Honeywell, Rolls-Royce forecasts predict several more good years
Market surveys have guided industry sages for decades, and Honeywell’s and Rolls-Royce’s prog- nostications this year certainly told business aviation what it wants to hear. Both outlooks bear good news. Though the two reports do not agree in all aspects and use some significantly different parameters, the overall message is uniform: look for strong performance in the business aviation sector for the next decade or two.
In fact, the time frames of the two forecasts represent one of the largest differences between them. Honeywell gazes into a 10-year crystal ball, while Rolls-Royce peers a full 20 years into the future. So some interpolation is necessary to scale the latter’s numbers down to a single decade. Both look to a leveling off from the current surge in deliveries. Honeywell sees sales dipping between now and 2007, staying on a plateau until 2011, then starting a steady climb. Rolls-Royce, conversely, has indicated a steady rise through 2010 followed by a three-year reversal, then relaunching a climb that is expected to peak in about 2020.
Another difference is how both forecasts view aircraft at either end of the size spectrum. Honeywell anticipates deliveries of 9,900 new business jets in the next 10 years worth $156 billion. But the vendor did not consider sales of VIP-configured airliners–so-called bizliners. Honeywell’s numbers also cull what it calls “ultra-light/personal jets” from the rest of the herd. That designation includes all jet aircraft with mtows of no more than 7,500 pounds and prices less than $2.2 million. The category includes such developmental aircraft as the Adam A700, Diamond Jet, Eclipse 500 and the HondaJet, should the carmaker ultimately press ahead with a business plan to sell the airframe.
Honeywell sees potential for sales of 800 to 900 such aircraft to corporate flight departments through 2015. This is in addition to the 3,700 to 4,600 ultra-light/personal jets to be spoken for by owner-pilots. Include the ultra-light/personal jets in the numbers and Honeywell foresees deliveries totaling 13,600 to 15,400 business and personal jets between now and 2015.
For Honeywell, the designation “very light jet” (aircraft included in its base numbers) means aircraft such as the Cessna Citation Mustang, CJ1+ and CJ2+, the Embraer Phenom 100 and 300, Beechcraft Premier IA and Sino Swearingen SJ30-2.
Rolls-Royce last year referred to very light jet contenders (aircraft with mtows of 5,000 to 10,000 pounds) as “microjets” and called for deliveries of some 8,000 aircraft in the next 20 years, helping to make up its overall figure of 23,000 aircraft valued at some $284 billion. This year, the UK engine maker sticks with the 23,000-aircraft figure but increases its 20-year estimate of non-microjet business jet deliveries from 15,000 to 15,400, including 3,650 large business jets.
Rolls-Royce anticipates a 32-percent increase in deliveries from this year to 2014 and an additional 9 percent increase from 2015 to 2024. Michael Miller, director of market planning and analysis at Rolls-Royce, said medium-, long- and ultra-long-range jets will constitute 70 percent of the dollar value of aircraft to be delivered through the forecast period.
Rolls-Royce cited some potentially volatile international markets as buffers for the expected softening of sales in North America, traditionally the largest market for business aviation by far (around 60 percent). Miller said, “China, India and Russia are expected to witness a large increase in activity.” Though he added, “Growth depends on market liberalization, which is driven by politics, regulatory issues and the culture of each country. Another major driver is the economy of the country as well as the wealth of its corporations and individuals. Finally, the infrastructure…such as airports and other transportation and services, dictates potential growth.”
Honeywell similarly hedged its bets, pointing out that its forecast assumes economic growth rates of greater than 3 percent per quarter at least through next year. The forecast also presents the disclaimer that its numbers do not reflect the potential effect of war, major economic shock, fuel crises or new regulatory restrictions–all of which have played prominent roles in the industry’s fortunes during the past five years, let alone 10 years.
Still, the Honeywell forecasters performed no shortage of homework. This year’s numbers were culled after lengthy telephone interviews with 1,400 corporate flight departments. This year’s effort represents the 19th annual forecast for Honeywell, and the company has demonstrated that, historically, its predicted numbers match up remarkably closely with actual industry figures derived after the fact.
North American operators Honeywell polled indicated that they expect to replace or expand their fleets to the tune of some 16 percent over the next five years. That contrasts with expectations last year that the overall fleet would expand or be replaced by 24 percent.
Like Rolls-Royce, Honeywell looks to overseas sales to offset the decline in domestic demand. According to Honeywell, European operators plan to replace more than 25 percent of their fleets; Latin American operators 37 percent; and the combined Asian, African and Middle East markets plan to bump up their involvement in business aviation by a whopping 44 percent.
The expected decline in growth in North America might be deceiving in that many operators told Honeywell they have no plans to expand or replace their fleets within five years because they had just done so. But other reasons included concern about operating costs and the possible institution of user fees.
OEMs’ Order Books Swell With Fleet Buys at NBAA Convention
The number of aircraft orders announced at the NBAA Convention is one barometer of the health of business aviation. This year’s meeting yielded some large fleet orders, the largest from New Jersey-based fractional operator Avantair for 36 Piaggio Avanti II twin turboprops. That piece of business was valued at $230 million, the largest ever for Piaggio. Cessna booked a $200 million order for a sampler of 20 Citations from European charter operator Jet Alliance. Similarly, Eclipse Aviation fattened its order book to the tune of some $120 million with two orders covering another 80 copies of its Eclipse 500. For more details, see the NBAA Convention coverage on page 22.