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Tuesday, November 10, 2015

Business Jet Deliveries Increase on Demand for New Models

Woodrow Bellamy III 

[Avionics Today 11-10-2015] Deliveries of business jets increased by 4.3 percent during the first three quarters of 2015, according to the third quarter aircraft shipment report released by the General Aviation Manufacturers Association (GAMA). Through the first nine months of the year, business aviation Original Equipment Manufacturers (OEMs) shipped a total of 465 business jets, compared to 446 during the same period last year. 
Bombardier has shipped 51 total Challenger 350 aircraft this year. Photo: Bombardier.
GAMA President and CEO Pete Bunce attributed the industry's performance to "new and recently certified business jet models," which also helped to raise overall billings to $15.7 billion, a 1.5 percent bump over the same period last year. Shipments of business jets were one of the only fixed-wing general aviation aircraft categories to see an increase through the first three quarters. Shipments of turboprops were down by 9.4 percent and piston aircraft were down nearly 11 percent. 
Rolland Vincent, a business aviation industry expert and analyst and president of Rolland Vincent Associates, told Avionics Magazine one of the biggest surprises in the third quarter report was the strong showing from Bombardier. Despite the recent cancellation of the Learjet 85 and the issues surrounding the CSeries, the Canadian OEM shipped 14 Challenger 350s in the first quarter and 18 in the second and third quarters this year. Additionally, it has earned $5 billion in total billings through the first nine months of the year from its business aircraft division. 
"The real star there for Bombardier is the Challenger 350, with that airplane they have ramped up production rates nicely; year-over-year they are up significantly on the Challenger 350," said Vincent. "They still have the challenge of getting the 650 certified though, it's not certain yet whether they will be able to do that before the NBAA conference next week, but that is definitely something to keep an eye on." 
Missing from the third quarter report was shipment data from Dassault Falcon Jet, which Vincent attributes to the New Jersey-based OEM's current transition phase from the 7X to the 8X program. 
"Dassault is in transition from 7X to 8X, and it seems people are enamored with the new one, which is not available yet so it's hard to move the 7X while that's going on," said Vincent. "They could be dealing with some production life cycle management challenges as they go from the 7X to the 8X." 
The business jet shipment numbers are largely driven by demand in the United States, with other regions of the world not showing as much demand for new, state-of-the-art business aviation aircraft. Purchasing new jets can also help ensure operators are compliant with upcoming ADS-B and FANS 1/A+ mandates in certain regions of the world, a buying trend Vincent wrote about in his October newsletter to business aviation investors. 
When asked about how the shipment trends so far this year, combined with how activity in the pre-owned market, impacts avionics manufacturers, Vincent's analysis echoes the market segment trends reported by Jetcraft's recently published 10 year business jet demand outlook
"Honeywell is well positioned with that strategic supplier-OEM relationship they continue to enjoy with Gulfstream. That continues to be the platform that people want the most — it continues to shine above all others in all the survey work that we do," said Vincent. 
"Garmin also continues to impress, and they are the preferred brand at the lower end of the market. Around the hangars and [Fixed-Base Operator] FBO lounges, pilots are always talking about Garmin, and that has been a huge advantage for their brand over time," said Vincent. "The other big avionics company we are intrigued by is L-3. They had some recent certifications this year for their ADS-B Lynx family of products. Business jet operators looking at ADS-B upgrades right now are certainly considering Lynx as an option." 
For the entire year, Vincent's firm — which does not forecast deliveries for twin aisle business jets — foresees flat growth overall for business jet shipments. 

"Our forecast for the whole year is 709 total business jet deliveries for the year. We are being a little conservative with these numbers, but they are actually looking pretty good," said Vincent. 

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