Lack of consumer confidence is still having an effect on production rates
Persistent weakness in the world's economies continues to pose a challenge to business aviation. The downturn that started in the latter part of 2001 and deepened in 2002 shows no signs of abating over the next 12 months. Orders and deliveries for new aircraft nose-dived, values of second-hand aircraft were slashed to record lows and even the previously unaffected fractional ownership programmes began to see a drop in trade.
In its latest business-aviation market forecast, US avionics, engine and equipment supplier Honeywell suggests deliveries will decline again next year and then resume a steady climb, with more than 7,600 aircraft, valued at over $121 billion, projected to be sold from 2003 to 2012. These predictions assume a growing economy and the return of customer confidence, the absence of which are having serious knock-on effects on business aircraft production rates.
According to the General Aviation Manufacturers Association (GAMA), worldwide shipments fell by almost 17% in the first nine months of 2002 to fewer than 1,800 aircraft. Turboprops, bearing the brunt of the slowdown, fell 26% in the third quarter alone and by over 40%, to just 170 aircraft, for the nine months ending September. Jet shipments declined by 15% for the quarter and are 12% down for the nine-month period, to 497 aircraft. GAMA's full-year shipment numbers, released in January, are expected to reveal that some manufacturers did not meet their year-end delivery targets.
Cessna planned to deliver 300 Citations in 2002 - down from 330 in 2001 - and fewer than the originally forecast 250 deliveries are now expected in 2003. Although the manufacturer has strong order backlogs, particularly for its newest Citation CJ3, Sovereign and Mustang, deliveries of these types are not expected to begin until 2004, and as late as 2006 for the Mustang.
Raytheon cut production to 282 aircraft in 2002, from 372 in 2001, and deliveries are forecast to fall again in 2003 to 276. Behind the decline is a drop in sales of the Beechjet, King Air turboprops and piston types. Production of Hawker and Premier jets is likely to rise, however.
Bombardier is expected to deliver 100 business jets for the year ending 31 January - 40 fewer than originally planned. Dassault will cut Falcon production from six to five a month in 2003, while Gulfstream is also cutting business jet production rates.
Business aircraft manufacturers are continuing to cut workforces. Cessna will begin axing 1,500 jobs at its Citation division in February, on top of 500 layoffs previously announced. Raytheon Aircraft has already cut 2,200 jobs and Bombardier is laying off more than 900 staff at its Learjet division, which began a four-month production shutdown at the start of December.
This most customer-driven and innovative of aviation sectors has traditionally reacted to a downturn by introducing new models to stimulate interest in the market. In the next 12 months, a clutch of new aircraft will either enter service or reach significant programme milestones.
Bombardier has a busy year ahead, including certification and first deliveries of its Challenger 300, formerly Continental, super mid-size business jet. The increased-performance Learjet 45XR super-light jet is also due to enter service in 2003, the super-large Global 5000 is set to take to the air in the first quarter, and flight testing of the "shrunk" Learjet 40 light jet will continue through towards certification early in 2004.
Three aircraft in Gulfstream's revamped line-up are also scheduled to enter service in the next 12 months: the large-cabin G400 (formerly GIV-SP) in the second quarter, and the long-range G300 and ultra-long-range G550 in the third quarter. The G300 is a less-capable version of the G550 (formerly GV-SP), which received provisional US certification in December. Raytheon, meanwhile, says its super mid-size Hawker Horizon is on target for its revised certification date of the fourth quarter of 2003.
The general aviation market is hard to read at the moment. Light aircraft manufacturers have suffered the same sales downturn as their business aircraft brethren, but orderbooks for new designs remain solid, suggesting there is pent-up demand that is simply waiting for an economic recovery.
General aviation continues to face several challenges following 11 September, including the perception that private aircraft are a security risk. Three cases of light aircraft crashing into office buildings over the year did not help, and day-to-day operations in the USA continue to be impaired by temporary flight restrictions.
In the wake of the terrorist attacks, new regulations have been introduced, requiring photographic identification for pilots and background checks for students, and more new rules are expected. Insurance costs for manufacturers and owners alike have escalated as underwriters try to recover their 11 September-related losses. And financing has become harder to secure as the economy has stalled.
Manufacturers struggled to meet their year-end delivery forecasts. The exception to the downward trend was Cirrus Design, which continued to ramp up production of its SR20 and SR22 piston singles during the year to work off a healthy backlog. But even Cirrus has seen a slowing in the new order pipeline.
Lancair, prevented from emulating Cirrus's start-up success because of funding difficulties, halted production of its new-generation light aircraft during 2002, but has now secured financing from its Malaysian partners and should resume production early in 2003. Mooney Aircraft returned to production during 2002 under new ownership, announcing a 20% price cut in the bid to stimulate sales. Liberty Aircraft should have begun production of its XL-2 two-seater in 2002, but now expects certification in 2003.
Release of the final sport pilot rule, expected mid-year, is eagerly awaited in the USA, where the official recognition of a new category of light sport aircraft is seen as an opportunity to revitalise recreational flying and create a new sector of the manufacturing industry.
Despite the downturn, there are still companies willing to enter the GA market. Privately financed Adam Aircraft is flight testing the A500 piston twin, scheduled for certification in 2003, and has launched development of a twin-turbofan derivative. The new A700 will compete with Cessna's new Citation Mustang personal jet, launched with fanfare in 2002. Eclipse, the personal-jet pioneer, hit problems late in the year, ditching the troubled Williams EJ22 engine. A new engine is to be selected early in the new year, but the company now faces significant funding and schedule challenges.
Source: Flight International
