COVER STORY • HONDA AIRCRAFT COMPANY
From start-up to mainline player
The Honda Aircraft Company has big ambitions for its new light jet, the HondaJet Echelon. So, what’s the business case for this new launch in a highly competitive market? (And what’s in the company’s 40-year plan?) Words: Mike Stones
COVER STORY • HONDA AIRCRAFT COMPANY
From start-up to mainline player
The Honda Aircraft Company has big ambitions for its new light jet, the HondaJet Echelon. So, what’s the business case for this new launch in a highly competitive market? (And what’s in the company’s 40-year plan?) Words: Mike Stones
IT STARTED IN a tree. The year was 1917 and 11-year-old bicycle mechanic Soichiro Honda had just cycled 20 miles to watch US airman Art Smith give one of the first flying displays in Japan. Lacking the entry fee, Honda climbed the nearest tree to watch the display and his life-long passions for flight and motorised mechanics were born.
They were passions that gave rise to the monolithic Honda Motor Company and the Honda Aircraft Company (HACI). Just over a century later, it is planning the launch of its new light jet – the HondaJet Echelon. Amod Kelkar, senior vice president and chief commercial officer, HACI explains its significance. But first, the company.
HACI has always been different – always adopted a distinctive approach to its business and products. It’s not just ownership by a giant motor manufacturer that distinguishes HACI. Almost everything it does differs from other manufacturers. Witness its decision to place engines on top of its aircraft wings. It created its own engine joint venture with GE. It sells aircraft through dealerships in preference to selling directly to clients like other manufacturers. But change is afoot.
From April 1st 2024, HondaJet changed its dealership model and opted to sell directly to clients in some regions. Dealerships were a good approach when HACI founder and CEO Michimasa Fujino launched the company in the early 2000s, says Kelkar. At the time, the company’s focus was on developing its first jet – a clean- sheet design – not building the infrastructural support to sell the aircraft.
“Since then, we have changed our global footprint of dealerships onto more authorised service centres [ASCs] and authorised sales reps,” Kelkar tells us. “So, we’re working towards converting some of our dealerships and exiting others and going for direct sales in certain regions.”
Japan was chosen to pioneer the change due to the country’s rapidly rising demand. Two years ago, the country accounted for two HondaJets, today it has 16. Where Japan has led, the US will soon follow. “In the US we have five zones and the territory will transition to an authorised sales representatives model,” he says.
Authorized Service Centres complete the new-look network that HondaJet is building. “It’s not easy to have your own service centres for a fleet of 250 airplanes. So, we have one Honda-owned service centre operating in Greensboro, North Carolina.” There are 21 HondaJet Authorized Service Centres in Japan. HACI has introduced Japan General Aviation Service (JGAS) as its new service centre in the region.
It's a move motivated mainly by the company’s desire to strengthen its relationship with its customers – both existing and potential. Kelkar puts it like this: “With the HondaJet Echelon on the horizon in four to five years, at the end of the day our customers’ needs matter the most and we are optimising our global footprint towards their needs.”
But that’s not the only reason. The dealership model worked well for 10 years, when the company offered a single product and had a small fleet. But now, with the Echelon approaching entry into service in a few years, HACI is expanding from its very light jet niche into the much more keenly contested light jet market. The new jet’s range of 2,625nm means the aircraft will compete with light jets and, potentially, midsize jets, according to the company.
Kelkar describes the transition as moving “from start-up mode and entering the market as a mainline player”. A player that is about to launch a new business jet into a much bigger market plus offering a full aftermarket service.
The significance of the move from start-up to mainline is underlined by the size of HACI’s new target market. Traditionally at home in the very light jet market, the company estimates global demand at about 100 aircraft served by two major players – Textron and itself – with Embraer accounting for some sales with the Phenom 100. Growth in this sector is judged to be limited by its nature as an entry point for new business jet owners.
But the light jet sector – the target market of the Echelon – is a much bigger space, with a 250 to 300 aircraft per year production footprint. It’s a market dominated by three players – Embraer, Textron and Swiss company Pilatus and now HACI. Kelkar can’t wait. “Even at moderate GDP growth of 3%-4%, there is enough space for us to have an active production line on an annual basis sold out without any problem. And without fighting the other three players,” he tells us. “Overall growth in that space is phenomenal."
