GRAHAM WARWICK, AMERICAS EDITOR
The sector may yet prove to be one of the few markets to benefit from the fall-out of the 11 September attacks
The aftermath of 11 September has presented both challenges and opportunities for business and general aviation. Whether the challenges are overcome and the opportunities realised will depend on how soon the US economy recovers.
Even before 11 September, general aviation was struggling as the US economy slumped. Aircraft sales were slowing, and financing for new programmes was becoming scarce. The groundings and airspace restrictions following the attacks only made things worse, halting aircraft deliveries and hobbling general aviation operations such as flying training.
Traffic is gradually returning to pre-11 September levels, despite some airports and airspace remaining closed to private aircraft - but sales continue their downward trend. The Aerospace Industries Association estimates US manufacturers will have delivered just over 2,500 business and general aviation aircraft by year-end, a reduction of almost 9% from 2000 and the first decline after six consecutive years of growth.
Falling sales
The downturn is most evident in the sales of light aircraft, which had been rising steadily since the General Aviation Revitalisation Act (which limits manufacturer's product liability) became law in 1994. Cessna and New Piper Aircraft have cut back production for 2002 and laid off workers, while Mooney production is still on hold while the bankrupt company seeks a buyer.
There are a few bright spots, with new manufacturers Cirrus and Lancair still ramping up production of their light aircraft to fulfil substantial order backlogs. But the scarcity of investment is forcing other new entrants to rethink their plans. Even Eclipse Aviation, which had energised the market with its well-funded plan to develop a personal jet, has had to restructure the programme to reflect the reduced availability of funding.
Whether financial woes claim any victims in 2002 will depend on how soon the US economy recovers, although the demand for flying training - and therefore light aircraft - could take longer to return, depending on how deep and how long the airline recession turns out to be.
Business aircraft sales are also tied closely to the economy, but are being isolated from the worst effects of the downturn by the strong orderbooks built up over the last few years as manufacturers launched new models. Business aviation operations, meanwhile, are back to pre-11 September levels, and could expand rapidly in the coming months as travellers look for alternatives to the airlines.
Revising its forecast to reflect post-11 September conditions, Honeywell predicts manufacturers will still have delivered a record number of business jets by year-end - the revised total of 750 aircraft representing a reduction of only nine units from the company's pre-11 September forecast. But the US avionics and engine manufacturer has reduced its forecast for 2002 by 7-8%, to around 700 aircraft, with a 4% increase to just over 730 units in 2003. Honeywell expects deliveries to return to 2001 levels and growth rates by 2004.
The company's optimism is based on the fact that manufacturers' orderbooks are still healthy, at an estimated 2,700 aircraft, and that buyer expectations remain high. Based on forecasts of a US economic recovery late in 2002, Honeywell expects manufacturers' order intakes to begin recovering in the second half of this year.
As an aircraft manufacturer, Bombardier believes that an economic recovery will be needed to start the much-anticipated rapid growth of business aviation. While there has been greatly increased interest in aircraft charters and fractional ownership as an alternative to airline travel since 11 September, this has yet to translate into a sustained increase in operator activity which would, in turn, stimulate order intake.
But many in the industry believe it is only a matter of time before business aircraft, fractional ownership and chartering take their place as routine modes of transport for the business traveller. And that time could come in 2002.
Source: Flight International