Plane and simple: Flight simulation

Mechtronix Systems finds a niche in flight simulation.

In the aviation industry, “taking acceptance” of equipment that is expensive, complicated and heavily regulated can be a lengthy process. So Jorge Campbell, senior manager of training for Panama-based COPA Airlines, was prepared to spend several weeks or more determining how faithfully an Ascent FFS X flight simulator, built by Mechtronix Systems Inc. of Montreal, replicates the experience of flying a Boeing 737 jet, the aircraft that forms the core of COPA’s 32-plane fleet. “It has to be at a level where a pilot doesn’t feel he’s actually in a simulator,” said Campbell in October as he stepped into the simulator “cockpit.” Mechtronix senior test pilot Eric Dionne was on hand to answer queries.

When the acceptance procedure was finally completed in January, COPA became the proud owner of its very own flight simulator. It was something the cost-conscious airline would not have previously considered. But at about US$6 million, the Ascent FFS X is about half the price of traditional full-flight simulators. And it costs less to operate because it’s based on electronics and computer software rather than the hydraulic systems and avionics of a real plane.

Ongoing crew training is obviously an important factor for commercial airlines. But most of that training consists of “recurrent” testing that lets pilots keep their licences for the planes they are rated to fly. This training must be done every six months, usually about four to six hours each time. For smaller airlines with no flight simulator of their own, it is inconvenient and costly: twice a year, pilots must take off three days–two for travelling, one for class–to train at larger airlines with time available on their simulators, or at third-party training centres. “This represents lost productivity, since pilots are taken out of work rotation for days at a time,” says Campbell. With its own simulator, COPA expects annual savings in training will be in the order of 15%. Then there’s 10% or so in productivity returns, given that pilots are off the job less, which means fewer replacements are needed.

Mechtronix, an upstart in the flight simulation business, is located near Montreal-Pierre Elliott Trudeau International Airport, about 25 kilometres west of the city. The privately held company is just down the road from CAE Inc. (TSX: CAE), which has almost three-quarters of the simulator business globally (see Project Phoenix, next page). Mechtronix president Xavier Hervé doesn’t presume his firm, with annual revenue of about $40 million, will overtake such a formidable competitor anytime soon. (CAE brings in about $1 billion annually from its simulator manufacturing and pilot training centres for the civil and military sectors.) Still, Hervé says Mechtronix is building simulators as good as traditional full-flight simulators, only cheaper and less expensive to maintain. “We’ve opened up the possibility of owning a simulator to a whole new class of customer who might not have considered it,” Hervé says, adding his target customer is a “Tier 2” regional airline with about 20 aircraft and 200 pilots.

Last fall, Hervé’s company received a new round of financing from Roynat Capital and the Caisse de dépôt et placement du Québec, which has held a stake in Mechtronix since 1997. It will use the money, $8 million, to expand its manufacturing capacity to produce up to 12 simulators annually. Mechtronix is also expanding its marketing efforts, especially in China, Latin America and eastern Europe. Hervé sees the potential market as 10% of a global commercial simulator business worth between US$800 million and US$1 billion. He forecasts Mechtronix revenue will double within three years, especially as it starts expanding the number of aircraft for which it makes simulators. (The current roster includes planes from ATR of France, Chicago-based Boeing and Canada’s Bombardier.) It has already delivered two full-flight simulators and is currently working on orders for four others.

The five founders of Mechtronix– Hervé, CEO Fernando Petruzziello, his brother Marco, Jo Frazao and Thom Allen–got their start in business back in the 1980s. Four of them were graduate engineering students at Concordia University, working on a project to build a flight simulator using microprocessor technology. They created a successful prototype, but Petruzziello says it was “too far ahead of its time” for commercial application. So Mechtronix became a consulting group specializing in applications of microprocessor technology; for example, it designed a cheese-cutting machine for Montreal dairy producer Saputo Inc.

By 1995, Mechtronix revisited the idea of building microprocessor-based flight training equipment. With smaller regional airlines and low-cost carriers, like Dallas based Southwest Airlines, becoming significant players in the industry, Mechtronix saw a need for training equipment to meet their cost structure. About the same time, regulators began allowing wider use of fixed-based training devices in specific areas, such as transitional training (moving to a different type of aircraft within the same class) or training to be part of an airline crew. After building a profitable business in fixed-based training equipment, Mechtronix moved into the full-flight simulator market about three years ago, finding “top-notch” suppliers of off-the-shelf visual and motion systems. “We took advantage of the technology changes happening in the video game market and military simulation market,” says Hervé.

Rather than focusing on developing a Level D simulator, the most sophisticated type and the one most often used in full-flight training, Mechtronix set its sights on developing a market for an upgraded “Level B” simulator that would meet the majority of training needs at much less cost. A Level D model’s replication is such that pilots can train on it and go straight to commercially flying the aircraft it emulates; pilots can’t train on a Level B simulator for certain manoeuvres. That’s not a problem, says Hervé. For purposes such as recurrent training, it’s not necessary for already-employed, active pilots to use a Level D trainer. In the case of COPA, for example, the airline plans to conduct 100% of its mandatory, recurrent pilot training and 80% of its initial (first-time flying a particular class of airplane) or transitional training on its new Ascent FFS X. The remaining 20% would be farmed out to third-party centres, mainly for new pilots to the airline.

The design challenge for Mechtronix, says Hervé, was creating a high-fidelity Level B simulator with six legs–typically they have three–at less cost than a traditional six-legged Level D simulator. (Doubling the number of legs makes it possible for the Level B simulator to pivot six ways, allowing it to better duplicate an airplane’s motions.) The solution, says Hervé, was to shorten the six legs, reducing the simulator’s requirements for weight loads and rigidity, thus making it more cost efficient. And such is the fidelity of Mechtronix’s Ascent FSS X, that it can also be built to meet the requirements of a Level D simulator. At a cost of between US$8million and US$10 million, this still would be cheaper than a traditional Level D model, which typically costs more than US$12 million.

There are other benefits besides the cheaper initial outlay, says Hervé. The Civil Aviation Flight University of China in Guanghan–among the largest in the world–recently purchased three Ascent FFS X simulators, including one Level D model. It was interested because the Ascent FFS X uses a hybrid electro-pneumatic system to activate the legs, requiring less maintenance. Meanwhile, the software can mostly be maintained by the IT department rather than engineers.

Analyst Ted Larkin of Orion Securities says Mechtronix has “intriguing” products, but the aerospace industry is very conservative. A manufacturer like CAE has a very appealing track record and customer list. Says Larkin: “Mechtronix will have its work cut out as it tries to make inroads with low-cost carriers and prove it can provide a cost-effective solution.”

Mechtronix is indeed a small player, and Hervé acknowledges products similar to theirs may well be launched by larger companies within several years. But there is an upside: copycats would validate Mechtronix’s technology and perhaps convince customers to take a chance on a tiny Canadian company that managed to outsmart the big boys by opening up a market where none existed.