Growing international demand and a long backlog of firm aircraft orders will push business aviation sales to record levels in 2009, Honeywell predicted in its closely watched business aviation outlook report released Oct. 4 at the NBAA convention in Orlando, Fla.
But there are storm clouds on the horizon.
The recently red-hot market for used jets has cooled, and high fuel costs and a U.S. credit crisis are leading corporate flight departments to scale back operations, according to the company’s seventeenth annual Business Aviation Outlook.
“Despite all the economic turmoil, 2009 is shaping up to be another record year for business aviation,” said Robert A. Wilson, president of Honeywell’s business and general aviation division. “International demand is strong, and we believe international growth in an increasingly global industry will offset any weakness in North America.”
Unlike the last major shock following the terrorist attacks on New York and Washington in 2001 when corporate aircraft plunged more than 40 percent, Wilson said the business aviation industry has become more global with the majority of sales coming from foreign customers.
A decade ago, more than three-quarters of corporate aircraft sales were within North America, and fractional networks accounted for 40 percent of all orders. Now, Wilson said the market is more diverse.
“It’s a truly global market,” he said. “Fractional sales are substantial – but they’re less than 10 percent of the current backlog.”
The inventory of used jets on the market has increased sharply in 2008, and a glut of unsold inventory pushed asking prices down in the third quarter. The Honeywell report anticipates the used jet market will continue to deteriorate in 2009.
The industry expects to sell about 17,000 new business aircraft worth a total $300 billion through 2018 with a sharp rise beginning around 2012 when deliveries of a new class of “very high speed, ultra long range” jets such as the Gulfstream 650 begin in bulk.
Such high-end aircraft could dramatically raise industry sales in revenue terms.
Most of the data in the Honeywell report were collected in the second quarter of this year, before the current credit crisis became acute. Wilson said Honeywell forecasters looked long and hard at their projections in light of recent economic developments and decided they are on target.
“I don’t think we’re being overly optimistic,” he said.