The business jet aviation industry is facing a “modest pace” for near-term orders due to an uncertain economic and political environment, along with a highly competitive used aircraft market. This is the conclusion of the 26th annual Global Business Aviation Outlook from Honeywell.
The Global Business Aviation Outlook forecasts up to 8,300 new business jet deliveries worth $249 billion from 2017 to 2027, down 2-3 percentage points from the 2016 10-year forecast.
“Declining used aircraft prices, continued low commodities prices, and economic and political uncertainties in many business jet markets remain as near-term concerns for new jet purchases, leading to a modest growth in 2018.”
By Ben Driggs, president, Americas Aftermarket, Honeywell Aerospace
“That said, there are several new and exciting aircraft models coming to market, which will drive solid growth in new business jet purchases in the midterm and long term.”
Key global findings in the 2017 Honeywell outlook include:
• Deliveries of approximately 620-640 new jets in 2017, a decline of roughly 30 aircraft year over year. This pullback comes on the heels of a moderate decrease in 2016 and is largely due to slower order rates for mature airplane models and a transition to new models slated for late 2017 and 2018.
• Operators plan to make new jet purchases equivalent to about 19 percent of their fleets over the next five years as replacements or additions to their current fleet, a decrease of 8 percentage points compared with the 2016 survey results.
• Of the total purchase plans for new business jets, 19 percent are intended to occur by the end of 2018, while 17 percent and 14 percent are scheduled for 2019 and 2020, respectively.
• Operators continue to focus on larger-cabin aircraft classes, ranging from the super mid-size through ultralong range, which are expected to account for more than 85 percent of all expenditures on new business jets in the next five years.
• The longer-range forecast through 2027 projects a 3-4 percent average annual growth rate despite the lower short-term outlook as new models and projected improved economic performance will contribute to industry growth.
• Declines in five-year operator purchase plans are offset in the long-term forecast by new programs entering service, improved economic performance and higher commodity prices, resulting in only a small decline in the overall outlook.
Used jets and flight activity
When it comes to used jets and flight activity, the pace of flight activity in the past year has recovered somewhat with survey respondents in all regions of the world except Asia reporting higher utilization in 2017.
Key findings include:
• Despite improvement of 7 percent year over year in overall inventory levels, asking prices are still declining overall, especially for medium- and long-range aircraft.
• On a positive note, the total number of recent model jets (less than 10 years old) listed for resale is down 15 percent year over year and now represents less than 8 percent of the installed base.
• In proportion to the level of overall listings, however, the share of recent model jets for sale is still more than 30 percent of total listings in comparison with pre-recession levels of 15 to 20 percent.
• Survey respondents increased their used jet acquisition plans by about 1 percentage point, equating to 25 percent of their fleets in the next five years. All regions’ used jet purchase plans were up or stable.
“The increase in used jet purchase plans clearly aligns with the reduction of used inventory for sale and could result in favourable pricing pressure on used jets in the medium term,” the report finds.
Impacting business decisions
Honeywell says the annual outlook reflects topical operator concerns, but also identifies longer-cycle trends that Honeywell uses in its own product decision process. The survey has helped identify opportunities for investments in flight-efficiency upgrades, expanded propulsion offerings, innovative safety products, services, upgrades and enhanced aircraft connectivity offerings.
“The survey also contributes to Honeywell’s business pursuit strategy and helps position Honeywell consistently on high-value platforms in growth sectors,” the company says.