Honeywell answers the question by splitting the market between light and light-medium jets, very light jets and personal jets, the latter of which encompasses Eclipse 500, Adam 700, Diamond Jet, Cirrus, Piper Jet others. Still it parses its definition by referencing what it calls new branded charter operations which have placed major fleet orders and this must include at least the Eclipse 500 given DayJet’s operation as well as plans by Pogo Jet. Related Story  The company explained, however, that this emerging air taxi business is not included in its forecast because the model has yet to be proved. It also said personal aircraft are considered general aviation rather than corporate aviation and its forecast is based on corporate aviation purchase data.
After surveying general aviation or owner-pilots collected in 2005 and corporate flight department purchase expectations in 2007, Honeywell expects total demand potential over a 10-year period to be in the range of 6,000-7,000 very light personal jets. Even so, it received no responses on planned VLJ purchases from traditional corporate transport companies. “We think there is a market,” said Spokesperson Bill Reavis. “We’ve been saying since 2003 there could be as many as 9,000. But this is a survey about planned purchases. We see them as entrepreneurally flown. We survey 14,000 flight departments worldwide and they don’t even list VLJs. They are looking for a three-to-five person capacity, longer range and a potty.”
“When combined with new-generation, low-cost aircraft carried in the Very Light segment of the Business Aviation Outlook, the total deliveries range from 8,000-9,000 aircraft from 2007-2017 and fall directly in the range predicted by earlier Honeywell survey research,” said the company, adding its projections now factor in demand from fractional ownership companies, branded charter and some emerging air taxi operations that have ordered very light jets as the core of their fleets. “Inclusion of these additional sources of demand has increased the outlook over the pure owner/pilot-based levels reported a year ago. Additionally, new OEM’s with credible development programs have emerged and the forecast window has moved a year further into a period of rapidly expanding delivery ramp-up plans for established programs.”
Honeywell’s definition of very lights jets encompasses the Embraer’s Phenom 100 as well as the Cessna Citation Mustang and as the HondaJet along with production and announced aircraft including the Cessna CJ1+ and CJ2 +, Beechcraft Premier I and the Sino-Swearingen SJ20-2. Reavis explained that Honeywell sees this market as those aircraft over $2.5 million along with weight considerations. Total deliveries of VLJs between now and 2017 will exceed 3,300, said the company.
Honeywell anticipates deliveries of more than 3,850 jets in the light- to medium-light aircraft during the forecast period, an increase of more than 18 percent compared with delivery expectations for these segments in last year’s outlook. In this category are such programs, one of the larger areas of operator new jet purchase plans in the 2007 survey, as Hawker 400XP, Hawker 750, Citation Bravo, Citation Encore+, CJ3 (525B), Citation XLS, Grob SPn, Embraer Phenom 300, Lear 40 and Lear 45/45XR.
The company anticipates more than 1,300 new deliveries for next year and 14,000 new business jet deliveries through 2017, representing sales of $233 billion. This year, said Honeywell, marks the fourth year of industry expansion since the last trough in 2003. Year-to-date, the number of aircraft delivered is up almost 11 percent compared 2006 and, industry-wide, sales are up just over 12 percent. For 2007, Honeywell forecasts deliveries of over 1,000 new business jets for the first time in history, up from 861 in 2006. Deliveries in 2008 are expected to exceed 1,300.
Year to date, new jet orders have risen over 100 percent over first half 2006 levels. Available measures of total industry book-to-bill ratio have exceeded 2.0 thus far in 2007. “Industry growth has moved into unparalleled territory,” said Rob Wilson, president, business & general Aviation for Honeywell Aerospace. “2007 is a record year for the industry. Order intake across most business jet categories remains very strong, with little discernable affect from recent stock market fluctuations and with backlogs exceeding two-and-one-half-years worth of deliveries, 2008 will likely be another banner year for the industry.”

