Forecasts predict boom for bizav

 - November 7, 2006, 4:47 AM

Honeywell Aerospace and Rolls-Royce each expects the world’s business jet OEMs to set a new delivery record next year and establish a strong precedent for a 10-year forecast period during which Honeywell believes the industry will ship more than 12,000 airplanes worth $195 billion.

Meanwhile, continued vigorous growth in deliveries, particularly among midsize and large jets, will generate $70 billion worth of revenue for the engine industry over the next 20 years, according to a new market forecast released by Rolls-Royce. The company predicts that the business jet segment will need 51,000 engines over that time period to power 24,000 airplanes.

Carrying backlogs approaching 2,500 airplanes, the industry hasn’t seen much better times in its history: year-to-date, business aircraft manufacturers delivered 26 percent more airplanes than they did during the same period last year. Honeywell forecasts deliveries this year of some 850 new business jets, compared with 737 in 2005. It projects next year’s deliveries will top 1,000 for the first time. Rolls-Royce expects the industry to deliver close to 900 aircraft next year.

Of the new business aircraft expected to enter the market, nearly half will come from the medium or large business jet category, according to the Rolls forecast. In fact, it added, only 130- to 190-seat airliners will surpass the medium and large business jet category in deliveries over the next two decades, as manufacturers deliver nearly 12,000 midsize and large business jets through 2025, bringing the total to 16,500 aircraft. Rolls-Royce expects the industry to deliver 7,330 jets in the midsize category during the same period, a unit figure second only to the very light jet category, which it believes will account for some 7,650 deliveries.

Honeywell projects a somewhat more even demand growth across most business jet segments over the next five years. Medium and medium-large aircraft together account for about 30 percent of the projected demand through 2011, according to its survey. Light and light-medium aircraft comprise about 25 percent of projected five-year demand, followed by long-range and ultra-long-range aircraft at 21 percent, according to the forecast.

New Markets Spur Demand
In general, the reasons for optimism seem clear: Rolls-Royce  expects a continuing expanding world economy run by exponentially wealthier individuals. As such, corporations will continue to demand the luxury and utility business aviation offers.

Although Rolls-Royce maintains that corporate profits, stock market performance and GDP growth remain the best indicators of business jet market health, neither it nor Honeywell downplayed the importance of new aircraft model introductions, airplane retirements and the development of the world outside North America and Europe. In fact, Rolls expects the emerging VLJ segment will account for nearly a third of all deliveries over the next two decades.

Of course, optimism throughout the business aviation industry about the prospects for the emerging VLJ category remains strong, and Honeywell didn’t buck the consensus in its forecast. According to Honeywell, VLJ deliveries will accelerate rapidly off a base of about 100 aircraft this year. It projects that from 2007 to 2016 VLJ builders will deliver on average nearly 250 aircraft per year.