Amod Kelkar is navigating HACI’s journey from “start-up mode to entering the market as a mainline player”.
HACI’s headquarters are located in Greensboro, North Carolina.
He has big ambitions for the “differentiating advantages” of the HondaJet Echelon’s range and fuel efficiency. “I think we will start with a moderate 15%-20% of the market in the first three years,” he tells us. “We should be able to move to 30% or more after five years of the HondaJet Echelon entering service. I don’t see that as a problem – as long as our supply chain can cope.” But he is quick to add HACI is not interested in making “other people’s lives difficult”. Kelkar says he simply wants to quickly establish the Echelon’s reputation as the sector’s “most popular productivity tool”.
The early signs are that significant numbers of light business jet owners will agree with that assessment. By April 2024, letters of intent (LoIs) for the Echelon had crossed the 415 count. Commercial deliveries are scheduled to begin in 2029.
HACI identifies product support as being a vital ingredient for success. Last summer the manufacturer launched its first Certified Pre-Owned (CPO) programme. Designed to reassure owners, the scheme guarantees end-to-end services, from ease of entry-into-service to post-sales support, backed by HACI and its authorised sales network. Every CPO HondaJet must pass a 210-point standard inspection conducted by Honda-trained technicians across the authorised service network. Also supplied free are pilots’ initial training, technical support and an extra year of warranty – irrespective of the aircraft’s age.
“That’s catching the attention of a lot of people who want to change their aircraft,” he says. “They are now gravitating towards HondaJet.” Kelkar draws pride from the fact that the only manufacturers offering certified pre-owned programmes are HACI and Bombardier – his current and former employer. It’s a system that supports aircraft efficiency, reliability and ensuring sustainability with regular technical upgrades, he says. It also offers the manufacturer the ability to stay in touch with its fleet and offer support from “day one”. Since its launch last June, the company has already sold many aircraft under the CPO programme.
The new HondaJet Echelon is aiming for type certification in 2028. Deliveries will probably start in 2029.
Kelkar also provided perspective on how HACI sees the contribution of Fleet Operators to the overall ecosystem. “Large-scale fleet operators like Volato demand airline-like support,” he says. But why fleet operators? Kelkar’s answer is, perhaps, surprising. “With multiple people using fleet aircraft at the same time, it’s a market that offers the most efficient use of business jets,” reasons Kelkar. And from that logic follows a compelling conclusion.
“Since they carry multiple passengers, fleet operators are practically airlines, except they are not scheduled airlines,” Kelkar notes. “They may not have daily flights from London to New York but they do fly multiple people from point A to point B on demand. So, they have a very similar pattern of demand and needs to a commercial airline.”
Fleet operators are not the only target audience for the Echelon. The aircraft’s long range and 47,000ft altitude are expected to open up new special missions applications beyond transporting passengers from A to B.
Beyond specific use cases, Kelkar believes the Echelon offers an overarching opportunity to deliver more sustainable transportation. Overarching because it fits both the new sustainability demands of society in general and specifically the developing requirements of business culture, which increasingly favours ESG (environment, social and governance) credentials. “We need to connect about the sustainability and efficiency standards of our products.”
HACI and its parent company are working hard to achieve carbon neutral status by 2050. (The motor manufacturer is aiming to achieve its first carbon-neutral plant in 2026 at the Saitama factory’s assembly plant, north of Tokyo in Japan. Last year Honda launched an internal carbon pricing to accelerate the reduction of CO2 emissions at its Japanese business sites).
"Fleet operators are practically airlines …"
Amod Kelkar, HACI
Top Left: First in Europe – In 2016, former HACI CEO Michimasa Fujino (left) handed over the first jet to Johannes Graf von Schaesberg of Rheinland Air Service. Bottom Left: Production of the HondaJet has steadily been ramping up. This pic: Above-the-wing mounted engines are said to cut noise and vibration
But do HondaJet customers – established and potential – want (or need) a jet with top ESG standards? Or are they simply interested in safe, comfortable and reliable flights at a price that will keep their finance teams happy?
It’s a key question for HACI. Kelkar answers it like this: “A lot of our customers, especially fractional owners of fleet operations, are noticing that the age demographic of their clients is dropping. That means younger people are now going for fractional ownerships. And they have a very particular view of environmental sustainability, fuel consumption and cutting carbon footprints.”
