According to the 26th annual Global Business
Aviation Outlook released on Sunday by Honeywell, the business jet
aviation industry is likely facing a modest pace for near-term
orders due to an uncertain economic and political environment
along with a very competitive used aircraft market.
The Global Business Aviation Outlook forecasts
up to 8,300 new business jet deliveries worth $249 billion from
2017 to 2027, down 2-3 percentage points from the 2016 10-year
“Declining used aircraft prices, continued low
commodities prices, and economic and political uncertainties in
many business jet markets remain as near-term concerns for new jet
purchases, leading to a modest growth in 2018,” said Ben Driggs,
president, Americas Aftermarket, Honeywell Aerospace. “That said,
there are several new and exciting aircraft models coming to
market, which will drive solid growth in new business jet
purchases in the midterm and long term.”
Key global findings in the 2017 Honeywell
- Deliveries of approximately 620-640 new jets
in 2017, a decline of roughly 30 aircraft year-on-year. This
pullback comes on the heels of a moderate decrease in 2016 and is
largely due to slower order rates for mature airplane models and a
transition to new models slated for late 2017 and 2018.
- Operators plan to make new jet purchases
equivalent to about 19% of their fleets over the next five
years as replacements or additions to their current fleet, a
decrease of 8 percentage points compared with the 2016 survey
- Of the total purchase plans for new business
jets, 19% are intended to occur by the end of 2018, while
17% and 14% are scheduled for 2019 and 2020,
- Operators continue to focus on larger-cabin
aircraft classes, ranging from the super mid-size through ultralong range, which are expected to account for more than 85% of all expenditures on new business jets in the next five
- The longer-range forecast through 2027
projects a 3-4% average annual growth rate despite the
lower short-term outlook as new models and projected improved
economic performance will contribute to industry growth.
- Declines in five-year operator purchase plans
are offset in the long-term forecast by new programs entering
service, improved economic performance and higher commodity
prices, resulting in only a small decline in the overall outlook.
Business Jets - Breakdown by Region
Brazil, Russia, India, China (BRIC)
A significant decline in Chinese and Russian purchase plans compared
with last year is driving lower BRIC results.
- Continuing the trend started in 2014, BRIC
purchase plans are down this year following the rebound in 2016,
reaching just over 19%. This rate aligns the BRIC composite
to the world purchase plan rate.
- Brazil remained a bright spot by recording the
strongest new aircraft purchase plans in the survey from a major
aircraft market, though overall buying plans also declined
- The combined BRIC countries’ near-term demand
profile has shifted somewhat later in the forecast period this
year, with only 24% of intended new jet purchases scheduled
for the next two years.
Impacted by regional tensions,
purchase plans are down significantly from last year and are now back to
2014 and 2015 levels.
- Operators in Asia Pacific report new jet
acquisition plans for 13% of their fleet over the next five
years, down significantly from last year and reflecting concerns
about increased regional tensions.
- Based on the expressed level of purchase
plans, Asia Pacific would represent close to a 6% share of
global new jet demand over the next five years.
Only 27% of Asian respondents plan
to schedule their new purchases within the first two years of the
Middle East and Africa
Slightly lower purchase
plans were reported, impacted by political tensions and ongoing
conflict in the region in tandem with a stalled recovery in oil
- The share of projected five-year global demand
attributed to the Middle East and Africa is 4% this year,
in line with the historical range of 4-7%.
- In the Middle East and Africa, 18% of
respondents said they will replace or add to their fleet with a
new jet purchase, down from 21% last year but in line with
the overall world average.
- In line with the global average, about 36% of operators responding to the survey plan to schedule
their new purchase within the first two years of the five-year
Only region with higher purchase
plans in 2017 compared with last year. Slightly lower Brazilian
purchase plans compared with 2016 results are offset by
significantly higher purchase plans in Mexico.
- 29% of the Latin America sample fleet
is expected to be replaced or added to with new jet purchases over
the next five years — 2-3 points higher than last year’s survey.
Increased plans from Mexican operators and resilience in the
Brazilian operator base helped drive higher results this year,
despite flat oil prices so far in 2017.
- About 34% of this region’s projected
purchases are planned for between 2017 and 2019, lower than the
worldwide average of 36%.
- Based on the current purchase plan levels,
Latin America would represent 15% of total projected demand
over the next five years.
New aircraft acquisition plans
in North America are lower in this year’s survey than last year’s.
- An estimated 61% of projected global
demand comes from North American operators over the next five
- New jet purchase plan levels decreased 9
points in North America, the industry’s largest market with 65% of the installed base. Purchase plans in this region
contributed significantly to driving the world average purchase
plan rate down to 19%. New jet purchases are roughly in
line with 2014 and 2015 survey results.
- On a positive note, about 39% of
operators responding to the survey plan to schedule their new
purchase within the first two years of the five-year horizon. This
is 3 percentage points higher than last year’s survey.
With operators still contending with
sluggish growth, the uncertain effects of Brexit, a refugee and
migrant surge, and continual threats of terrorism, new jet
purchase plans declined significantly in this year’s survey.
- Europe’s purchase expectations declined this
year to close to 19%, a drop of 11 percentage points
compared with last year’s results.
- Despite the decline in new jet purchase plans,
Europe’s share of estimated global five-year demand remained at
near 14% in the 2017 survey.
- A comparison of the planned timing for
European purchases indicates a cautious approach to timing the
replacement of expansion of the fleets with new acquisitions. Only
33% of new jet purchases are expected in the first two
years of the survey, while close to 45% are scheduled for
2022 and beyond.
Used Business Jets and Flight Activity
Turning to used jets and flight activity, the
pace of flight activity in the past year has recovered somewhat
with survey respondents in all regions of the world, except Asia,
reporting higher utilization in 2017.
With respect to the used jet market:
- Despite improvement of 7% year-on-year in overall inventory levels, asking prices are still
declining overall, especially for medium- and long-range aircraft.
- On a positive note, the total number of recent
model jets (less than 10 years old) listed for resale is down 15%
year-on-year and now represents less than 8% of
the installed base.
- In proportion to the level of overall
listings, however, the share of recent model jets for sale is
still more than 30% of total listings in comparison with
pre-recession levels of 15 to 20%.
- Survey respondents increased their used jet
acquisition plans by about 1 percentage point, equating to 25% of their fleets in the next five years. All regions’ used
jet purchase plans were up or stable. The increase in used jet
purchase plans clearly aligns with the reduction of used inventory
for sale and could result in favorable pricing pressure on used
jets in the medium term.
Honeywell’s forecast methodology is based on
multiple sources including, but not limited to, macroeconomic
analyses, original equipment manufacturers’ production and
development plans shared with the company, and expert
deliberations from aerospace industry leaders. Honeywell also
utilizes information gathered from interviews conducted during the
forecasting cycle with over 1,500 non fractional business jet
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