Aircraft systems manufacturer Honeywell Aerospace predicts 7,600 business jet deliveries worth approximately $248 billion over the next decade. The Arizona-based company (Booths N1816B and N4302) issued its 28th annual Global Business Aviation Outlook on the eve of NBAA’s annual conference and exhibition, covering a period through 2029. This year’s prognostication is down slightly from last year’s forecast, which called for 7,700 aircraft deliveries worth $251 billion.
Among the aircraft the company tracks in its survey (excluding personal jets and bizliners), Honeywell lowered its 2019 delivery numbers from 715 to 690 jets, due to longer than anticipated certification times on some programs and slow ramp-up rates on others. That still represents a rise from 2018’s 633 deliveries, and the aerospace giant sees even more on the horizon for next year.
“Production ramp-up on many new business jet platforms will lead to a 7 percent increase in deliveries in 2020, following a strong projected growth in 2019 over 2018 aircraft deliveries,” said Heath Patrick, the company’s president for Americas aftermarket. “We are confident that these new and innovative aircraft models will support solid growth in the short term and have a continuing impact on new business jet purchases in the mid- and long-term.”
The company predicts total deliveries of 740 jets in 2020, according to Gaetan Handfield, its senior manager of marketing analysis who prepared the outlook.
Between June and September, the company surveyed more than 1,600 aircraft operators, accounting for 13.5 percent of the world’s private jet fleet. Fractional ownership providers were not included, but are estimated to account for up to 14 percent of total unit deliveries over the next five years. Those interviews, along with information from OEMs, are used to shape the first half-decade of the outlook, while economic models weigh more heavily in the latter half.
Honeywell sees North America accounting for 60 percent of the demand over the next five years, followed by Europe (19 percent), Asia Pacific (10 percent), Latin America (7 percent), and the Middle East/Africa (4 percent). Of those intended purchases, 42 percent mention large-cabin jets, with midsize (which now includes the super-midsize category for the first time) and light jets accounting for 29 percent each. The bigger jets (including bizliners) are expected to account for 73 percent of the total valuation over that span, leaving just 27 percent of the market value for the midsize and light jet categories.
Based on the results of those operator interviews 17.2 percent of the global fleet is to be replaced or expanded with a new business jet over the next five years, a decrease of 2.5 percentage points from last year’s survey. Of the total purchase plans over the next five years, 35 percent are expected to happen over the next two years. By the third year, that percentage will swell to 57 percent., which is five points higher than last year’s results.
Yet, the company added, operators indicated a stronger willingness to pursue used aircraft. Operators worldwide noted that 32 percent of their fleet is expected to be replaced or expanded with preowned jets over the next five years, an increase of 8 percent over last year’s survey. Taken with the new aircraft purchase plans, that would actually represent an increase in aircraft purchases over last year, according to Handfield.
Taken by region, new jet purchase plans declined by 2 percent in North America, with 15 percent of the installed fleet expected to be replaced or supplemented through 2024. Thirty-six percent of those purchases are expected in the next 24 months, while interest in used jets rose by 11 points over last year's survey. A full one-third of the fleet is expected to be replaced or expanded with a used aircraft over the next five years, the highest percentage recorded over the past five years of the survey.
In Europe, where flight activity has been on a recent decline, purchase expectations decreased by five points to 28 percent. Planned timing for those purchases in the first two years of the survey window totals 34 percent, one point behind last year’s survey. Another surprise in this year’s results involved the UK, where, as a result of the continuing Brexit stalemate, new aircraft purchases could be expected to be lower than last year, but actually increased in the survey.
“The two countries that are down this year in Europe are Germany and France, which could be linked to Brexit anxiety, but could also be linked with the economy, especially in Germany [which] is in a recession right now,” said Handfield.
Latin American operators expect to replace 21 percent of their fleet over the next five years. While purchase intentions remain stable in Mexico, operators in Brazil indicated slightly lower plans compared with last year.
Asia-Pacific is forecast to see an increase in the percentage of fleet to be replaced or expanded from last year, moving from 12 percent to 15 percent, with 24 percent of those intended purchases happening by the end of 2020. Handfield said many of those involve orders already placed with the manufacturers and are simply awaiting delivery. While China remained stable in the region, the survey indicated increased demand from India and South Korea.
In the Middle East and Africa, 12 percent of the survey respondents said they anticipated a new jet purchase, down two points from last year’s results. Of those, 32 percent indicated that purchase would come in the first two years of the outlook.
Overall, the aircraft with the most intended purchase mentions was the Bombardier Challenger 350.