MONTREAL, Sept 14 (Reuters) - Bombardier (BBDb.TO) on Tuesday unveiled an upscale variant of its Challenger 350 business jet as the planemaker vies to protect its dominant market share in the segment and capitalize on higher demand for private flying during the pandemic. The refreshed variant, named Challenger 3500, seats up to 10 passengers and comes with voice-controlled cabin systems like lighting, and a smaller version of the chaise lounge seats found on Bombardier"s flagship Global 7500. The Challenger 3500, expected to enter service in the second half of 2022, will list for $26.7 million, the same price as the 350, Chief Executive Éric Martel said in an interview. While Bombardier has focused on paying down debt after facing a cash crunch in 2015, it faces pressure to refresh the Challenger in a market where wealthy buyers demand the latest features. During the pandemic, health has risen to the top of concerns of the targeted elite, alongside security and privacy, underpinning demand for private jets. Martel said the changes would help Bombardier keep Challenger as market leader in the super-midsized segment, which bridges small corporate planes and long-range aircraft that can seat 19. "We"re raising the bar in that category," he said, adding that cabin features are key for Challenger customers. The plane competes with Embraer SA"s (EMBR3.SA) Praetors, Textron Inc"s (TXT.N) Cessna Citation Longitude and the G280 from General Dynamics Corp"s (GD.N) Gulfstream Aerospace. While the new variant would likely stimulate demand, Vertical Research Partners analyst Robert Stallard questioned whether the changes are enough, given fierce sector competition. "If Gulfstream comes out with a clean sheet replacement for the G280, then the Challenger 3500 is likely to have a fight on its hands," Stallard said in a note to clients. Gulfstream said in an emailed statement that it "remains confident in the G280’s proven track record and are committed to enhancing it even further." Textron declined to comment. Spending on the new 3500 variant is contained within Bombardier"s expected capex of $200 million to $250 million, Martel said. A mockup of the jet, Bombardier"s first update of the Challenger 300 family since the 350"s entry-into-service in 2014, was on display for a virtual event, confirming a Reuters report on Monday about the launch. read more Martel told reporters at an in-person component of the event that a flight test for the Montreal-assembled Challenger 3500 would be done in Wichita, Kansas. Bombardier said the mockup will be on display next month in Las Vegas at the business jet industry"s largest air show. Martel said Bombardier is weighing potential major options for its aftermarket division, along with large-cabin Global and Challenger 650 business jets.