NBAA - Honeywell confirms MENA leading business aviation revival

The Middle East, Africa and Asian regions still rank as the areas with the highest purchase expectations in the business aviation sector despite the effects of the global recession - that was the positive note from the 18th edition of the Honeywell annual Business Aviation Outlook issued today at NBAA in Orlando, USA.

As part of the forecast in which Honeywell confirmed the boom of 2003-2008 is officially over, the company said that purchase expectations of 55 percent recorded in Africa/Middle East were up more than 10 points from 2008, setting a new record high.

All the increase in purchase plans came from the fleet replacement category. Fleet expansion demand fell by about three points compared to last year. Middle East and selected African economies continue to benefit from improved oil prices and burgeoning trade with China and Asia, the report said. Operators in these regions expect to be active buyers. Operator plans to buy are timed sooner than in Latin America, North America and Europe. But fleets in these areas are relatively small so even high planned purchase rates yield smaller absolute numbers of new jet purchases until the fleets expand at a future time.

Confidence in Asian and Middle Eastern economic growth in the intermediate and long term remains high, boosting interest in larger, longer-range aircraft with better operating economics.

Concerns over new duty time restrictions and carbon emission regulations were voiced in this region as well.

Overall, Honeywell forecasts delivery of approximately 11,000 new business jets from 2009 through 2019, generating estimated industry sales of $200 billion.

For 2009, Honeywell Aerospace forecasts deliveries of 750-800 new business jets, down from 1,139 in 2008. Deliveries in 2010 are expected to drop below 700. Based on operator survey responses, long-term buyer interest has increased, however new purchase plans are currently timed later in the five-year planning window, which strongly suggests that by 2011-2012 there will be significant pent-up demand that will improve the outlook for order intake and new jet deliveries.

“Offsetting this near-term contraction, Honeywell’s surveyed operators said their new purchase plans were less affected during the five-year horizon in key international markets within Europe, Asia, Africa and the Middle East,” said Rob Wilson, President, Business and General Aviation, Honeywell Aerospace.

“The relatively stronger levels and timing of international purchase plans suggests that pent-up demand will improve both order intake and new jet delivery rates by 2011-2012, similar to what the industry experienced in the last cycle,” Wilson said. “Despite some program cancellations and delays, there is still a solid pipeline of new high-value models supporting long-term growth and our survey indicates that international demand will remain significant.”

2008 marks the end of an unprecedented five-year industry expansion that began in 2003. After peaking in 2008, new jet deliveries are projected to decline roughly 30 percent in 2009 followed by a 10- to 15-percent decline in 2010 before starting a recovery in 2011.

Based on new jet models mentioned by survey respondents, the 2009 Business Aviation Outlook projects a fairly balanced demand profile across most business jet segments over the next five years.

Medium and Medium-Large aircraft combined account for about 23 percent of the projected demand through 2014. Light and Light-Medium aircraft make up about 24 percent of projected five-year demand. The next largest groupings are in Long Range and Ultra-Long Range aircraft at 18 percent and in large class models also at 18 percent. Sustained interest in the Long and Ultra-Long Range segment is has been present for several years and reflects increased need for aircraft capable of trans-Pacific flights, as well as the growth in demand in other regions requiring more

Long Range operations as trade and economic growth is still anticipated.

North America is expected to account for about 48 percent of business jet deliveries over the next five years, continuing to reflect somewhat more cautious attitudes and slower growth in the region versus the very high levels of purchase expectations in all other areas.

Honeywell has reported on this trend for several years, and the survey is tracking with observed shifts in orders and deliveries very closely. The North American share declined from 55 percent in the 2008 survey.

Asian demand through 2014 based on the survey slipped back to around 7 percent of the total on lower purchase plans aimed at fleet growth. European demand share expanded to 27 percent based on the record purchase plans in the region. Latin America share declined roughly one point to 11 percent. The Middle East/Africa region gained three points over last year to nearly 7 percent. While these percentages shift somewhat each year, the overall demand pool remains fairly large so individual regions are still absorbing significant numbers of new aircraft into their fleets, even if percentage share slips a few points.