Sluggish global economies combined with heightening political tensions will impact negatively on the business aviation market over the next two years, according to Honeywell Aerospace. But the introduction of new models and upgrades along with a strengthening US economy will help the sector to flourish in the long term.
Honeywell makes this prediction in the 24th edition of its annual Business Aviation Outlook – published yesterday. The survey forecasts deliveries of up to 9,200 business jets worth $270 billion between 2015 and 2025. This marks a nearly 3% reduction in last year’s 10-year forecast of 9,450.
“While emerging markets like Brazil continue to be a bright spot for business aviation over the medium term, we have seen weaker demand across other key growth markets, which may affect near-term order and delivery levels,” says Honeywell’s business and general aviation president, Brian Sill. “And while the sluggish economic growth and political tensions are driving a more reserved approach to purchasing, we are seeing operators invest in retrofits and upgrades for their existing aircraft, especially around connectivity, boosting aftermarket opportunities.”
Deliveries of up to 725 new jets are forecast this year, says Honeywell, “marking a single-digit percentage growth year over year”.
FRACTIONAL BOOST
This is largely due, it says, to new model introductions and an increase in deliveries to fractional ownership companies such as NetJets and Flexjet.
“2016 deliveries are projected to be slightly lower, reflecting weaker emerging market demand partially offset by deliveries to fractional operators,” it continues.
Honeywell found that of the 1,500 flight departments interviewed, around 22% planned to purchase new business jets over the next five years either as replacements or additions to their current fleet.
Nearly 20% of these purchases are planned by the end of 2016, followed by 17% in 2017 and 20% in 2018.
Aircraft in the top half of the sector will continue to dominate, in value terms, throughout the forecast period.
In the “near-term”, aircraft spanning the super-midsize to VIP airliner segments are expected to account for more than 80% of total business jet values, although demand for these types will remain flat.
Over the forecast period, however, Honeywell predicts a 3% average annual growth for these high-end types as new models and improved economic performance contribute to industry growth.
The upsurge will also be aided significantly by the plethora of new products and upgrades that will enter service over the next five years. These include Honda Aircraft’s HondaJet, the Embraer Legacy 450, the Pilatus PC-24, the Cessna Longitude and Hemisphere, the Bombardier Challenger 650, the Global 7000 and 8000, the Falcon 5X and 8X and Gulfstream’s G500 and 600.
Demand for new aircraft will vary considerably across the regions, however.
Given North America’s huge installed base, the continent’s buyers will inevitably account for the bulk of aircraft acquisitions over the next decade. According to the report, the continent – the USA in particular – will represent over 60% of projected global demand between 2015 and 2020. This is a 2% hike on last year’s prediction, and reflects the importance of the region to the industry’s future “given the unsettled conditions elsewhere around the world”, says Honeywell.
Europe – home to the second-largest business aircraft fleet – has seen operator purchase expectations fall this year by 4% to 14%. Honeywell attributes this decline to the “sluggish growth and increased political tensions” in the region
Purchase expectations from the BRIC countries – Brazil, Russia, India and China – have also fallen. 2014’s survey showed 29% of respondents had acquisition plans, but this has dropped to 21% this year.
Brazil, however, remains a bright spot. Thanks to a vast and ageing installed fleet, operators in the country,“retain a very strong near-term demand profile”, says Honeywell, with 47% of new jet purchases scheduled over the next two years.
The 10-year outlook for Asia Pacific remains stable despite ongoing regional tensions and government austerity measures, mainly in China. Operators’ purchase expectations have climbed by 2% over the last year and now only 14% of the region’s fleet is forecast to require replacement over the next decade, Honeywell says. ■
Source: Flight Daily News
