US fractional market set to boom

GRAHAM WARWICK / WASHINGTON DC

Report predicts huge expansion in shared ownership sector by end of 2006 as operators exploit untapped potential

The US fractional-ownership market will grow to over 1,600 aircraft and more than 13,500 share owners by the end of 2006, forecasts Aviation Research Group/US (ARG/ US). The business aviation consultancy believes only a small portion of the fractional market has so far been developed.

The company says that, at the end of last year, US fractional schemes operated around 640 aircraft on behalf of approximately 4,500 owners - all but a handful of them with the major providers: Bombardier Flexjet, Executive Jet's NetJets and the now-merged Flight Options and Raytheon Travel Air. This represents a quarter more aircraft than last year, and a third more owners.

Despite the demise of United Airlines' subsidiary Avolar, ARG/US expects US fractional providers to add around 170 aircraft this year. Deliveries are projected to reach 220-plus aircraft a year by 2006 as new fractional schemes enter the market.

ARG/US has revised its predictions upwards from its last five-year forecast, released in 2000, based on the stronger than expected performance of fractional providers during the current economic downturn. The company expects a "solid rebound" in the market as the economy improves later in the year.

NetJets remains market leader with 49% of the fractionally sold fleet. Flexjet, Travel Air and Flight Options follow in order of market share. Netjets also had the highest annual fleet growth rate, at 37%, followed by Travel Air at 27%.

Light jets, such as the Bombardier Learjet 45, Cessna Citation Ultra and Raytheon Beechjet 400A, lead the fractional market, making up 34% of the fleet, and ARG/US forecasts deliveries of another 325 aircraft over the next five years. Mid-size jets, led by the Citation Excel and Raytheon Hawker 800XP, account for 31% of the fleet with another 295 forecast to be delivered by 2006.

The emerging super mid-size sector, currently dominated by the Citation X, is expected to absorb 115 aircraft over the next five years, as the Bombardier Continental and Hawker Horizon enter the fractional market. The large-jet market, led by the Dassault Falcon 2000, is forecast to account for an additional 165 deliveries.

ARG/US says the economic downturn has had a negative effect on the long-range, large-cabin segment of the fractional market, represented by the Boeing Business Jet, Bombardier Global Express and Gulfstream V. Deliveries of only 22 such aircraft over five years are forecast. In addition, ARG/US projects deliveries of 40 turboprop aircraft to fractional providers over the next five years.

Source: Flight International