New business jets entering service will help drive robust short- and medium-term growth in the industry, which also is seeing a tightening market for used jets, Honeywell Aerospace finds in its annual Global Business Aviation Outlook.

Honeywell predicts manufacturers will deliver 7,700 new business jets from 2019-2028, valued at $251 billion – 50 aircraft more or 1% higher in dollars when compared to the same period in last year’s forecast. Adding Airbus Corporate Jets and Boeing Business Jets increases the forecast to 7,900 aircraft valued at $270 billion.

In the latest outlook, released this past week, Honeywell says it is using a 10-year, rather than 11-year, forecast period to better align with aircraft manufacturers’ forecast planning.

Flat delivery levels this year will be followed by high single-digit growth in 2019 as new models enter their first full year of production. Manufacturers delivered 640 business jets in 2017, a number Honeywell expects to inch up this year to 641. It expects deliveries to increase by 50 or more units in 2019.

New business jets entering service this year or next year include the midsize Pilatus PC-24 (delivered in February); the super-midsize Cessna Citation Longitude; the large-cabin Gulfstream G500 and G600; and the large-cabin, long-range Bombardier 7500.

The forecast is based on a survey of 1,575 corporate flight departments around the world, operating 4,400 turbine-powered aircraft or 13.2% of the world fleet. Fractional ownership companies were not included.

While reflecting topical operator concerns, the results also identify trends Honeywell, an avionics and engine manufacturer, uses in its own decision process for in-flight efficiency, propulsion, services and connectivity offerings, the company says.

Operator plans to replace or expand their fleets over the next five years represent 20% of the current fleet versus 19% last year. Fleet replacement/expansion plans in Europe amounted to one-third of the current fleet, an increase of 14% over last year; plans in North America represented 17% of the fleet, up 1%. Other regions declined in terms of fleet replacement/expansion percentage of current fleets.

Gaetan Handfield, Honeywell Aerospace senior manager for marketing analysis, said the initial shock of Britain’s exit from the European Union (Brexit) may have resolved, encouraging operators to buy new aircraft, particularly in Germany and England.

“I was surprised by that,” Handfield said of the region’s fleet renewal plans. “Obviously, last year, we were all talking about the Brexit issue and the economies in Europe not being that strong. I thought this year it would be a bit higher but not that much higher. The rebound is quite spectacular. Brexit is one year old now, so I think people are getting more comfortable with the idea.”

Big-cabin jets – ranging from super midsize through business liner classes – over the next five years represent 62% of the units and 87% of the value of planned new jet purchases in 2018 dollars. Small cabin personal, very light and light classes of jets follow at 28% of units and 6% of value of intended purchases. Midsize cabin light medium through medium jet classes represent 10% of units and 7% of value, according to the forecast.

North America represents 61% of regional demand for new jets in the next five years, followed by Europe (16%), Latin America (12%), Asia Pacific (7%) and the Middle East and Africa (4%).

Performance ranked as the top reason for selecting a new model in North America, Europe, Latin America and Asia. In the Middle East and Africa, customer support outranked other reasons, and customer support also figured as the second-highest reason for buying a new jet in Latin America and Asia.

The inventory of used aircraft is down 13% overall from last year. The inventory of jets aged from 0-to-10 years listed for resale is down 30% year over year, well below the historical average of 8% “and very positive for new business jet sales.”

In the U.S., only 4% of the installed base of aircraft is for sale, a low level that Handfield attributes to the Trump administration’s 2017 tax reform package, which allows jet owners to deduct 100% of the cost of both factory-new and pre-owned aircraft within its first year of service.

“In the U.S., for sure, it has to be the tax depreciation bonus,” said Handfield. “If there’s one thing that shows the impact of tax depreciation in 2018, it’s the inventory of used aircraft in the U.S. market.”

“We’re down to 4% now,” he adds. “That’s major – it means there are almost no aircraft available. It’s becoming more and more difficult to find a good, young, used aircraft right now in the U.S. market. You have to go to the international markets, and because of that, we’re seeing pricing going up.”