Plus, the new generation of clients are much more open to sharing flights with other people. These are trends that did not exist 20 years ago and Kelkar expects them to become even more important.
From opportunities we turn to challenges. Two, in particular, exercise minds at HACI: first, the supply chain; and second, attracting the right people to the right jobs. Kelkar traces supply chain difficulties back to the global pandemic. Commercial aviation recovered at a much faster rate than many expected, he says. That meant big manufacturers such as Boeing and Bombardier experienced very high demand immediately after the Covid recovery.
“Passenger velocity picked up at a much higher rate than people expected and that created problems for small- to medium-sized players like us,” Kelkar explains. “Our demand for parts is relatively modest and our parts are sometimes unique to our product line.”
HACI’s solution is to strengthen relationships with suppliers. Kelkar talks regularly to C-suite executives in supplier organisations to ease the continuity of parts supply. But it’s an improving trend. “In 2022 we were really in bad shape and in 2023 we recovered a little bit,” is his frank assessment. “2024 is looking much better in terms of streamlining our supply chain and supplying parts to our production line.”
“Younger people are now going for fractional ownerships”
Amod Kelkar, HACI
The second challenge is finding the right people with the right skills at the right time. Again, Covid continues to cast a long shadow. Part of the experienced workforce has simply moved out of the work system, changed career, decided to work in consultancy or from home. That has created a skill shortage which is felt particularly keenly for employers located outside major metropolitan areas – such as HACI in Greensboro, North Carolina.
Unlocking global opportunities
“Anyone who knows anything about business aviation should think about China, India and the Middle East – especially Qatar and Saudi Arabia,” says Kelkar. He sees huge potential
HACI is evaluating the opportunity but it plans to wait until the right moment arises, when the company’s supply of inventory and local infrastructure align. “The main reason is we don’t have the volume at present to deliver to these regions. We are sold out until 2026,” he says. “The problem in massive geographies, like India or China, is the infrastructure has to go first and then the aircraft. Otherwise, the AOG (aircraft on ground) in a remote location takes much longer.”
To underline his point, HACI’s closest service centres to India are in the east Malaysia and in the west of Germany. So, unlocking the potential of big markets like India or China requires the support of full-service centres equipped with a comprehensive range of spare parts. So, it’s a big undertaking and, lacking the inventory at present, not one that justifies the expense.
HACI’s most important market, unsurprisingly, is the Americas, which accounts for 80% of the manufacturer’s aircraft. It’s also a key area of growth for the business, as it steps up its focus on supplying to individual and fleet operators.
Europe, too, is “another very fertile land for HondaJet units”, he says. The company has a well-invested infrastructure in the region with a HondaJet simulator in the UK and a spare parts facility in Amsterdam. There are also two authorised service centres and a dealership in Europe.
But how much business? Lucrative though business jet manufacture can be it’s still tiny compared with global car production. In other words, does the monolithic Honda Motor Company really need within its portfolio a relatively small-scale jet manufacturer? Kelkar confesses that question also occurred to him before joining HACI. “I’m an aerospace guy and I had the same question during my interview process.”
Three reasons persuaded him the answer was yes. First is the heritage of the Honda company. “Mr Honda always had a dream of developing, designing and building airplanes,” says Kelkar. “That’s why you see the wing in the emblem of the Honda brand since the 1950s.” His observation also neatly references Honda’s long-term moto: “The power of dreams.”
Second, Honda has long aimed to be a mobility solutions company. This includes making vehicles for use on land, sea and air. (Honda makes the world’s most popular form of transport, the Super Cub motorbike, which shares its name with an iconic aircraft, and has sold more than 100m units since its launch in 1958. So, air transport – both in the form of business jets and now eVTOLs – is an integral part of the company’s offer.
“Thirdly, they look at us [HACI] as a huge brand value for the overall Honda company,” he says.
So, knowing Japanese companies’ love of long-term planning, does Honda Motor Company have a 50-year plan? “I have not seen a 50-year plan,” Kelkar tells us. “But I have seen a 30-year plan.” While remaining tight-lipped about their contents, he does concede this: “We certainly are working towards business sustainability and HondaJet Echelon will prove to be the catalyst in this transformation. HACI aims to bring a continuous improvement culture that builds safe and reliable products which align with Honda’s skyward mobility vision.”
