Why the HondaJet HA-420 matters to businesses of all types

In an era of post WeWork, financial scrutiny and with the undercurrent of Global Warming and carbon emissions discussion, the HondaJet is primed to be the evolutionary step that propels the BizAv sector forward.  It is neither overwhelmingly eco-unfriendly, nor ridiculously expensive to own and operate, and yet, it could conceivably ferry just about anywhere in the world if you had a dedicated enough owner/pilot.

The HondaJet has gotten enough press – but it’s justified. And not just because it looks like a friendly cartoon bird. The ability to transport a 4 person group halfway across the United States at an operating cost that is staggeringly low compared to most of its competitors (especially the mid-sized jet options), makes it intriguing to most small and medium business with the revenue to consider private in-house air travel. (Note the HondaJet Elite can carry 6 passengers – 4 PAX is a normal payload for a light jet)

What is more interesting though, is the innovation paired with the low acquisition costs. The just over 5-million-dollar baseline cost associated with this small jet means that business owners that would not be able to even discuss private ownership are now legitimately able to rationalize, not only discussion, but actual purchasing.

To be completely transparent, this is a purchase still relegated to those companies and individuals with assets of more than 75 million. That isn’t a hard and fast rule, especially with the ability to cover some substantial portions of the fixed aviation costs with charters, but it probably doesn’t make sense to most people under that threshold to consider private travel. Note: there are HondaJet buyers with under 25million in assets or revenue. So, this “rule” is more of a general concept than a rule.

And let’s be honest about the utility aspect of the plane – it is not a full-sized jet. You will still have to crouch down to get into its airframe. The max interior height is just over 5 feet. If you are regularly traveling in coach as an executive or business owner, you won’t be able to justify the expense of the operating costs per hour. But if you’re regularly flying business class, and too much of your time is wasted in terminals, this one might make sense.

The time savings alone will cut a large swath out of the operating expense. The business class seat fares will cover another large portion. By the time you are looking at vacation costs, it starts to pencil out nicely. Especially if you vacation within 1000 miles of the United States Coastline.

Sure, there is still the obvious 5+ million in purchase cost, but with a solid balance sheet, a 20-million dollar revenue company should be able to finance competitively and make the purchase make sense, depending on the sector they operate in.

HNW individuals can probably justify it if they travel domestically weekly, with a net worth approaching 45 million or above. Under that threshold, there is a slightly diminishing return, as the annual operating and fixed costs are at about even, with first class or business class travel anywhere on the globe. The only true reason for purchasing and full timing a light jet option at that threshold is the time savings and the ability to fly on a whim without hassle. No HNW worth more than 45million who already appreciates the experience on a commercial carrier is likely to be working towards a light jet purchase.

There are simply too many other options including flexible/partial ownership, charters, or time-card related hours. That isn’t to mention the interesting options several commercial carriers are considering rolling out for premium passengers in the next year or two.  Above 45 million, and a buyer might be able to push into the medium jet category legitimately – especially on the used market.

This isn’t just about acquisition justification though. This is about how the HondaJet makes sense going forward. Historically, “investments” in things that move (planes trains and automobiles) haven’t made a lot of sense in the long-term. But the light jet segment is almost guaranteed to be a robust market going forward. Especially in an era were full-sized business jets are considered by even the largest global corporations to be frivolous operating expenses and too heavy a toll on the environment. Whether or not that is due to public scrutiny mostly, or that the company’s actually feel that way, is inconsequential, because it’s happening.

Honda has a lot of innovation, most of which we aren’t going to cover here, as the HondaJet is already well covered on this angle. But one of the innovations is the top of wing engines. This improves travel quality in the cabin and helps to improve on safety and fuel burn.

Because of the re-thinking of how to engineer a jet, the HondaJet represents what is likely to be the way forward in Business Aviation going forward. The days of multiple underutilized jets sitting in a hangar somewhere is a distant memory for most big companies. The idea that the Bombardier Global 6500 makes sense to most companies is simply not an applicable concept anymore. Sure, The Jeff Bezos’ of the world can justify the expense of a top of the line Gulfstream, but people like Bezos take a lot of flak for the associated carbon emissions of those large jet’s operations.

