After four years of decline, business aviation is poised for moderate recovery beginning in 2012, according to Honeywell Aerospace’s annual Business Aviation Outlook, released yesterday at the NBAA 2011 Annual Meeting and Convention in Las Vegas, Nev. The Honeywell forecast is based on surveys of more than 1,500 flight departments around the world.
Honeywell (Booth N4500) cites several leading indicators pointing to a modest recovery. First, order activity has shifted from severely net negative in 2009 to modestly net positive in 2010, and strengthened in the first half of 2011. Moreover, global recovery of business aircraft flights continued in 2011, though the pace of increase has slowed.
Meanwhile, demand for large-cabin, ultra-long-range jets remains strong, while the supply of late-model aircraft on the used market is declining. Also, the BRIC (Brazil, Russia, India, China) countries, which have experienced strong growth in demand, have strong near-term demand and the highest planned future purchase rate of all regions. (The 2011 forecast marks the first time Honeywell has broken out the BRIC countries as a region of its own.)
Finally, five-year purchase plans, which have remained stable despite continuing economic uncertainty, suggest order intake should strengthen in 2012 and 2013.
“The key question is, ‘Do you plan to buy or replace or expand your fleet in the next five years,” said Rob Wilson, president, business and general aviation. “Based on the responses, we extrapolate purchase expectations.”
The survey found that flight departments’ five-year purchase expectations–the percentage that anticipate buying new or used business aircraft during the next five years–is 30 percent. The forecast broke out purchase expectations by regions. After the BRIC countries, Honeywell anticipates demand will be strongest in Asia, followed by the Middle East/Africa, Latin America, Europe and North America. Honeywell noted that with more than 70 percent of the world’s business aircraft, North America is a mature market and its lag in demand behind other regions is not remarkable.
The survey also asks why flight departments plan to purchase aircraft. Aircraft age is always the number one reason cited. But for the first time, Honeywell noted, the second reason cited by the majority of purchasers across the globe is because they want aircraft with longer range. “I want to go longer distances, I want to have more productivity, I want to see more customers in more places,” Wilson said, paraphrasing the responses.
While a turnaround is welcomed, near-term pain remains. Honeywell forecasts that deliveries of 600 to 650 new business jets in 2011 will reflect a decline of 15 percent below the 732 aircraft delivered last year, while deliveries in 2012 are expected to rebound to a level still less than 700 airframes, though improved over this year’s total.
Overall, during the next decade (2011-2021) Honeywell forecasts up to 10,000 aircraft worth $230 billion will be purchased. This represents approximately a 2-percent increase in total expected sales compared to the ten-year projections from the 2010 Honeywell forecast.
This is the 20th edition of Honeywell’s annual forecast. Reading between the lines has often provided valuable insights for many in the industry and Honeywell itself.
“The forecast allows us to invest in areas our customers say are important to them,” said Carl Esposito, v-p of marketing and product management. “As the potential expands for a new class of aircraft, potentially the long-range, mid-size-cabin jet, we will be investing in the key technologies to make those aircraft as successful as the other classes are, and have been.”