Honeywell predicts weakened global demand for business jets

Honeywell's Global Business Aviation Outlook released Oct. 8 at the start of the National Business Aviation Association's annual convention in Las Vegas said global economic and political uncertainty, combined with low commodity prices and stiff competition from the used-jet market, will restrain new aircraft deliveries.

"Declining used aircraft prices, continued low commodity prices, and economic and political uncertainties in many business jet markets remain as near-term concerns for new jet purchases," said Ben Driggs, a Honeywell Aerospace executive. "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."

Honeywell estimates up to 8,300 new business jet deliveries valued at $249 billion will take place in the next 10 years.

Other highlights of the report estimated:

• New aircraft deliveries of 640 aircraft in 2017, down about three percent from the previous year;

•  Large-cabin airplanes will account for about 57 percent of new business jet deliveries and 85 percent of revenue in the next five years;

•  Russia, India, and China have seen a significant drop in demand for new business jets, while Brazil is a "bright spot";

•  Asia as a whole has seen a significant drop in business jet demand due to increasing regional tensions;

•  The Middle East and Africa forecast for new sales is down, too, due to low oil prices;

•  Europe saw an 11-percent decline in new business jet purchases in 2017 compared to the previous year due to sluggish economic growth, concern about Brexit, and political turmoil;

•  North America, which accounts for 61 percent of global demand for new business jets, is expected to see a 9-percent reduction in new business jet purchases to roughly the same levels as 2014 and 2015.

In the used-jet market, asking prices declined about 7 percent this year and are still falling. Used jet inventory has dropped, but sales remain soft.

"We expect roughly similar delivery levels in 2018 compared with 2017," Driggs said.