Alan Dron
Gulfstream, one of the world's best-known names among business aircraft manufacturers, will almost certainly be acquired by a rival over the next decade, says a new study of the industry issued today.
The business jet market is about to dip, but will see an upward trend over the coming decade; the new crop of proposed 'miniature' business jets will founder in the face of corporate conservatism, and there is a 50% chance of a supersonic business aircraft being launched within the next 15 years, predicts the survey from US analysts Teal Group.
Lucrative
Gulfstream, although occupying a lucrative niche with its GIV and GV models, lacks critical mass and is thus vulnerable to a take-over, says the report.
The most likely buyers, it claims, are Raytheon, or Textron/Cessna.
Fairfax, Virginia-based Teal Group's annual world business aircraft production forecast foresees some 4,100 business jets, worth around $53 billion in 1998 dollars, being produced over the 1998-2007 decade.
This compares favourably with the previous 10 years, when only 3,076 jets, worth $37 billion (again in 1998 dollars) were delivered.
While the current boom will not be sustained beyond 1999, production figures for even the worst years of the coming decade will be better than any of the past 10 years apart from 1997, says Richard Aboulafia, lead analyst for Teal Group's World Military And Civil Aircraft Briefing.
Terrific
"The business jet market is in the midst of a terrific growth spurt," he comments. Deliveries of business jets rose from 352 in 1996 to 439 in 1997, representing "the largest single one-year rise in the history of this market.
"This year and next represent the peak of the market. Business jet deliveries will total 485 jets worth $6.7 billion in 1998."
That number will be virtually static at 487 next year, but will then decline, the survey predicts.
The current all-time market peak is largely the result of unsustainable factors such as an unprecedented number of new models and a 'supply push' rather than 'demand pull' phenomenon created by manufacturers offering discounts to customers willing to take initial order positions.
Despite this, production levels will remain relatively strong, Teal says for several reasons.
One is simply that business aircraft are viewed less as corporate toys and more as useful business tools. Another is that early generations of business jets will need to be replaced.
A third is that fractional ownership schemes are introducing more companies to corporate aviation. These schemes are something of a double-edged sword however, says the report: "Fractional ownership sales represent a big chunk of the sales upturn, but these are not end user orders, and to a certain extent, they will cut into 'traditional' demand down the road," says the report.
Fulfilled
That demand will largely be fulfilled by five major players, headed by what the report describes as "the Bombardier gorilla", with its Challenger Global Express and Learjet product lines.
Those lines are predicted to hoist Bombardier's market share over the coming decade to 26%, compared with 20% in the past 10 years. The report claims that
Bombardier's success is partly due to a financial "helping hand from the Canadian government". Be that as it may, it sees the company producing two new models over the coming decade - a stretched Challenger 605 and a new, mid-sized business jet.
A strong product line also features in its predictions for Cessna, which it believes will have a good decade ahead, with market share stable at around 19.7%.
Prosper
Dassault's Falcon range will continue to prosper, the report says, and its fighter aircraft interests make it "-uniquely well placed" to develop a supersonic business jet.
Such a venture would allow Dassault to address its lack of a competitor with Bombardier's Global Express and Gulfstream's GV.
Raytheon, described as currently the weakest of the main five manufacturers with just two jet types in production, can look forward to the new Hawker Horizon, Premier I and at least one - possibly two - Premier growth aircraft coming on stream. The report predicts however, that its market share over the coming decade will drop to 9.4% compared with 15.2% over the past similar period.
Raytheon's fortunes could be turned around if, as the report predicts, it takes over Gulfstream. Adding the latter company's forecast 20.4% of the market over the next decade to its own sales figures would give it a market-leading 30%-plus of sales.
The report repeats its previous prediction that Israel Aircraft Industries' business jet unit, US-based Galaxy Aerospace, will be taken over, possibly by Bombardier in search of a product in the sector's upper-middle class of jet.
It believes that Sino-Swearingen, developing the light SJ30-2, is also in line to be swallowed by the Canadian company.
Finally, a bleak future is predicted for many of the new wave of small jet designs shown at the 1997 NBAA show in Dallas, such as the Visionaire Vantage, the Century Jet and Phoenix Fanjet.
Smaller
"The argument against smaller business jets remains strong," claims the report. It questions whether many companies want such a small business jet, noting that Sino-Swearingen had to scale up its SJ30 to take more passengers.
Possibly the strongest factor against this class of aircraft, however, is simply that "-this is a very conservative market", comments the report.
Source: Flight Daily News