Long Term, Biz Av will Flourish

High fuel prices and concerns about the economy are dampening the near-term prospects for the general aviation industry, but the long-term outlook remains favorable, according to the 2008-2025 FAA Forecast released last week. “We see a strong growth in business aviation demand, driven by a growing U.S...

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High fuel prices and concerns about the economy are dampening the near-term prospects for the general aviation industry, but the long-term outlook remains favorable, according to the 2008-2025 FAA Forecast released last week.
“We see a strong growth in business aviation demand, driven by a growing U.S. and world economy, as well as a growing fleet of very light jets (VLJs),” said the agency in its report. “VLJs, with their relatively inexpensive operating costs, may redefine ‘on-demand’ air taxi service. Next year, we project that 400 units will join the fleet, with that figure growing to 450-500 a year through 2025. Partly because of the influx of new VLJs, the number of general aviation hours flown is projected to increase an average of 3.0 percent a year through 2025.”
The current forecast assumes the annual increase in VLJs will result in the U.S. market growing to 8,145 by 2025. The agency noted that this is in the middle of a fairly wide range of industry estimates with the key driver being the on-demand air taxi industry. “Those who believe the time has come for the air taxi industry tend to have higher fleet forecasts,” it said. “Those who are less sanguine about the prospects for the on-demand, air-taxi industry tend to have more conservative fleet forecasts. If the on-demand air taxi industry does gain widespread acceptance, it will spur the demand for VLJs and the general aviation active jet fleet and hours flown could be higher than forecast.”

From an operations standpoint, we predict that, on average, every year, from now until 2025, we’re going to add the equivalent of JFK, LaGuardia and Newark combined into the system. – FAA Forecast

As the demand for business jets has grown over the past several years, the current forecast assumes that business use of general aviation aircraft will expand at a more rapid pace than that for personal/sport use. The business/corporate side of general aviation should also continue to benefit from a growing market for new very light jets (VLJs), said the agency. In addition, corporate safety/security concerns for corporate staff, combined with increasing flight delays at some U.S. airports have made fractional, corporate, and on-demand charter flights practical alternatives to travel on commercial flights.
Largely as a result of VLJs as well as fractional ownership fleet and activity levels, jet aircraft are forecast to account for most of the increase in usage, with hours flown expanding at an average annual rate of 7.7 percent over the forecast period. Fractional ownership aircraft fly about 1,200 hours annually compared to approximately 350 hours for all business jets in all applications.
FAA expects VLJs to be used much differently than traditional turbojets and made separate assumptions for traditional turbojets and VLJs. The assumptions underlying the VLJ forecast are vital for both fleet and hours flown, the agency said, and are broken down into air taxi use, private use and shared ownership use. VLJ air taxis are expected to average approximately 1,500 hours per year, shared ownership users about 525 and private use 375.
By 2025, the annual utilization rate for all VLJs is forecast to be 1,014 hours. Traditional (non-VLJ) turbojets are expected to average approximately 397 hours per year by 2025, as VLJs are expected to have a greater share of their use in on-demand air taxi than the traditional turbojets.
The active general aviation fleet is projected to increase at an average annual rate of 1.3 percent over the 18-year forecast period, growing from an estimated 225,007 in 2007 to 286,500 aircraft by 2025. The more expensive and sophisticated turbine-powered fleet (including rotorcraft) is projected to grow at an average of 3.7 percent a year over the forecast period with the turbine jet fleet increasing at 5.6 percent a year.
Single-engine fixed-wing piston aircraft, which are much more numerous, are projected to grow at much slower rates (0.5 percent respectively) while multi-engine fixed wing piston aircraft are projected to decline 0.9 percent a year. In addition, it is assumed that relatively inexpensive
VLJs and new light sport aircraft could erode the replacement market for traditional piston aircraft at the high and low ends of the market respectively.
General aviation activity at FAA air traffic facilities was essentially unchanged in 2007. Operations at combined FAA and contract towers rose just 0.1 percent in 2007, the first increase since 1999, as increases in contract tower activity offset a decline in FAA tower activity.
General aviation instrument activity (IFR) at combined FAA towers fell in 2007, down 1.5 percent, but the number of general aviation aircraft handled at FAA en route centers increased by 1.2 percent.
Between 2003 and 2005 large changes in both the number of aircraft (turbojets up by 22.8 percent, total rotorcraft up by 33.7 percent) and hours (single-engine piston down by 17.6 percent) in many categories occurred, said the agency, reporting the results of the 2006 Survey were consistent with the results of the 2004 and 2005 surveys.
Based on the latest FAA assumptions about fleet attrition, aircraft utilization and General Aviation Manufacturers Association aircraft shipment statistics, the active general aviation fleet is estimated to have increased 1.4 percent in 2007, to 225,007. General aviation flight hours are estimated to have increased 0.6 percent in 2007 to 27.7 million. Related Story
Total activity at combined FAA and contract tower airports totaled 61.1 million operations in 2007, unchanged from 2006 but 11.0 percent below the peak activity level recorded in 2000. Commercial activity (the sum of air carrier and commuter/air taxi) increased by just 0.2 percent in 2007. Air carrier operations increased by 2.7 percent, offsetting a decline in commuter/air taxi operations (down 2.5 percent). Commercial operations as a whole are lower than their peak in 2005. The 0.1 percent increase in general aviation activity was the first increase since 1999. At the end of 2007, non-commercial aircraft activity, which also includes military operations, was 16.1 percent below the activity in 2000, having declined each year since 2002.
At the end of 2006 a total of 1,273 aircraft were estimated to be in the light sport category. The forecast assumes registration of 5,600 aircraft over a five-year period beginning in 2005, including both newly built aircraft and conversions from ultralight trainers. By 2025 a total of 14,700 light sport aircraft are projected to be in the fleet.
The demand for general aviation products and services, especially business jets, appears to be expanding, said FAA. While the high end of the industry (business and corporate jets) is growing, the lower end of the business (piston aircraft) is showing signs of a slowdown. How long the industry expansion continues depends, in large part, on the strength of the market for business jets and VLJs.
This year’s forecast assumes $86/barrel oil in 2008, up from $60/barrel in 2007, and then gradually falls back to $73/barrel in 2015. Rising fuel has already prompted carriers to cut capacity and service, providing opportunities for the emerging air taxi market.
Acing Administrator Bobby Sturgell told Forecast Conference attendees the agency is accelerating NextGen routes — Required Navigation Performance (RNP) and area navigation (RNAV) — into Chicago, DFW, D.C. and New York affording more satellite-based navigation. “In fact, we’ve increased our production of RNP approaches this year, from 50 to 69,” he said. “We’re deploying the Traffic Management Advisor to JFK and LaGuardia and connecting it to the Washington, D.C. area. This will allow us to sequence incoming planes more efficiently — from as far as 100 miles away — and achieve capacity gains of 3-5 percent. We’re working with the Port Authority of New York and New Jersey to deploy a Surface Management System at JFK. This will improve the airlines’ ability to plan ground operations, resulting in reduced noise, fuel and emissions.”