Business jet sales are expected to reach $250 billion over the next 10 years as a growing number of customers gravitate toward long-range, large-cabin models. But 2013 is shaping up as another flat year as lingering market sluggishness continues to hold down deliveries of small and midsized business jets, says Aerospace.
In its 21st annual Business Aviation Outlook, Honeywell forecasts a market for 10,000 new business jets through 2022. In terms of overall delivery numbers, the outlook remains little changed from the predictions Honeywell made in 2011. But the fleet composition is changing, with a greater number of large-cabin, long-range aircraft pushing up billings estimates by 9% over 2011 levels.
Large-cabin jets now account for more than 40% of new purchase plans, says Honeywell, which surveys more than 1,500 business jet operators worldwide for its annual outlook. These aircraft are expected to represent about 70% of the value of new business jet deliveries. Add in super-midsized business jets, and the larger aircraft are expect to account for 50% of the deliveries and “well over” 80% of the billings over the next 10 years, says Rob Wilson, president of Honeywell Business and General Aviation.
For the first time this year, Honeywell asked business jet operators why they would choose a specific type of aircraft. The number one answer to come back across all regions was range, he says, as customers want aircraft that fly farther. The market, he says, “really skewed toward the large-cabin class.”
While in the long term Honeywell sees an overall acceleration of deliveries, in the near term the news is not as positive. Honeywell is forecasting manufacturers will deliver 680-720 business jets this year, which will be close to or only slightly more than the 681 shipped in 2011. Shipments in 2013 are expected to match those of the past couple of years, Honeywell says. “Next year’s totals are anticipated to be of similar magnitude, reflecting the protracted nature of the global economic recovery,” Wilson says.
Other manufacturers are expressing similar sentiments, with bothand indicating that 2013 sales totals should resemble this year’s. Both hope to have new models coming onto the market next year, including Cessna’s Citation Ten and M2, and Embraer’s Legacy 500. Wilson notes that any time new products hit the market, “we see increases in those segments.” But those models are not expected until the latter part of the year.
While the market is still showing little signs of life, Wilson says Honeywell continues to believe that 2011 was the trough year for the downturn. Deliveries are expected to pick up in 2014, although noticeable acceleration is not likely to occur before 2015-2016.
Deliveries are predicted to accelerate rapidly through 2017, peaking between 2019 and 2022. But at no time is the peak expected to match that of 2008. Billings, however, tell a different story, growing steadily from 2014. Billings are expected to eclipse the 2008 peak sometime after 2016 and grow from there.
The level of interest in nearer-term purchases, those over the next five years, has not changed in the past three years. About 30% of respondents told Honeywell they plan to replace aircraft in the next five years. This remains above the 25% levels that were more the norm prior to 2006, but below the peak of 40% in the 2009 survey. Most of the operators, though, expect to buy their aircraft in 2014 or later.
Demand is expected to grow internationally, with the North American market portion declining to about 53%. That compares with the 2011 forecast of a 55% share.
In the near term, more operators in the “BRIC” countries (Brazil, Russia, India and China) expect to buy their aircraft sooner. The number of those operators expressing plans to purchase new aircraft decreased from 50% to 46%, but more than 40% plan to purchase in the next two years.
Purchase plans in the Asia Pacific region have cooled somewhat, with 34% of survey respondents reporting intentions to buy. This is down from 45% in the previous survey. But Honeywell says the region is still a strong growth area. “It is critical to understand that demand from this part of the world remains well above the world average, and we do not believe the 2012 results represent in any way a change in the region’s fundamental underlying growth drivers,” Wilson says.
Latin America represents another growth area, with 39% of survey respondents expressing plans to buy aircraft and nearly 70% of those purchases expected to take place in the next three years. Honeywell says Latin America now accounts for 18% of aircraft demand, up significantly from 13% in the 2011 forecast.
Europe’s demand share also grew slightly to18%, but only from demand in Russia and other countries in Eastern Europe. Demand for new aircraft in Western Europe has slowed.
But at the same time, Wilson notes used jet purchase expectations in Europe improved. This is a sign that there are a number of good aircraft still on the market, albeit at depressed prices, he says.