Description And Analysis Of The Market

In aviation terminology, our products belong to GA (General Aviation) category. The category includes all aircraft except military and commercial passenger aircraft. About 313000 GA airplanes fly all over the world, which is about 80% of all civil aircraft in service.

GA aircraft in individual regions of the world:

Region

Amount (number of units.)

USA

215 000

Canada

17 500

Western Europe

30 000

Eastern Europe

2 500

Africa

25 000

Mexico

3 500

Australia/New Zealand

7 000

South America

11 000

Middle America

1 000

Japan

1 000

Total

313 500

80% of the above are single-engine machines. Over 70% of all GA airplanes are operated in Northern America (USA and Canada).

Every year, about 25000 - 30000 of single-engines airplane are bought. Average price of a single-engine, used plane is $65000. The world demand can be estimated as 25000 - 30000 of such planes a year. Used airplanes are bought ten times more often than new planes, so demand for new airplanes is at the level of 2500 - 3000 a year. Secondary market of GA airplanes is estimated at 15-18% of all GA aircraft. There are 48000 of two-seat aircraft (with engine power below 160HP) registered in the world, so it can be assumed about 7200 - 8640 airplanes change their owner every year. Very high prices of planes, soaring fuel price and maintenance will cause stagnation in production of classic GA planes. According to the market analytics:

• current level of global production will generally stay at the same level;
• "alternative" aviation market, meaning ULM aircraft, will be growing very fast due to low cost of aircraft purchase and maintenance;
  

Global demand for two-seaters with engine power below 160HP is estimated at 1000 - 1200 units. The demand can be met by ULM aircraft in 75%. Homebuilt airplanes market, based on DIY "kits", will grow. Forecasted demand is estimated at 1200 - 1500 a year. Homebuilt planes are registered in "Experimental" subcategory and regulations requires owner's input of work at the level of 51%.

Price of a plane translate directly into cost of maintenance and operation - level above $100000 a year will not be accepted by potential customers.

Our Potential Customers And Demand Forecast

Western Europe and USA

For the Company, the most promising foreign markets are US and West European markets. In the United States, there are about 212500 airplanes in service. 165000 (78%) of them are single-engine. 60000 (37%) of them are planes with 1-3 seats, whereas 105000 (64%) are planes with 4 or more seats. In Western Europe, there are about 30000 GA airplanes, 21000 of which are single-engine machine. 31,5% are registered in Germany, 26% in France, 23,5% in Britain. Only 50% of those aircraft were manufactured in Europe (mainly in France and England) - the rest were imported from the USA.

Production peak of GA aircraft was between 1965-1981, which means that 50% of all airplanes are 20 years old and about 30% is 25-30 years old. It means that global GA fleet is pretty old, both in terms of technical condition and technological solutions. Consequently, there are good reasons to believe that used planes will eventually cease to meet customers' requirements.

East European market

Due to very high economic instability of East European markets, even approximate estimates are not credible. Level of new planes supply in the region is close to 0. For the Company, the most promising markets of the region is Poland, Czech republic and Hungary as the rate of economic grow is very high in those 3 countries. Company offer should be directed to private persons. Prospective markets to be considered in the future are Ukraine, Latvia, Lithuania and Estonia, where supply level is also close to 0 now.

Domestic market

There are about 100 planes in private hands in Poland. Optimistic demand scenario is another 100 airplanes sold in the next 5 years. Companies' demand is estimated at 50 airplanes in the next 5 years. So, the total purchasing power of the Polish market, on condition the current high economic grow is maintained, would be about 400 two-seater in the next 5 years. Ekolot would cover 35% of this demand, which is about 140 airplanes.