After the HondaJet’s initial release a large market has developed that seeks to re-imagine the business jet. Massive strides have been made by companies like Airbus and Embraer (and even Boeing) to change how we propel jets in the future. The first fully electric plane took flight within the past 6 months, albeit a brief flight.

Here’s where the HondaJet makes the most sense to a buyer who would have historically been priced out of the market: overall cost of ownership and reduced risk of value drop.

Sure, you can buy some excellent Lear Jets for under 2-3 million dollars.  That’s a great jet with a history of dependability. It is also around the same size as the HondaJet, but it burns way more fuel. It’s a bird that is likely 15+ years old, and it needs an upgrade. You won’t be getting a toilet most likely; the avionics are substandard, and you’d be lucky to even find a pilot willing to fly it at all. Most private pilots won’t pilot a plane that’s older than 10-12 years, unless they flew those miles/years and know the plane well.

When you realize the retrofit will cost another 500k-1.2million or so, you’re nearly 4 million deep into a 15+ year old plane that has aging infrastructure, no hope of a further resale and is nearly impossible to find a pilot for.  

In fairness, the HondaJet is even better suited to an owner/pilot, because of the configuration, so don’t get the scenario twisted. You’d only be moving 4PAX at most and a pilot in the mix makes it harder to justify for legitimate team travel. That doesn’t mean that it doesn’t represent a ridiculous bargain or supreme utility. By comparison, the very similar (*newly upgraded) Embraer Phenom 300 is set to deliver in May 2020 at a price hovering around $10 million dollars.

The Phenom 100 is a closer comparison, but to showcase the specialness of the HondaJet, we have selected a much more impressive jet from Embraer. Another reason we have chosen this comparison is that the Embraer Phenom 300E is the industry standard for light jets.

The Phenom is a 6+ passenger jet and a slighter larger light jet with a longer range – but not significantly so. For instance, the Embraer interior cabin height is 4 feet 9 inches; the HondaJet Elite is 4 feet 8 inches tall inside. The Embraer is capable of taking 10 passengers comfortably with significantly reduced range – but you’ll have to strap someone onto the toilet to do that.

Furthermore, purchasing a 10million dollar jet is out of the reach of most wealthy individuals, even those with a 100million dollar net worth. To divert 10% of your total net worth to a jet, and a significant operating expense base on top of that just doesn’t make sense.  It can be done; it just isn’t something that happens a lot. Similarly, the HondaJet, just by virtue of its lower price of entry doesn’t appeal to travelers with a sub 45-million-dollar net worth, for the same reason.

Again, for businesses generating large revenues or growing quickly, these expenses can be factored into an overall plan to make the purchase much more justifiable.

It’s also highly likely that charters and regionals will employ the HondaJet at some point too, as soon as deliveries slow a bit. Right now, early buyers are just starting to get their deliveries.

We highlight 3 light business jets that we think are going to be the new standard bearers for the BizAv game for many years to come in an article that talk about the jets in a comparative scenario. These jets include the HondaJet Elite; the Pilatus PC-24 and the Embraer Phenom 300. If you’re contemplating a light jet for business reasons, each can make a case for your dollars and all are under the 12million USD mark. That article would make sense to read if you are in the market.

The HondaJet engine is a completely new engine, made in concert with GE, a powerhouse in the Jet Engine game. It can climb at 4100 ft/min and cruise at 483mph at a maximum of 43,000 feet. This is significant. The Embraer Phenom 300 climbs at around 3300 ft/min with a certified ceiling of 45,000.

The max range sits at 1437 nautical miles with 4 passengers. It’s not a huge set of legs, but it’s very good for domestic business cases, and can be ferried to much larger distances if properly planned for, with extra fuel considerations, though the passenger total can be tricky in longer range destinations.  

