The effects of the crippling global economic recession will drive down business jet deliveries by 30% this year and a further 15% next year, according to Honeywell's eighteenth business aviation outlook released at the NBAA business aviation convention in Orlando, Florida.
The aerospace supplier in its 10-year outlook says that "2008 marks the end of an unprecedented five-year industry expansion that began in 2003". The outlook is regarded as the industry benchmark forecast.
After peaking in 2008 with 1,140 business jet shipments, new deliveries will fall to 800 this year and 700 in 2010. "A year ago, it appeared that the large industry backlog would act as a buffer to any moderate economic contraction and reduce the volatility in new aircraft deliveries," Honeywell says. "As the extent of the recession worsened and the insidious nature of the credit crisis was revealed, it became evident that industry backlogs were insufficiently firm to provide short-term buffering."
However, over the 10-year forecast period the market will pick up substantially, Honeywell suggests, with 11,000 business jets worth $200 billion set to be delivered between 2009 and 2019, it predicts.
Honeywell found that while long-term buyer interest has increased, "new purchase plans are currently timed later in the five-year planning window, which strongly suggests that by 2011-12 there will be significant pent-up demand that will improve the outlook for order intake and new jet deliveries".
Nevertheless, key international markets including Europe, Asia, Africa and the Middle East are set to play a significant role in the industry's near-term revival, says Honeywell. "The relatively stronger levels and timing of international purchase plans suggests that pent-up demand will improve both order intake and new jet delivery rates by 2011-12, similar to what the industry experienced in the last cycle," says Rob Wilson, Honeywell's president, business and general aviation.
"Despite some programme cancellations and delays, there is still a solid pipeline of new high-value models supporting long-term growth and our survey indicates that international demand will remain significant."
International markets will account for more than 50% of the new aircraft deliveries over the next five years and North America around 48% - down from 55% in the previous survey. "Clearly, operators around the world are looking beyond the current economic climate and anticipating a return to improved business conditions. The level of optimism varies somewhat by region, but it is certainly behind the stronger purchase plans reported this year," Wilson says.
"While these results appear remarkably upbeat, it should be noted that the timing of planned purchases in the five-year window is heavily shifted in most regions to the post-2010 timeframe," he adds.
Globally, more than 75% of operator purchase plans mentioned in the 2008 survey were still in place, although about 17% were being deferred to a later date. "By 2012, a combination of pent-up demand and global economic recovery will cause demand for new jets to improve. The pipeline of new high-value models also supports the long-term growth scenario and international demand will remain significant."
Fractional operators still account for about 10-12% of the backlog for business jets, but have drastically curtailed current new aircraft additions in the face of falling share sales, says Honeywell. "New jet deliveries to fractional fleet operators are off more than 66% and sales of new ownership shares have deteriorated further after 2008.
"As a result we are predicting lower deliveries into this segment for the next few years as excess capacity is worked off and shareholder levels are rebuilt," it says.
Demand over the next five years is expected to be fairly evenly balanced across most business jet segments, with light and light-medium accounting for 24%, medium and medium-large aircraft 23%, long-range, ultra-long range and large-cabin aircraft at 18%.
Over the full 2009-19 forecast period, Honeywell projects deliveries of around 2,800 very light jets (Cessna Citation Mustang, Embraer Phenom 100), 2,400 medium/medium-large aircraft (Bombardier Learjet 85, Hawker 750), 2,400 light/light-medium (Bombardier Learjet 40XR/45XR, Cessna Citation XLS) 1,500 long/ultra-long range (Dassault Falcon 7X, Gulfstream G550) 500 very high-speed, ultra-long-range jets (Gulfstream G650) and 1,000 large business jets (Bombardier Challenger 605, Falcon 2000LX).
Source: Flight International
