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Monday, October 18, 2010

Business Aviation Outlook: 2011 Is Trough

Business aircraft deliveries in 2011 are expected to fall below 700 units, marking the trough of a three-year freefall in industry fortunes, according to Honeywell Aerospace.

Unit deliveries in 2009 dropped 25 percent from the peak year of 2008, and are expected to decline another 16 percent this year to 675-700 units delivered due to continuing global economic weakness, Honeywell said in its annual Business Aviation Outlook, briefed to reporters Sunday in Atlanta. The forecast, based on a survey of 1,200 corporate flight departments, aircraft manufacturers and other sources, was released in advance of the National Business Aviation Association (NBAA) conference, which opens Tuesday.

Honeywell predicts another period of expansion will begin in 2012, and return to peak levels in 2017.

“The delivery peak to trough is down 40 to 45 percent from the good old days of 2008,” said Rob Wilson, Honeywell Aerospace president of Business and General Aviation. “We expect the overall demand to return to peak levels in about the 2017 time frame and achieve record output levels supported by global economic recovery and a robust product pipeline as we near the end of the decade.”

Five-year buyer interest has softened from 2009, and new purchase plans are slightly below levels observed during the 2007-2008 industry growth period. International demand now accounts for 40 to 45 percent of new aircraft purchase plans over the next five years, down from 50 percent in the 2009 survey.

Longer term, Honeyell forecasts delivery of 11,000 new business jets from 2010 through 2020, generating industry sales of $225 billion. This represents a 10 percent increase in total expected industry sales value versus the company’s prior 10-year estimate.

“In the current down cycle, although we see strong purchase expectation across the globe, we also see that the buying time frame is skewed to later than the five-year horizon,” Wilson said. “This has driven our investment and focus on retrofits, modifications and upgrades, many of those focused on enhancing the safety, enhancing the productivity, enhancing resale value for those customers that are hanging onto those aircraft a little longer.”


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