LYON, France—"Our customers are very active—the market isn’t flat in terms of discussions, it’s flat in terms of placing orders," Dassault Aviation chairman and CEO Eric Trappier says.

He is talking about Falcon business jets. For at least 15 years, the quote could have been about the Rafale fighter.

Dassault, which traces back its roots to an innovative propeller designed by its founder, Marcel Dassault, in 1916, has kept the strong corporate culture of a family-run business with an omnipresent passion for aviation. Although relatively small – 12,000 employees – in a world of giants, it has remained fiercely independent. And, despite a consistently healthy cash flow, it has not tried to take over any other aerospace company. Instead, it uses its 25% stake in aircraft system supplier Thales to influence the strategy of another major French player in civil and military aeronautics.

. In 2007, Falcons were selling like hot cakes while the Rafale had begun building a reputation of an "unsalable" aircraft, as some French politicians would soon describe it. Rafale export sales took off at last in 2015 but demand for business jets has failed to recover from the 2007-2008 crisis.

The current shift is not too worrying for Dassault’s overall financial performance. The effect of the Rafale contracts has so far been practically invisible on revenues because early export deliveries have only offset an agreed trough in French ones. But this is about to change. Trappier says total 2017 revenues should be higher than 2016’s €3.6 billion ($4 billion), thanks to Rafale export sales.

Nevertheless, civil research and development (R&D) expenditures may be questioned eventually. Dassault releases an overall number, lumping together civil and military R&D activities. At least, it clearly cited the Falcon 5X’s program suspension for the decrease in R&D spending in 2016, to €293 million.

This was still 8% of the revenues. This percentage is probably about to increase back to previous levels – it was in the 10-13% range between 2013-15 – with foreseeable needs for current and future programs. So what if R&D for business aircraft stay at a high level for a mere 40-or-so annual deliveries?

Dassault has, for decades, endeavored to stay at the forefront of business aviation technology – a relentless competition with archrival Gulfstream. Last October, Dassault received EASA and FAA certification for its FalconEye combined vision system. The system is the first head-up display to blend synthetic terrain imaging with actual thermal and low-light camera images for enhanced situational awareness. The company does not disclose the cost of the development but its duration, at least three years, gives an idea of the effort.

Meanwhile, the Falcon 5X program, a cleansheet design featuring a wider fuselage, is stalled. Supplier Safran Aircraft Engines is partially redesigning the Silvercrest turbofan to meet the expected performance. Entry into service has been postponed to 2020. It is fair to assume a lot of the 5X’s development cost lies ahead.

And now Dassault is gearing up for the launch of its next business jet. "We want to be in a position to launch a new Falcon business jet at the end of 2017," Trappier says. The airframer is aiming at an improvement in comfort and a reduction of the environmental footprint. It is thus considering "technology bricks" such as more laminar airflow on the wing to cut fuel consumption, a U-shaped empennage for lower noise and a new generation of composites for better recycling qualities. A fuel cell might replace the auxiliary power unit for greater overall energy efficiency. Such levels of technology advancement again suggest hefty R&D spending.

All these projects are taking place as Falcon deliveries are on a downward trend. This year, Trappier only anticipates 45 – the weakest number since 1996. Global deliveries of business jets were down 8% last year. Even Gulfstream, which for some time had managed to curb the damage, saw deliveries slid to 88, from 120 in 2015. Trappier expects the business jet market to remain weak in 2017, with a gradual recovery likely to begin in 2018. However, any upturn has proved elusive in recent years. Even worse, last year, "to sell Falcons we had to fight—and we had to cut prices," says Trappier.

The bottom line is a risk of disproportioned investment in R&D. "If the market does not come back, it will be a very heavy bill of development," Teal Group analyst Richard Aboulafia says. It may be alleviated by European funding for some demonstrators but the company used to amortize such costs with faster sales. Over the last 21 years, Dassault has handed over an average 63 Falcons per year.