Meanwhile, throughout his long life, Soichiro Honda never forgot Art Smith’s display in 1917. Just 10 years later, the 35-year-old Smith died when his Curtiss biplane crashed during a night flight for the US Post Office. Even in later life, Soichiro and his wife Sachi both held private pilot's licences. He enjoyed hang gliding and ballooning into his late 70s.
No surprise then he chose a wing to serve as the logo for the company that bears his name.
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HondaJet Echelon – What’s in the name?
“A LOT OF work with in-house experts.” That’s how Amod Kelkar, senior vice president and chief commercial officer, Honda Aircraft Company (HACI) remembers the detailed search for a new name to grace HondaJet’s newest aircraft.
Eschewing number-based names, beloved by some other business jet manufacturers, HACI chose Echelon because of its double meanings. A double meaning that signals both the company’s product portfolio and its environmental ambitions.
“Echelon has a double positive meaning,” says Kelkar. The first fits neatly with the manufacturer’s move into a new market segment. “In the French language it means ladder – an upper echelon or a step up a ladder. So, for anyone who wants to move into the light jet space is going to be moving up to a high level with our product.”
The second meaning references flocks of migrating birds flying in V-formation.
A characteristic flight pattern of geese, ducks, swans and other birds, echelon formations cut the birds’ energy requirements by up to 30%, enabling them to fly further than they otherwise could on long migratory routes. (In aerodynamic terms, the lead bird’s wingtip vortices create upwashes that help to support its followers).
For HACI, Echelon echoes the fuel efficiency (and savings) offered by its new jet.
Kelkar sums up the benefits like this: “The name refers to the aircraft’s reduced fuel consumption and improved aerodynamics and taking someone to the upper level.”
Amod Kelkar – Programme Leader for the HondaJet Echelon
Amod Kelkar – Programme leader for the HondaJet Echelon
IT TAKES A team to build a new business jet. Kelkar would be the first to highlight the teams of designers, engineers, planners, marketeers, accountants, logistics specialists and many others who contribute to the Echelon project. But he leads them all.
Since this January, the Indian-born business leader has combined three roles at HondaJet. His latest promotion, to the role of senior vice president, gave him overall responsibility for HACI’s business strategy and performance as well as working with all business units. He also leads strategic supplier relationships on both HondaJet and HondaJet Echelon programmes. Kelkar reports to Hideto Yamasaki, HACI’s CEO.
As its chief commercial officer, he leads Sales, Marketing and Communications, Customer Service and commercial strategy.
His third role is main programme leader for HondaJet Echelon. In this capacity he is responsible for the entire project – the lifecycle and execution of the Echelon programme. Reporting to him are the chief engineer and all the programme leaders from various divisions.
They are roles for which Kelkar has undergone a lifetime of training. After 19 years at Bombardier, he moved to De Havilland for one-and-a-half-years before being lured to HACI in January 2021.
Kelkar sees his time at previous OEM’s as playing a pivotal role in preparing him for his current challenge. “Number one is the overall big picture perspective that came from owning customer relationships and business operations along with a global P&L [profit and loss account] and an aftermarket of more than 3,000 airplanes including multiple models,” he tells us. Kelkar ran a team of close to 400 people, who supported 100 different airlines in more than 80 countries.
So, what’s Kelkar’s management stye? Without hesitating he singles out three actions. “Number one, it is informed by the realisation that people are our biggest assets by far. Second, I try to spend as much time as possible in making our work as relevant for every member of the Honda Aircraft Company as it can be – how they fit and contribute to the big picture,” he says. “I see that as a huge motivation when people realise how they fit into the big picture of the business."
Third, he focuses on accountability “as a positive energy”. Top talent from across the world has been attracted to HACI’s Greensboro HQ. “The technical capability to do the job is very much there. My role is to help make it a positive spiral by giving accountability, responsibility and recognition.”
It’s a personal responsibility that Kelkar takes seriously – so much so, it extends into his private time. “I use my so-called relaxing hours for some kind of enrichment for myself and my team. So, I focus on reading, as much as possible, about business trends and industry practice.” (A favourite read is Malcolm Gladwell’s The Outliers).
