Honeywell Forecasts Record Deliveries, Despite Slump

Orlando, Fla -- Deliveries of business jets in the Very Light Jet segment will continue to build momentum off a base of around 250 units in 2008, according to Honeywell Aerospace, which released its latest forecast on the eve of the NBAA show.
For VLJs, deliveries are forecast to increase dramatically in 2009 and beyond, averaging around 400 aircraft per year for the latter portion of the forecast period. The rapid increase in projected demand reflects the introduction and rapid production ramp up of new very light jets, such as the Embraer Phenom 100 and Cessna Citation Mustang.
Total deliveries of very light jets for the 2008 to 2018 forecast period are expected to approach 4,000. Honeywell, however, includes the Cessna CJ1+ and CJ2+, Beechcraft Premier I and Sino-Swearingen SJ30-2 in the VLJ segment, leaving such aircraft as the Eclipse 500 and Adam A700 to the category of personal jets. It also puts the Diamond Jet, Cirrus, Piper Jet and others in this category which is not normally covered by its Business Aviation Outlook.
Total demand potential over a 10-year period is estimated to be in the range of 4,000-5,000 very light personal jets. When combined with new-generation, low-cost aircraft carried in the Very Light segment of the Business Aviation Outlook, the total deliveries range from 7,000-8,000 aircraft from 2008-2018 and remains within the range predicted by earlier Honeywell survey research. The projections now factor in demand from fractional ownership companies, branded charter and some emerging air taxi operations that have ordered ultra-light jets as the core of their fleets. Honeywell had not included these additional sources of demand, which substantially increased its outlook which was largely based on pure owner/pilot based operations. The forecast window has also moved a year further into a period of rapidly-expanding, delivery-rate plans for ongoing programs but also accounts for recent disruption in some production lines which has tempered the outlook somewhat from a year ago.
In its 17th annual Business Aviation Outlook, Honeywell forecasts delivery of approximately 17,000 new business aircraft from 2008 through 2018, generating expected industry sales of $300 billion. This year marks the fifth consecutive year of industry expansion since the last industry slowdown in 2003. Year-to-date, the number of aircraft delivered is up almost 22 percent compared with the same point in 2007, and industry-wide new jet delivery revenues are also up just over 22 percent.

Fleet Replacement Drivers
Chief reasons cited for replacement of current aircraft remain relatively consistent with prior surveys, with age, cabin size and range improvement all listed as important criteria in every region. Asian and Middle Eastern operators listed more spacious cabins as a primary reason for replacement aircraft followed by longer range. State of the art technology in avionics and engines also continued to gain prominence as leading reasons for aircraft replacement in every region.
“Advances in technology are being pursued by every manufacturer,” said Rob Wilson, president, Business and General Aviation, Honeywell Aerospace. “Improved cabin comfort, extend range, broader mission capability and advanced Avionics and Safety systems produce business jets that are highly productive, cost-efficient assets. These innovations are coming from both existing and emerging business aircraft OEM’s. Gains in new aircraft capability and flexibility, incremental demand from fractional ownership and jet cards, airline use of business jets, branded charter operations and special mission applications, and a global economy are all contributing to business jet demand.”
Factoring in projected record aircraft deliveries in 2008 and the generally strong levels of global purchase expectations, this year’s Business Aviation Outlook forecasts another record-setting year in 2008. For 2008, Honeywell Aerospace forecasts deliveries of nearly 1,200 new business jets for the first time in history, up from 1020 in 2007, a 15 percent increase, despite an uncertain economy in North America. Deliveries in 2009 are expected to break more records, ranging between 1,300 and 1,400 jets depending on how quickly several new programs are able to ramp up.
“New aircraft sales have remained at record levels” said Wilson. “2008 will add to the string of record years the industry has experienced and order intake across most business jet categories remains strong, consistent with last year’s forecast. Aircraft backlogs currently equate to nearly three years worth of deliveries, so 2008 and 2009 still shape up to be strong years for the industry.”
Year to date, new jet orders have risen roughly 20-25 percent over first half 2007 levels, however, a sizable portion of these orders are for new models entering service in 2012 and beyond. Honeywell believes that order intake will moderate to more sustainable levels in the second half of 2008 and into 2009. Nevertheless, available measures of total industry book-to-bill ratio are still running at or over two-to-one so far in 2008.
While the overall outlook for the OEM portion of the industry remains positive, recent data from the FAA and Euro-control points to reduced business aircraft flight activity in the U.S. and Europe for the rest of this year and potentially impacting 2009 flight operations. The company cited economic pressures and unexpected fuel price increases for these trends and for the increase in aircraft now on the market.