Typically, in the industry, for the price point and even 1.5 times the cost, you won’t get performance anywhere near these numbers.

Again, using the Embraer Phenom 300 as a comparison shows us for roughly twice the money, you’re getting an inch more in headroom 3 more seats and about 200-500 miles more range. The fuel burn is 456kg/hour at 431 knots giving you about 5 and a half hour legs, with 4PAX. The HondaJet can deliver about 275 kg/hour fuel burn at 410 knots giving about 3 hours and 20 minute legs.

Variable operating costs are averaging about $1755 per hour for the Phenom 300 and about $1135 for the HondaJet which is a significant deciding factor if you need the 2 extra (+) seats of the Phenom, but also a low cost basis if you are content with the 4+ seats of the HondaJet.

Note that the Embraer Phenom 300 has accounted for about 50% of the market in light jets since 2012. In the light jet market, Embraer is a force to be reckoned with, and it wasn’t until the HondaJet Elite that this powerhouse has been successfully challenged since its debut.

With Bombardier’s recent setbacks and mounting debt, they are almost sure to be exiting the light jet game, as their rail division and their large private jet portfolios feature much better chances for immediate and intermediate return for the company as it restructures. The buyer for say, a Global 6500 or 7500 is NOT the same buyer as will be shopping for a HondaJet Elite.  All of this means that the classic reimagining of the Lear Jet that Bombardier envisioned launching in 2020 and 2021 is likely not to happen as planned.

The Smallest jet that Airbus is playing around with at a large scale is the C series it purchased from Bombardier (at the time of this article being published, Airbus is negotiating to buy the final portion of the program that Bombardier still owns). This is now known as the Airbus A220.

The Cessna Citation series has an entry in the mix, but it does not have the volume production sell-through that the parent company would like, and is not, therefore a threat to the domination that the HondaJet is set up to have over the next 15 years. Textron (Cessna) cannot compete currently with it.

Given the price points, the performance specifications and the ability for Honda to actually deliver the jets, nothing short of a completely reliable, thoroughly tested and safe fully electronic or hybrid jet would threaten to de-seat them as the leader in the space. It’s unrealistic to think that the electric jet is just around the corner. With the HondaJet here now, in a position to operate at a lower cost than all the previous light jets that came before it, and at a significant discount to competitors, it simply cannot be beat.

Even the reigning King of the space will lose significant market share to the newcomer.

The following are the specifications for the HondaJet Elite. It’s quite clear that as data starts to flow through to Honda and GE recognizes the benefit of having mainstream data on the plane, that engine improvements will be made to increase efficiency.

HondaJet Elite Specifications:

HondaJet Elite

Performance

Maximum Cruise Speed @ FL300422 KTAS

Maximum Cruise AltitudeFL430

Rate of Climb4100 ft / min

NBAA IFR Range (4 occupants)1437 nm

Takeoff distance<3500 ft

Landing distance<3000 ft

Engines

Manufacturer / ModelGE Honda / HF120

Output (Uninstalled Thrust)2050 lbf each

derated from 2095 lbf each

Bypass ratio2.9

Exterior Dimensions

Length42.62 ft [12.99m]

Wing Span39.76 ft [12.12m]

Height14.90 ft [4.54 m]

Interior Dimensions

Length17.80 ft [5.43 m]

Width5.00 ft [1.52 m]

Height4.83 ft [1.47 m]

Baggage Space

Combined stowage66 cubic ft

Aft compartment57 cubic ft

Nose compartment9 cubic ft

Configuration

Typical configuration1 crew + 6 pax (2 crew + 5 pax)

Alternative configuration1 crew + 7 pax (2 crew + 6 pax)

With the Honda mentality of meeting the market at the price they’d rather pay, it’s also likely that the volume of sales will be significant enough to change the landscape of the light jet industry, and potentially create new markets within it. With first flight having taken place in 2013, but real deliveries having only taken place in the last couple of years, this is the market maker.