather than waiting for the aircraft to come to them.”

That’s a level of passion and commitment typical of those involved with the Piaggio project.