Short-Term Deliveries Slip, Extended Outlook Remains Healthy in 2017 Honeywell Forecast

October 9, 2017

Slow but steady continues to be the theme for anticipated worldwide business aircraft deliveries, according to the 26th annual Global Business Aviation Outlook released by Honeywell ahead of NBAA’s Business Aviation Convention & Exhibition (NBAA-BACE). A variety of external factors are expected to drive low single-digit growth over the next 10 years, with up to 8,300 new business jet deliveries worth $249 billion from 2017 to 2027.

“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, Honeywell president for the Americas Aftermarket. “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.”

This marks the fourth consecutive decline in the annual forecast’s anticipated business aircraft deliveries, with 2017 totals down 2-3 percentage points from the 2016 10-year forecast and off the 2014 forecasted peak of up to 9,450 anticipated deliveries. Slower order rates for established business jet models are to blame for much of that decline, with deliveries of approximately 620-640 new jets expected this year, a decline of roughly 30 aircraft year over year.

Honeywell further noted an 8 percent decrease in planned new jet purchases by operators over the next five years compared to 2016 survey results, with super-midsize through ultralong range aircraft representing more than 85 percent of all purchases in that time. The longer-range forecast through 2027 projects a 3-4 percent average annual growth rate, fueled by certification of new models and projected growth in the global economy.

Despite a nine-point decline in expected new jet purchases compared to last year’s forecast, North America will continue to comprise an estimated 61 percent of projected global demand over the next five years. Nearly 40 percent of survey respondents in the region intend to schedule new aircraft purchases over the next two years, a 3 percent uptick over last year’s survey.

Honeywell Says International Markets Mixed

The forecast also presented a mixed picture around the globe. significant declines in Chinese and Russian purchase plans – with a notable hit to anticipated deliveries across the Asia-Pacific due to concerns over “increased regional tensions,” according to Honeywell – fueled a drop in forecasted deliveries across the BRIC nations, with Brazil the strongest market for business aircraft in those regions.

Political tensions and ongoing conflicts are also to blame for modest drops in anticipated deliveries across the Middle East and Africa, with 18 percent of respondents expressing plans to replace or add to their fleet with a new jet purchase over the next five years, down from 21 percent last year, but in line with the overall world average.

Latin America marked the only region with higher purchase plans in 2017 compared with last year, with “significantly higher” purchase intent from Mexico offsetting modest drops in other countries. If those numbers hold, Latin America would represent 15 percent of total projected demand over the next five years.

In Europe, operators will continue to grapple with sluggish growth fueled by nervousness over Brexit and continual threats of terrorism. New jet purchase plans across the region declined significantly in this year’s survey, down 11 percentage points over the 2016 forecast.

There are bright spots, however, with flight activity in the past year recovering somewhat over 2016 totals, and survey respondents in all regions except Asia reported higher utilization rates in 2017.

Honeywell also cited encouraging signs from the preowned market, with a 7 percent year-over-year improvement in total inventory levels and a slight uptick in anticipated used jet acquisitions by survey respondents. That news is tempered somewhat by continued low asking prices, with newer aircraft less than 10 years old comprising more than 30 percent of total listings.