Globalisation of demand is driving business jet backlogs to record levels and looks set for sustain demand for several years, according to Honeywell's latest business aviation outlook.
The avionics-to-engines manufacturer forecasts annual deliveries will exceed 1,000 business jets for the first time this year, up from 861 in 2006, and grow beyond 1,300 in 2008, remaining in the 1,200-1,400 range for the balance of the decade. Honeywell is forecasting deliveries of 14,000 business jets from 2007 to 2017.
"Backlogs are at a very robust level - two and a half years of aircraft deliveries," says Charles Park, director, market analysis. "And the order intake continues to be strong - book-to-build in the first half of 2007 was over 2.0 - so the backlog is still growing."
While North American purchase expectations declined slightly from the 2006 survey on slower US economic growth, intentions to replace or expand business aircraft fleets increased in other regions, rising particularly strongly in Europe.
"The slowing in the USA is being offset by other areas, which is consistent with what manufacturers are seeing," Park says. "About half the manufacturers' order intake is from non-North American operators, a much higher percentage than we would expect."
Over the next five years, Honeywell projects, customers outside North America will account for about 50% of new aircraft deliveries. The increased demand in Europe is the "most striking and unexpected", he says.
While purchase expectations in North America slipped slightly to 20%, in Europe they rose to 47% from the levels of around 25% that have prevailed since 2001. "Factors include the strength of the euro against the dollar, which makes purchasing a dollar-denominated aircraft attractive," Park says.
There is also strong demand out of Russia, especially in the energy sector, while east European economies are growing more strongly than those in the euro zone. Overall, European operators are looking for larger-cabin, longer-range aircraft. "Customers need to go further and be more comfortable, so they are moving up."
Honeywell sees little impact from the recent debt market turmoil. "We have already baked a slowing on the US economy into the forecast. There is no evidence in hand to suggest we need to revise it downward," Park says.
The company also does not expect industry capacity issues to effect demand. "We do not see anything structurally that would cause the market not to expand as forecast," he says. "There is always the risk of a back-up in the supply chain that would cause deliveries to slide to the right, but that would just flatten off the top of the mountain."
Of the 14,000 business jet deliveries forecast by Honeywell from 2007 to 2017, long-range and ultra-long-range aircraft account for more than 2,000 large jets more than 1,300 medium and medium-large more than 2,600 light and light-medium more than 3,850 and very light jets more than 3,800. Demand for personal jets - those costing less than $2.5 million - is forecast at 6,000-7,000 aircraft.
Source: Flight International
