Strong Markets In Asia, The Middle East, Parts Of Latin
America
Yet another business aviation forecaster is predicting the start
of a long-term industry recovery in 2012. Forecast International
(FI), a provider of market intelligence, forecasting, proprietary
research and consulting services for the worldwide aerospace,
defense, electronics and power systems industries, expects modest
improvements next year, with stronger growth coming in 2013.
“Production is forecast to total 683 units in 2011, and
then rise to 728 units in 2012,” FI said of projected
aircraft sales in the executive summary to a recent report,
entitled The Market for Business Jet Aircraft 2011-2020.
FI agrees with several earlier forecasts that have predicted
pent-up demand and other market factors will help sustain growth
into the next decade. The report predicts production in the
2011-2020 timeframe to total 10,907 aircraft at an estimated value
of $230.3 billion. However, FI doesn’t expect business
aircraft production to return to the 2008 record high of 1,313 jets
until 2018.
Reflecting the growing international nature of business jet
travel, the FI report predicts that most of the industry’s
gains will be driven by sales of larger, high-value business jets.
While the U.S. remains the largest geographic market for business
aircraft, the country’s share of worldwide sales has declined
to between 45-50 percent. “Market demand is strong in the
Middle East, Asia and parts of Latin America,” the report
said.
In October, Honeywell predicted in its 20th Annual Business
Aviation Outlook that new aircraft purchases would increase next
year by between 3-5 percent in units and 5-8 percent in dollars. It
also expects the recovery to continue into 2021, with sales during
the 10-year period reaching about $230 billion, or about 10,000
aircraft.
Both reports acknowledge that business aircraft production will
decline for a third straight year in 2011. In December, the General
Aviation Manufacturers Association (GAMA) said worldwide deliveries
of general aviation aircraft totaled 436 units during the third
quarter, up slightly from 425 units in 2010. Billings in the
quarter rose to $4.8 billion, up from $4.1 billion the same time a
year ago.
However, GAMA said shipments for the nine-month 2011 period,
ending Sept. 30, were down nearly 10 percent. Billings for the
period totaled $12.1 billion, down 10 percent from the 2010
period.
As promising as the forecasts sound, economic concerns have led
at least one business aviation analyst to scale back his earlier
predictions for growth starting in 2012. “Our 2012 forecast
has flattened a bit, although the total is still slightly higher
than 2011,” said Richard Aboulafia, vice president of The
Teal Group. “The key U.S. market is in better shape than
generally known, but a difficult global environment is keeping U.S.
companies from spending money. Europe, of course, looks like it has
another year or two of pain and restructuring ahead. Some emerging
markets, particularly China, are also showing worrying signs of a
slowdown.”
Nonetheless, Aboulafia still sees some positives on the horizon
that will continue to drive business aviation market growth.
“Corporate profits and cash holdings have reached record
levels,” he said. “That, coupled with three or four
years of drastically reduced aircraft deliveries, implies
considerable pent-up demand. When the global picture brightens, and
when confidence returns, this market could recover at a very high
growth rate. But that probably won’t start until later in
2012, and it might not start until well into 2013.”
Brian Foley, of Brian Foley Associates, remains upbeat about
growth prospects for 2012, noting that many segments of the market
already are posting improvements.
“FBO, MRO, charter, fractional and large cabin jets have
already been on the upswing, which should continue throughout
2012,” Foley said. “As for the small- and mid-size
jets, their recovery is largely dependent on equity markets showing
some form of stabilization and growth. My guess is as good as
anyone’s when this may happen. Let’s hope it’s in
2012.”