Having lived and worked for many years in Japan, Canada and now the US, Kelkar thinks his continuous learning has delivered compelling business benefits. Over the past 25 years he has visited more than 50 countries for work, and this delivers a global perspective that provides valuable business insights, he says.
This leads to a surprising admission from the man who leads the multi-million dollar investment programme dedicated to delivering the HondaJet Echelon. “Long experience brings me to the realisation that most certainly, I am not the smartest person in the room. It is better to be open and transparent about that and what value I can bring to the discussion and learn and absorb what people have to share and find that point of win-win.”
Pressed to identify non-work interests, Kelkar concedes a strong interest and support for animal welfare charities. “I am a cat person,” he tells me.
250 and counting: In January 2024, the HondaJet team celebrated the production of their 250th aircraft.
HondaJet Echelon – Long legs, engines on top
TWO OF THE new HondaJet Echelon’s most distinctive features are its long legs and its wing-mounted engines. But pry a little more deeply and you will find new engines and a new fuselage compared with its elder sisters the HondaJet Elite II range.
First, that range. The Echelon’s ability to deliver non-stop, US continental trans-continental travel – with one crew and 10 passengers or two crew plus nine – will prove a true game-changer, Honda Aircraft Company (HACI) hopes. It claims a range of 2,625nm (4,862kms). That compares with four-passenger ranges of about 2,000nm for Embraer’s Phenom 300 and the PC-24.
The new jet’s baggage capacity is 120 cubic ft and its cabin altitude is 6,363ft.
HondaJet’s famous over-wing mounted engines – conceived by now retired aeronautical engineer Michimasa Fujino – are retained in the new design because they continue to deliver “the same three advantages they always have”, says Amod Kelkar, chief commercial officer, HACI.
The first two are more space in the cabin and the second is a reduction in noise and vibration, as the engines are not connected to the fuselage, says the manufacturer.
Lower drag and, therefore, improved fuel efficiency are also claimed for the engine-over-wing design.
The location of the engines may remain the same but the Echelon sports new power units. In place of the two GE Honda HF/120 engines that equip the HondaJet Elite II, the new jet will wear twin Williams International FJ-4C power units. “The main reason is that the current [GE] engine, while delivering a robust 2,000 lbs of thrust, does not meet the payload requirement for the HondaJet Echelon, which needs 3,000 lbs of thrust,” says Kelkar. Ensuring the GE Honda engine could deliver 50% more would have required a full redesign and that lengthy task did not fit Honda’s technical and commercial timelines for the Echelon programme.
It's not just the engines that are new. After an RFP (request for proposal), the manufacturer decided to change its fuselage supplier from GKN Aerospace to Spirit AeroSystems based in Wichita.
So, equipped with its new engines and fuselage, there’s “tremendous momentum”, behind the Echelon project, says Kelkar. The new jet’s critical design review is due to take place this July. HACI is aiming for type certification in 2028, with commercial deliveries probably starting in 2029.
The new cabin is longer and slightly larger than the first HondaJet. The Echelon interior is 5.08ft (1.55m) high by 5.21ft (1.59m) wide. It is said to deliver a maximum speed of 518mph (834km/hour) and a maximum cruise height of 47,000ft. The aircraft will be delivered with Emergency Autoland and Runway Overun Awareness and Alterting System (ROASS) as standard.
So how about the price tag? Here’s an indication of pricing in the light jet segment. A Cessna Citation CJ3 Gen2 carries a list price of $11m, while a Embraer Phenom 300E costs $10.995m. The Pilatus PC-24 comes in (or rather goes out) at $11.9m.
HACI is not releasing list prices until there is a clearer idea of costs. “Next year I think we will be able to talk about the price.”
Disrupted deliveries: HondaJet & HondaJet Elite deliveries
Source: Amstat
SINCE THEIR debuts in 2015 and 2018 respectively, HondaJet and HondaJet Elite models have garnered significant interest in the business jet market, writes Fayaz Hussain.
According to Amstat, Honda has delivered 244 aircraft to date but delivery patterns have shown variability.
“Part of the reason [for the variability] has been the availability of supply. We have decided to focus on quality over quantity of deals. So that has been the focus of the company,” says Amod Kelkar, chief commercial officer, Honda Aircraft Company (HACI) on the unevenness in deliveries.
