Nearly 10,000 new business jets worth about $250 billion are predicted to be delivered from 2012 to 2022, according to Honeywell’s 21st annual business aviation outlook, released Sunday evening. The forecast reflects an approximate 9 percent increase in projected delivery value over last year’s 10-year prognostication, driven by pricing increases and a continued trend toward more demand for higher-priced larger business jets.
In the short term, Honeywell forecasts deliveries of 680 to 720 new business jets this year, a single-digit increase over levels reported last year. “Next year’s totals are anticipated to be of similar magnitude, reflecting the protracted nature of the global economic recovery,” said Honeywell Business and General Aviation president Rob Wilson.
“Over the medium term, a return to historical growth conditions supported by globalization, wealth creation in developing nations and new aircraft development should boost orders and support accelerated growth beginning mid-decade,” he added. “Despite the economic challenges our industry has been dealing with for the past 40 months, we believe some progress is being made.”
Honeywell’s forecast is based on a survey of operators, about 30 percent of which have plans to purchase a new business jet over the next five years either as a replacement or as an addition. According to Honeywell, this level of interest is on par with the past three survey cycles and compares favorably with results of 25 percent or less that were the norm until 2006. About 20 percent of those with plans to purchase a new business jet intend to do so by 2013, with a similar proportion planning 2014 and 2015 purchases.
Meanwhile, “The trend toward larger cabin aircraft with ever-increasing range expectations and advanced avionics continues to be reflected in this year’s survey,” said Wilson. In fact, larger aircraft are projected to account for nearly 70 percent of business jet billings and about one-third of deliveries between now and 2022.
Though North American operators are expected to account for roughly 53 percent of business jet demand this year, the level of forecast aircraft demand coming from outside this region continues to increase, Honeywell said. The BRIC countries (Brazil, Russia, India and China) reflect a slight tempering of enthusiasm compared to a year ago but are still quite strong when compared with other regions, as well as with results accrued during the more than 20 years Honeywell has been conducting this survey.
The Asia Pacific region is projected to have aggregate share of world five-year projected demand of about 7 percent, off two points from 2011 levels. Honeywell said the overall decline in purchase plans in this region can be partially attributed to “a moderation of past exuberance and an economic tempering affecting the region’s major economies.” That said, Honeywell does “not believe the 2012 results represent in any way a change in the region’s fundamental underlying growth drivers or commitment to business aviation.”
Latin America is shaping up to be where the biggest growth is for the business jet market, with this region’s share of total demand projected to increase nearly five points from a year ago to 18 percent. Meanwhile, the share of projected five-year global demand attributed to the Middle East and Africa remained near the center of its historical 4 to 7 percent range again this year, Honeywell said.
North America, the industry’s mainstay market, is expected to represent more than half of projected global demand for the next five years. Europe’s purchase expectations are also up slightly, with its estimated share of global five-year demand rising by one point to 18 percent in the latest Honeywell survey.
“We continue to see underlying macro-trends that support potential demand for business jets, making the industry’s long-term prospects attractive,” Wilson said. Other factors that Honeywell believes will help accelerate global business aviation growth are long overdue structural and regulatory reforms, new product development and more efficient, higher-capacity air traffic control systems.