[Avionics Today 10-30-2015] A new report released by aircraft acquisition services/brokerage company Jetcraft foresees a $271.1 billion 10-year outlook for 8,775 business jets through 2024. The forecast also predicts a $7 billion business aviation market collectively between Honeywell, Rockwell Collins and Garmin.
Ultra long range business jets such as Bombardier's Global family, pictured here, is expected to be in high demand. Photo: Bombardier.
The international aircraft acquisitions company based its forecast on "interactions with all of the principal players involved in executing tasks across the aircraft sales cycle." Jetcraft's experts analyzed each major purchasing region, including North America, Latin America, Europe, the Middle East and Africa as well as the Asia Pacific and Russia. The forecast found that North America will continue to be the world's largest market for business aircraft purchasing.
"The North American region will continue to dominate the market of total aircraft unit deliveries, representing 4,728 units. North America benefits from the availability of financing as a result of liquidity in the market. In addition, bonus depreciation allowance provides individuals and companies with the ability to benefit from an aggressive depreciation schedule on capital equipment. This economic activity is a key factor driving the region’s incremental year-on-year growth for most of the forecast period," the report states.
Another key regional forecast finding was that Europe, the Middle East and Africa would account for a combined 20 percent of the total aircraft deliveries market, representing 1,751 units combined.
In the Asia-Pacific region, the forecast treated China as a separate entity because "its economic situation is so unique." Predicting China's business aircraft purchasing plans over the next decade is difficult, considering the International Monetary Fund's (IMF) forecast that the country's Gross Domestic Product (GDP) will decline to 6.8 percent this year and 6.3 percent in 2016, and a debt load of $28 trillion equating to 282 percent of GDP according to Jetcraft. The forecast states that airport infrastructure development is crucial to driving domestic demand in China.
"As efforts now shift on gearing economic growth toward domestic consumption — and away from infrastructure investment — critical airport development and related infrastructure is in jeopardy. Airport infrastructure is crucial for business aviation as it comes hand in hand with much needed regulatory additions, i.e., more airports lead to increased passenger traffic, which leads to more fixed based operations, which results in freeing up the airspace, all of which collectively feed the business aviation ecosystem," the report says.
The Jetcraft forecast projects the largest demand through 2024 for 2,105 ultra long-range jets, with Gulfstream accounting for 40 percent of that demand, and Bombardier coming in a close second at 37 percent.
Within the different business jet segments, the forecast illustrates the strategic market orientations for major avionics Original Equipment Manufacturers (OEMs). Specifically, the forecast states that Rockwell Collins' strategy is to secure program participation or Tier I vendor status in each of the segments. Honeywell and Garmin, in contrast, focus on particular ends of the segment scale, with Garmin at the lower end segments and Honeywell at the higher end.
"Garmin in particular found favor with OEMs wishing to tap into the first-time buyer customer base with more intuitive flight deck design and functionality, such as flight envelope protection, enhanced synthetic vision and touchscreen capability. In fact, with all the experience they’re amassing on current programs, Garmin could easily start vying for the new larger widebody models such as Embraer’s first purpose-built widebody aircraft which it will eventually announce presumably within the forecast period," the forecast says.