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At NBAA2013, Honeywell Predicts 2013 Dip, but Long-Term Growth

October 21, 2013

Honeywell’s 22nd Annual Business Aviation Outlook, released on the eve of this year’s NBAA Business Aviation Conference & Exhibition (NBAA2013), is predicting positive growth in business jet purchases over the next 10 years, despite a projected dip in deliveries this year.

The aerospace manufacturer projects that up to 9,250 new business jets worth nearly $260 billion will be delivered between 2013 and 2023. Although the estimates from the 2013 outlook are slightly lower than last year’s prediction of 10,000 new business jets being delivered through 2022, the projected value of those deliveries is up 3 to 4 percent, compared to the company’s 2012 forecast, in large part due to the continuing strong demand for large-cabin jets.

“The trend toward larger-cabin aircraft with ever-increasing range expectations and advanced avionics is seen more strongly than ever in this year’s survey,“ said Rob Wilson, president of Honeywell Business and General Aviation.

Because of delays in some aircraft development programs – not a decline in demand – Honeywell forecasts business jet deliveries will be down slightly in 2013, to between 600 and 625 units. This compares to the 672 deliveries in 2012, according to the General Aviation Manufacturers Association. However, Honeywell’s forecast sees an average of 4 to 5 percent annual growth over the next decade, likely beginning in 2014.

Over the next five years, Honeywell predicts that big-cabin business jets – ranging from super-midsize through the ultra-long-range and business liners – will account for 56 percent of new purchases, compared to 25 percent for small-cabin airplanes and 19 percent for midsize jets. In terms of dollar value, big cabin airplanes will account for 83 percent of the market.

Honeywell, which surveys more than 1,500 business jet operators to develop its annual outlook, found operators plan to replace 28 percent of their fleets over the next five years. This is down 2 percent from last year’s survey, but still up from pre-2006 averages of about 25 percent. Regardless of aircraft class, the primary driving factors behind planned purchases of new jets are the desire to acquire airplanes with greater range and larger cabins.

During the next five years, roughly 61 percent of projected demand for new business jets will come from North American operators, up eight points from the 2012 survey. Latin America is expected to account for 18 percent, while Europe will account for 12 percent. Despite strong growth in business aviation in certain emerging markets, Asia Pacific and Middle East/Africa will account for 5 percent or less of the projected demand each.

Honeywell is hopeful that the uptick in purchase plans by North American operators will spur what it expects will be a moderate recovery long term. “Stronger new aircraft acquisition plans in North America are welcome news and should support industry momentum,“ said Wilson.

Honeywell expects U.S. business jet operations to grow about 1 to 2 percent this year, mostly because of international flight activity and relatively strong charter operations. The company notes that flight activity has picked up in recent months, and predicts that 2014 “should bring growth in the low single digits, presaging a slow, multiyear path back to historical normalcy.“