Aircraft delivery surge ends

KATE SARSFIELD / LONDON

Further decline in business jets expected this year, but potentially higher piston single sales could offset the gloom

The string of record-setting deliveries and billings has come to an end for business and general aviation aircraft manufacturers, as worldwide shipments suffered the worst annual decline last year for more than a decade, according to figures released by the US General Aviation Manufacturers Association (GAMA).

The knock-on effect of the economic malaise has cast a dark shadow over the industry, slashing sales and production rates across all three aircraft sectors. During 2002, North American and European manufacturers recorded deliveries of 2,539 jets, turboprops and pistons, a decline of more than 15% over the previous year's total of 2,994, says GAMA.

Industry billings slumped by over 14% from an all-time high of $13.9 billion in 2001 to $11.9 billion last year.

Deliveries of jets and turboprops will decline slightly in 2003, but could be offset by potentially higher piston single sales.

Business jet slump

Shipments of business jets were down 12.7% to 683, the first drop in deliveries since 1996, although the total is still above 1999 levels, GAMA points out. Shipments by US manufacturers declined 11.5% to 531 aircraft.

Cessna once again delivered the most with 305 Citations, only one fewer than in 2001, although delivery numbers are expected to fall sharply to 220 Citations this year. Gulfstream, with its extended aircraft line, headed the billings table, delivering 85 aircraft valued at nearly $3.3 billion. The same number of aircraft shipments are planned this year.

Gulfstream knocked Bombardier off the billings top spot. The Canadian manufacturer last year delivered 108 aircraft valued at just under $2.1 billion, 74 fewer than for 2001, as production was halted towards year-end.

Airbus and Boeing Business Jets (BBJ) recorded a hefty decline in shipments as demand for widebody business jets, particularly from fractional ownership programmes slowed. Only two A319 Corporate Jetliners were delivered last year against five for 2001. BBJ and BBJ2 numbers fell to 11 - a drop of five aircraft.

Dassault saw shipments fall from 75 to 66 units and expects to deliver the same number this year including the first deliveries of the 2000EX, production of which is already sold out for 2003. Deliveries of Raytheon business jets fell by four, to 94 aircraft, although the company's piston and turboprop shipments were worst affected with 165 shipped against 266 last year. Of the three sectors, turboprop deliveries last year suffered the sharpest decline, falling 33% to 280 compared with 421 the previous year. Piston engine deliveries fell by around 12% to 1,576 aircraft, although Cirrus Design saw shipments of its SR20/22 singles more than double from 183 in 2001 to 397 last year and plans to increase deliveries to 500 aircraft this year.

Added to this, GAMA says the used aircraft inventory remains "frustratingly large", with 17% of the total turbine fleet on the market, well above the historical average of around 12%. Prices of used business jets are also down by around 20%. GAMA chairman and Gulfstream president Bill Boisture warns that used aircraft inventories will have to be absorbed before there can be an upturn in new aircraft sales, pushing any hope of a recovery into 2004-5.

There were a few bright spots, however. Numbers of corporate operators worldwide increased 5% to almost 14,000 using a total of 22,600 aircraft, while US fractional- ownership programmes saw share owners increase by 20%, from 3,416 to almost 4,100.

The fractional-aircraft fleet increased by just over 11% and accounted for 15% of total deliveries last year. Yet Boisture cautions that fractionals are subject to the same economic pressures as the rest of the aircraft market.

Reflecting on previous and more severe downturns, the industry remains cautiously optimistic. "We've been through a lot worse," Boisture says. He adds: "We are not some start-up industry trying to find its niche or some old line industry struggling to remain relevant in today's society." General aviation, Boisture argues, is a $41 billion industry, and "is an integral part of the transport system and economy and fundamental to the way companies do business today".

It is the soft economy that is providing the crucial obstacle for growth. "It may not be the deepest trough in modern times, but it is certainly one of the longest," GAMA concedes. Yet until an economic updraft takes hold and used aircraft inventories are shaken up, sales of new aircraft will continue to remain stifled. In the meantime, the industry continues to take steps to "navigate through the rough patch". Costs will continue to be slashed, with further job cuts expected. Customer support programmes will be enhanced to retain the sought-after brand loyalty in this highly competitive market.

Security measures

Continued access to airports and airspace by general aviation aircraft will be vigorously defended and passenger security measures enhanced, says GAMA, in an effort to promote and preserve the utility of general aviation transport. New measures to stimulate aircraft sales will also be sought.

GAMA is lobbying Congress to extend the "bonus depreciation" provision that became law last year and which allows companies that buy aircraft before 11 September 2004 to accelerate depreciation. The association says its first priority is to get the rate increased from 30% to 50%, then to extend the provision beyond 11 September.

For their part, airframers will continue to enhance their current line-ups and develop new models, to titillate the market and stimulate order books.

A number of new types, each with healthy backlogs, are set to enter service within the next 12 months. These include the Bombardier Challenger 300 - formerly Continental - super mid-size business jet, and increased-performance Learjet 45XR superlight jet, Gulfstream's large-cabin G400, long-range G300 and ultra-long-range G550.

Source: Flight International