Some 9,250 new business jets worth nearly $260 billion will be delivered between 2013 and 2022, according to Honeywell’s 22nd annual Business Aviation Outlook released today. This latest forecast calls for about 750 fewer aircraft shipments than in the 10-year outlook released by the company last October, though the overall value is up by nearly $10 billion because of a more favorable mix as the trend toward larger business jet models continues.
Honeywell predicts deliveries of 600 to 625 new business jets this year, down from the 672 jets handed over to customers last year. “The reduced deliveries expected in 2013 are largely due to new program delays, rather than deterioration in demand,” said Honeywell Business and General Aviation president Rob Wilson. “2014 industry deliveries are anticipated to be up modestly, reflecting recovery in supply-side constraints and some gains linked to the projected pace of global economic recovery.”
In its latest survey, Honeywell found that 28 percent of the operators interviewed plan to purchase new business jets over the next five years either as a replacement or an addition. This level of interest has been largely stable for the last four survey cycles, Honeywell said, and “compares favorably” with results of 25 percent or less that were the norm until 2006.
Of these new business jet purchase plans, 19 percent are expected to occur by the end of next year, while more than 22 percent are anticipated each year in 2015 and 2016. (The survey does not allocate specific years beyond 2016.) Honeywell said that this is slightly improved from last year’s results and leads to a modest gain in projected demand in the near-term.
According to Honeywell, many of the deliveries and billings over the next decade are projected to be super-midsize or larger business jets. “Volume growth between now and 2023 will be led by this class of aircraft, reflecting nearly 60 percent of additional units and nearly 85 percent of additional retail value,” the company said. In the near-term, this group is expected to account for more than 80 percent of business jet billings.
Wilson said that the biggest surprise from this year’s survey was an 8-percent jump in projected business jet demand–to 61 percent–from North American operators over the 10-year forecast. “Stronger new aircraft acquisition plans in North America are welcome news and should support industry momentum as some of the higher growth regions work through a year of modestly reduced growth rates,” he noted.
In the rest of the world, business jet demand in Asia Pacific slid by two points to 5 percent over the next decade; Africa/Middle East region, unchanged at 4 percent; Latin America, unchanged at 18 percent; and Europe, 12 percent, down six points year-over-year. While business jet demand from the BRIC countries–Brazil, Russia, India and China–has damped somewhat from last year’s outlook, Honeywell said demand in these countries is “still quite strong when compared with other regions or with results accrued during the more than 20 years Honeywell has been conducting the survey.”
In this year’s survey two common themes emerged from operator responses around the world, Honeywell said. “Demand from developing markets, while significantly higher than mature markets, continues to reflect cooling short-term economic conditions, and, in some cases, regional turmoil. In addition, government responses to budget growth, debt and aircraft-related legislation and regulations in all areas of the world remain as factors influencing near-term purchase plans.” Despite these concerns, most operators surveyed believe that local economic growth will be stable or improve in the near term.
“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 we believe will help accelerate global business aviation growth are long overdue structural and regulatory reforms, which have the potential to unlock significant spending power that would propel aviation expansion. New products also increase demand.”
Honeywell’s forecast is based on multiple sources, including macroeconomic analyses, OEM development plans shared with the company and opinions from “aerospace industry experts.” Honeywell also gathered information by conducting interviews with more than 1,500 non-fractional business jet operators across the globe.