By Region
North America is expected to account for about 50 percent of business jet deliveries over the next five years, a lower-than-proportional share of global demand, reflecting somewhat slower growth in the region and the very high levels of purchase expectations in all other areas. Honeywell has reported on this trend for several years.
Asia is up strongly and is expected to account for up to 15 percent of total business jet demand in the next five years. Europe rebounded strongly, and, if realized, European demand will contribute about 22 percent of the world total. Latin America follows at 10 percent and the Middle East/Africa region remains steady over last year at four percent. While these percentages have shifted somewhat, the overall demand pool has grown so individual regions are still absorbing significant numbers of new aircraft into their fleets, even if percentage share slips a few points.
European demand has exploded given the experience of NetJets, which opened a European subsidiary more than a decade ago, and only had 80 clients after five years along with hundreds of millions in losses. However, since 2005, it has added 589 customers. Charters are driving demand in Europe because business travelers must cover multiple cities or countries in a single day. Commercial transport covers about 100 airports compared to business aviation which now covers in excess of 1,000.
The strength of the Euro against the dollar also contributes to the sales boom, as does the increased wealth and business expansion anticipated in Eastern Europe and Russia. Overall, European operators reported a particularly strong increase in replacing their fleets, while holding fleet expansion plans more in line with 2006 levels. Honeywell cited rising interest in moving into larger and longer-range models as reported by European respondents along with activity by charter/managed fleet operators.
North American purchase expectations declined slightly, but expectations in all other world regions expanded significantly. Overall, respondents to this year’s survey said they expect to replace or expand about 33 percent of their fleets over the next five years, up from about 26 percent in the 2006 survey. International buyers now account for about 50 percent of the new aircraft deliveries projected over the next five years. Purchase expectations also trended up in Asia, Africa and the Middle East. Aggregating all regions, five-year purchase expectations were well above the 24 percent average recorded over the last six years. Between 2008 and 2012, the 2007 survey forecasts demand for 4,600 aircraft globally, not including demand from fractional ownership or branded, charter, start-up businesses.
In Europe, purchase expectations of 47 percent were up significantly compared with 2006, and are well above the 25 percent-or-better levels that have prevailed since 2001. “Seven consecutive years of strong purchase intentions in Europe is a great track record, and confirms the value operators receive from using business jets,” Wilson said.
In North America, 2007 survey respondents said they expect to replace or expand about 20 percent of their fleets during the next five years. “The level of purchase expectations in North America remains significant,” Wilson said. “Despite slower economic growth and recent credit and stock market fluctuations, survey purchase plans lost less than one percent of their 2006 levels. Just like last year, we continue to hear concerns about high fuel costs, taxes, user fees and ease-of-use issues such as Temporary Flight Restrictions in the United States.”
Despite those responses, overall buying plans in the region held relatively steady, with replacement plans actually increasing and offsetting some of the slowdown in plans for fleet expansion. Honeywell’s baseline forecast assumes lower than three percent U.S. GDP growth in the short term. Should the U.S. economy outperform those estimates purchase expectations could strengthen further.
In other regions, five-year purchase expectations gained strength. The Asia/Africa/Middle East region once again ranks as the area with the highest purchase expectations. Purchase expectations grew for the fifth consecutive year to record levels exceeding 50 percent, again attaining the highest readings in the history of the survey. Middle East and selected African economies continue to benefit from higher oil prices and expect to be active buyers.
Confidence in Asian economic growth remains high boosting interest in longer-range aircraft with state-of-the-art avionics. Sales are being driven partly by growing demand for trans-Pacific flights on long-range planes. Across the board, long-range business jets will account for more sales than any other segment of the market, according to Honeywell.
In Latin America, operators reported a strong level of purchase expectations. Just over 38 percent of current fleets are expected to be replaced or added to over the next five years. Purchase plans recovered from the lower 2006 level by eight points, and interest is high in historical terms, exceeding all prior survey levels except 2006, said the company, adding Latin American purchase plans were influenced in the 2007 survey by several sometimes contradictory factors. The region still reflects the positive impact of elevated energy prices on regional economies, including those of Mexico, Venezuela and Brazil but concerns are rising over potential political instability.

Replacements & Used Equipment
Current average pricing is running nearly 14 percent ahead of levels from the same period a year ago though there is obviously some variability on a by-model basis. Large backlogs in the new-jet sector also contribute to stronger used jet business environment since few slots are available on many models until 2010 or beyond.
Age remains the primary reason cited for aircraft replacement along with range improvement, while European operators listed larger cabins followed by longer range. Improved speed, comfort and updated technology in avionics and engines also appear as leading reasons for aircraft replacement across all regions. Five-year purchase expectations for used jets also stayed in line with 2006 results and continued a modest rate of improvement. Purchases of used aircraft have been at relatively high levels for several years, resulting in firming prices and a declining inventory of late-model jets. Over the last few quarters average asking prices have risen and supply, as measured by share of active fleet for sale, has fallen, moving in line with survey results over the past two years. Recent sales activity has been particularly strong with second quarter 2007 unit sales posting the highest second quarter level in five years. “World economic conditions play a key part in the industry expansion we’ve experienced but steady gains in aircraft value offered to operators also stimulates growth,” Wilson said. “Value to the operator takes the form of improved aircraft reliability, mission flexibility, cabin productivity, comfort and convenience. Historically, the Honeywell Outlook shows increases in purchase plans and subsequent aircraft deliveries tend to be highly associated with the introduction of new aircraft. Manufacturers help stimulate demand with new models incorporating advances in aviation technology within the larger global economic framework.”
Improved engines, safety systems, cockpit avionics and cabin information and comfort improvements along with advances in aerodynamic design continue to deliver compelling gains in value to fleet operators, pilots and passengers.

Fractional/Jet Card
Owners of fleets serving fractional shareholders and Jet Card purchasers continue to provide a substantial portion of total industry demand. Fractional fleet operators still account for about 15-18 percent of the backlog for business jets but Honeywell has seen inroads made in their overall share of backlog and new deliveries by the large number of orders placed by traditional operators and charter providers over the last one-to-two years. New deliveries to fractional fleet operators should range between 110 and 150 aircraft annually through the forecast period. Sales of new ownership shares have flattened significantly since 2004 but are back in positive territory thus far in 2007, said Honeywell. Sales of jet cards, which offer business jet access in smaller blocks of flight hours, without a long-term financial commitment or equity stake, remain strong as well.
New branded charter operations continue to place sizable aircraft orders, especially of new Very Light Jet (VLJ) class aircraft, adding to total aircraft demand. “If trends continue, shared ownership and charter fleets likely will continue to have high utilization rates and capacity bottlenecks could fuel additional aircraft demand,” Wilson said, citing the dismal customer service record of scheduled carriers.
Replacement demand for new aircraft is also a significant source of new jet purchases in the fractional segment. High utilization and the desire to maintain consistent passenger experience and hold down operating costs contributes to fractional replacement rates at shorter intervals than typical for many traditional operator groups
“Advances in technology are sought by every manufacturer,” Wilson said. “Innovation to improve cabin comfort, extend range, broaden mission capability and produce business jets that are highly productive, cost-efficient assets is ongoing across the industry, and is coming from 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, are all fueling unprecedented business jet demand.