Farnborough Air Show

Bombardier forecast: super-midsizes will lead

 - November 27, 2006, 7:16 AM

Bombardier is forecasting continued growth for the business aviation industry over the next half-decade and is positioning itself to take advantage of the market. Its research suggests that among the market hotspots, super-midsize business jets will be generating the most heat.

The Canadian airframer’s vice president of business aircraft James Hoblyn noted a number of current market indicators as evidence of steady, if not spectacular, growth over the next couple of years. Those strongest indicators include a worldwide fleet of 13,000 business jets whose owners are replacing airplanes on average every six years, and a surge of concept buyers in 2004 and 2005 on the international market. Of all orders placed in 2005, Hoblyn noted, 43 percent were placed by international operators.

“We’re riding an up-cycle now,” said Jahid Fazal-Karim, senior vice president of aircraft sales for the business aircraft division. The low point was in 2003. The upswing since then, he said, is due primarily to U.S. annual economic growth of approximately three percent, an emerging class of high net worth individuals in developing countries, healthy backlog numbers and a strong pre-owned aircraft market.

Fazal-Karim also noted that the number of available aircraft models is higher than it has ever been, allowing customers to choose an airplane that more precisely meets their requirements. According to Bombardier, there were 20 aircraft models available in 1996, while today, there are more than 40.

Hoblyn described the $19.21 million Challenger 300, certified in 2003, as an example of a bizjet model developed to fit a specific market niche. Designed from a blank sheet, it has coast-to-coast range, takeoff field length of 4,720 feet, and long-range cruise speed of Mach 0.80 or better.

Bombardier also foresees a growing demand for the corporate shuttle and last year launched a family of aircraft for this market–the Challenger 850, Challenger 870 and Challenger 890. While market response to the shuttle versions has been “gratifying,” Hoblyn said the executive/VIP variant of the Challenger 850, priced at $27 million to $28 million typically equipped, has been “an immediate success.”

Bombardier picked Lufthansa Technik of Hamburg, Germany and Midcoast Aviation in the U.S. to do the executive/VIP interiors and at last report Lufthansa has a backlog of 17 Challenger 850s. Midcoast Aviation has its first 850 already in the shop and expects to do another seven. Hoblyn said the regional jet production line is holding 10 to 15 slots a year for airplanes that will undergo the executive/VIP treatment. Most of the Challenger 850 executive/VIP aircraft orders have come from European operators, as does most of the interest in the shuttle variant.

According to Fazal-Karim, Bombardier sees the next big markets for business aircraft in Russia, India and the People’s Republic of China. Russia, he said, represented 35 percent of Bombardier’s European orders in 2005.

“A couple of years ago, Russian demand was primarily for widebody business jets,” he said. “Now, in an improving economy, that demand is shifting to midsize airplanes, and they are registering and basing the aircraft outside Russia in order to avoid the high import taxes.”

While India and China have “tremendous market potential,” said Fazal-Karim, there are difficulties that remain to be overcome. In India, he said, the challenge is in a “cumbersome” import process, and in China, there is a need to open more military airports to civil use. And in both countries, the process of getting landing permits is lengthy and complicated.