A strong initial performance saw nearly two-thirds of deliveries concentrated between 2017 and 2021, with an average of 37 aircraft delivered annually. This period reflects Honda's focus on establishing a foothold in the market and capitalising on the innovative design of the HondaJet range. However, a strategic shift towards quality has been a contributing factor to the decline in deliveries observed in 2022 and 2023. The jet manufacturer made only 18 and 23 deliveries in 2022 and 2023 respectively.
Kelkar also attributes the recent slowdown in deliveries to global supply chain disruptions impacting the entire aerospace industry. Kelkar acknowledges that the high volume of deliveries in 2021 stemmed from backlogs created during the pandemic. “Also because of Covid some customers cancelled their orders and we ended up with some inventory. The good news is that with strong demand we were able to find homes for all the inventory over 2022 and 2023.
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HondaJet Echelon promises to uncork ‘a game changer’
“EVEN IF ONLY HALF the performance targets promised for the HondaJet Echelon are achieved, the new aircraft promises to be a true game changer.” Michelle Hoover, founder and president of exclusive HondaJet broker Global Elite Aviation is enthusiastic about the market prospects of the Echelon.
It is an informed opinion – from a broker who knows HondaJet and its target market well. And someone who wants to sell lots of them. After a successful career in the wine industry working in sales and sales management (including gaining sommelier qualifications), Hoover moved into aircraft sales with Textron Aviation in 2016.
From Textron, Hoover joined Cutter Aviation, where HondaJets became the central theme of her career. This was reinforced by her time as vice president, Aircraft Brokerage and Acquisition at QS Partners.
Hoover thinks Honda Aircraft Company (HACI) enjoyed a key advantage in planning the Echelon. “The manufacturer started with a clean-sheet design,” she says. “That gave them a big advantage in knowing the performance figures of competitor aircraft and designing a light jet that improved on them.”
For Hoover, this all adds up to: “A game-changing aircraft in its class, the HondaJet Echelon is on track to redefine the light jet category.” Decisive factors (if delivered) will be its transcontinental range – 2,625nm – and single-pilot capability, she says. “The ability to fly from LAX to Teterboro, non-stop with a single-pilot airplane will transform the light jet segment.” No light jet – no Cessna Citation CJ3, Pilatus 24, not even the “Queen of the class” the Phenom 300 can match that range with single-pilot capability, she adds.
HACI is also harnessing the expertise of its parent company, Honda Motor Company, in using its automotive design and technology to benefit the cabin outfitting of the new jet. While no price has yet been released for the new jet, Hoover expects it to be competitive with other light jets.
The Echelon will appeal to private owners and corporate flight departments who want to replace business class commercial flights with speed and convenience of private jet travel, according to the CEO of Global Elite Aviation. Not only will flights be quick and convenient but, thanks to modern connectivity solutions, staff can work productively during the flight.
Turning to HACI’s new appetite for direct sales to clients, Hoover believes the manufacturer has been considering doing this for some time. So far, HACI has confirmed its intention to move to direct sales in the key markets of North America and Japan. “Adopting direct sales should come as no surprise,” Hoover tells CJI.
It’s a tactic that will unlock a number of benefits. “Going direct will help to standardise pricing, in place of each dealer negotiating their own price with the customer,” she says. It also offers an opportunity to standardise buyers’ incentives – which can differ significantly from dealer to dealer.
Its dealership sales model initially provided HACI with a ready-made network – including access to customers, says Hoover. These dealers often also sold turboprops, which could be considered a natural entry point for the very light business jet market.
But now the company is expanding, direct sales promise another crucial benefit, says Hoover. It will enable the manufacturer to standardise customers’ experience across regions and enable it to deepen relationships with the people who buy its aircraft.
Meanwhile, Hoover reports a typically slow first quarter followed by a busy phone in the second quarter. HACI’s strategy of regularly introducing new models has built a pipeline encouraging owners to upgrade. “I see a lot of repeat customers in addition to new owners,” she tell us. “A number of HondaJet owners are selling their aircraft and upgrading to the new Elite ll model.”
In mid-April, Global Elite Aviation had six HondaJets on the market and had sold five since December. Hoover looks forward to adding the Echelon to Global Elite Aviation’s inventory.
Michelle Hoover
“Going direct will help to standardise pricing."
Michelle Hoover, Global Elite Aviation
