A Private Jet Maker Is Thriving By Making Old Planes New Again

Designing a new airplane is an incredibly expensive, complicated, and long process, one that can prove wasteful if not executed properly — as Boeing's troubled Dreamliner jet has proven in recent months.

In 2007, looking to avoid the costs and pitfalls that come with new aircraft, aviation entrepreneur Kenn Ricci created a business that would sell small jets for half of what they usually cost, thanks to a simple change.

Instead of building new jets, Nextant Aerospace would take old jets, refurbish them, and sell them for 50 cents on the dollar.

The result, President Sean McGeough says, gives you "everything a new aircraft gives you." Unless a buyer is dead set on having a 100 percent new plane, he seems right. That's because Nextant retains the hull of the plane, then replaces just about everything else.

So far, Nextant has produced one model, the 400XT, based on the Hawker 400. The huge cost of designing a plane from scratch does not have to be recouped, so the price of the planes stays low.

In refurbishing a jet, the airframe is kept, while the avionics and any life-limited components, along with the interior, are replaced. From start to finish it takes about 6,000 man hours of work, around 16 weeks.

Before re-entering service, the jets go through the same certification process and flight testing as any new plane. The end result, McGeough says, is a "virtually new" airplane.

In fact, he says, the updated planes are often improvements of their original selves, because they are outfitted with systems developed since the planes were first designed. Once a Hawker 400 becomes a Nextant 400 XT, its operating costs drop 30 percent, and its range improves by 50 percent, says McGeough.

McGeough joined Nextant as President after leading Hawker Beechcraft's international operations in Europe, the Middle East, Africa, and Asia Pacific. Selling old planes instead of new ones was "very new territory," he says, but he was drawn to Nextant by its value proposition and track record of high deliveries: 25 planes in 13 months.

Matt Doyle is the Executive Vice President of Sales and Marketing at Flight Options, a fractional jet ownership company that has purchased 12 aircraft from Nextant (its chairman is Kenn Ricci, Nextant's founder). Asked if he hesitated before buying refurbished aircraft, Doyle said no.

If Flight Options can offer essentially new planes to its customers for half the cost, and saves everyone money, it's a good deal, Doyle told Business Insider.

That's especially important in a private jet industry that has been lagging in the United States in the wake of the recession. Nextant has sold aircraft to corporate clients, commercial fleet operators, and wealthy individuals.

Its business model has proved popular abroad as well: Despite expectations that its clients would be mostly domestic for the first few years, McGeough now predicts 60 percent of its products over the next three to five years will go to foreign buyers.

So far, Nextant has not gone beyond its first product, the refurbished 400XT. To build on its early success, the company is getting ready to announce its next model, a few months from now.

And while selling old planes may seem questionable, the saga of Boeing's Dreamliner — the commercial passenger jet full of new technology that was designed to change the industry — proves its wisdom.

The Dreamliner debacle is an example of why remanufacturing works, McGeough argues: "You don't go through the teething problems you would on a cleansheet design," and you work only with proven technology.