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Thursday, February 20, 2014

Despite GA Billings Surge, Overall Market Is Unrecovered

Woodrow Bellamy III 

[Aviation Today Feb. 20, 2014] Increased demand for large business jets helped worldwide billings for General Aviation (GA) reach $23.4 billion in 2013, an increase of 24 percent from the previous year and the second-largest number recorded since 2008, according to the General Aviation Manufacturers Association (GAMA) year-end report. 
 
 
GAMA's year-end numbers show demand is up for long-range business jets, such as Bombardier's Challenger 850 pictured here. Photo, courtesy of Bombardier.
 
Despite the increase in billings, unit shipments are still nearly half of what they were before the recession began in 2008. Total GA aircraft shipments in 2013 increased 4.3 percent to 2,256, from 2,164 in 2012.  
 
This discrepancy between shipments and billings reflects increased demand for larger, more expensive corporate jets while midsize and light business jets are not receiving as much demand. Larger jet demand is reflected in higher billings in 2013 for manufacturers of longer-range jets, such as Gulfstream, which saw an increase of $3 billion, while billings for Dassault and Bombardier were also up by about $500 million each. 
 
By contrast, Cessna, which recently introduced the light and medium jets — M2 and the new Citation Sovereign Plus — had a 25 percent decline in business jet deliveries and a reduction in billings of $200 million. 
 
Executives from Bombardier, Cessna parent Textron and Gulfstream parent General Dynamics all reported that they're facing challenges in the mid and light end of the business jet market. 
 
"The one part of the business that we're still concerned about is the business jets in our recovery, especially as we look at segments within business aviation between light and medium and large cabin. Our recovery is not complete there," says GAMA President and CEO Pete Bunce. 
 
"One thing that we have done through this style turn is continued our innovation and we've continued our growth, even though times have been difficult, and I think that we will see the fruits of that. But still the other economic factors that take place — whether it’s where we used the light to mid jet aircraft where the infrastructure is robust, whether it’s Europe or North America. How those economies continue to recover will continue to impact the light to mid jet recovery."
 
Among other GA segments, shipments of turboprops increased 10 percent last year from 2012, as Bunce says a drilling boom in the U.S. required more aircraft that can land at small airports near oil and gas fields in shale formations. Piston aircraft deliveries were also up 2.7 percent. 
 
Both Bunce and GAMA chairman Steve Taylor expressed cautious optimism about the continued recovery of the GA industry since the recession. GAMA is working with regulators in emerging GA markets such as China and Indonesia to ensure airspace liberalization and the construction of more GA airports will allow operators in the Asia Pacific region to introduce newer GA aircraft into their fleets. 
 
"If you look at the orders that happened just on the commercial side in Indonesia alone, an island chain that's gigantic, basically the size of the continental U.S. when you stretch those islands, thousands upon thousands of islands that they intend to connect with airports, [that's] perfect for business and General Aviation. We're excited about this pie expanding, and opportunities for industry growth," said Bunce. 
 

In 2014, the struggling light to mid-sized segment of the business jet industry is expected to get a boost from the introduction of new jets to arrive on the market this year, including Embraer’s Legacy 500, Bombardier’s Learjet 75 and Honda's first ever business jet, the HondaJet. 

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