The forecast notes that the business aviation industry continues to face a slow near-term pace of orders due to a slow-growth economic environment across many global markets, along with many political uncertainties.
The 25th annual Global Business Aviation Outlook represents a 6% to 7% reduction from the numbers noted in the 2015 forecast, according to company officials.
“We continue to see relatively slow economic growth projections in many mature business jet markets. While developed economies are generally faring better, commodities demand, foreign exchange and political uncertainties remain as concerns,” said Brian Sill, president, Commercial Aviation, Honeywell Aerospace. “These factors continue to affect near- term purchases, but the survey responses this year indicate there is improved interest in new aircraft acquisition in the medium term, particularly in the 2018-19 period. In the meantime, operators we surveyed this year indicated plans to increase usage of current aircraft modestly in the next 12 months, providing some welcome momentum to aftermarket activity, which has been flat recently.”
Findings in the 2016 Honeywell outlook include:
- Deliveries of approximately 650 to 675 new jets in 2016, a low- to mid-single-digit percentage decline year over year. The pullback in deliveries expected in 2016 comes on the heels of a small increase in 2015 and is largely due to slower order rates for mature models and a stabilization in fractional-usage type of aircraft deliveries.
- 2017 deliveries are projected to be slightly lower, reflecting transitions to new models slated for late 2017 and 2018 service entry.
- Operators plan to make new jet purchases equivalent to about 27% of their fleets over the next five years as replacements or additions to their current fleet, an encouraging increase but one that is less than firm in timing.
- Of the total purchase plans for new business jets, 21% are intended to occur by the end of 2017, while 18% are scheduled for 2018 and 2019, respectively.
- Operators continue to focus on larger-cabin aircraft classes, ranging from super mid-size through ultralong-range and business liner, which are expected to account for more than 85% of all expenditures on new business jets in the next five years.
The longer-range forecast through 2026 projects a 3-4% average annual growth rate despite the lower short-term outlook as new models and improved economic performance contribute to industry growth.
According to the forecast, about 65% of the projected demand comes from North America, up 4 points from the 2015 survey.
New jet purchase plan levels rose 5 points in North America, the industry’s largest market, and helped drive the world average up to 27%.
USED JETS and FLIGHT ACTIVITY
Over the course of the past year, the pace of flight activity has not recovered, according to the forecast. On a positive note, operators responding to the 2016 survey report they plan to increase aircraft usage in the next 12 months to a modest extent.
With respect to the used jet market:
- Roughly 10% of today’s fleet is up for resale, down from a high of nearly 16% in 2009 but up from the low point achieved last year. Inventory levels are trending up, while asking prices continue to drift lower.
- In 2016, the total number of recent model jets (less than 10 years old) listed for resale rose significantly to about 675 aircraft, excluding personal jets and business liners. In proportion to the level of overall listings, the share of recent model jets for sale has risen noticeably.
- Operator respondents reduced their used jet acquisition plans by about 8 points, equating to 24% of their fleets in the next five years. Plans to buy a used jet fell across the globe. The decline in used jet purchase plans clearly aligns with the expansion of used inventory for sale and continued price pressure on used jets.
- Weaker used aircraft purchase plans may slow the pace of aircraft upgrades.