Business Jet Market Still Growing, But Nearing Its Peak

Forecast International's new study on "The Market for Business Jet Aircraft," expects annual business jet production to reach nearly 1,400 units in 2008, and exceed 1,600 units in 2009. However, the company projects that annual production will then suffer a three-year decline, dropping to a level of 1,515 units by 2012. Growth is expected to resume in 2013, with yearly production exceeding 1,700 units by 2017, the final year of the time period covered by the study.

Overall, Forecast International projects that 15,936 business jets, worth an estimated $223 billion, will be produced from 2008 through 2017. This total includes some 5,600 Very Light Jets (VLJ).

Despite the current shakiness of the VLJ segment, Forecast International still expects the VLJ sector is expected to be a very dynamic portion of the market. VLJs are the smallest aircraft on the business jet market, and include such models as the Eclipse 500 and the Diamond D-Jet.

"The business jet market has experienced tremendous growth since 2004 and, though the growth track continues, the question on the minds of nearly everyone in the industry concerns how long the good times will last," states an FI release. "While continuing to rack up strong sales, business jet manufacturers are sitting on high order backlogs and cannot get aircraft to their customers quickly enough. Manufacturers and completion facilities are bumping up against capacity limits, while customer waiting times for new aircraft are lengthening.

"Nevertheless, warning signs are appearing that seem to indicate that a market downturn is on the way. The United States and parts of Europe are experiencing an economic slowdown. US corporate profits are down. Fuel costs are surging. New fees and operating regulations may soon be imposed on business aviation operators. Large numbers of business jets delivered in recent years have led to conditions of market saturation in the US. And the inventory of used business jets for sale has been growing in recent months, often a sign of a weakening business jet market."

Though the new study anticipates a decline in business jet production between 2010 and 2012, Forecast International believes the decline is expected to be relatively shallow, with the industry emerging in very good shape. Projections indicate that production will drop by only about seven percent over the three years, thus paling in comparison to the double-digit production decline experienced in the industry’s last downturn in 2002-2003.

The study lists a number of reasons for this anticipated shallowness of the upcoming market downturn. One is the strong order books enjoyed by manufacturers, which include large numbers of orders for models still in development that are targeted for service entry after 2010. Another is the increased diversity of geographic demand for business jets.

According to Forecast International senior aerospace analyst Raymond Jaworowski, "Though the US is still the largest single geographic market for business jets, non-US customers now account for more than half of business jet sales. Robust sales in other parts of the world will help offset slowing sales in the saturated US market."

Also helping to fuel business jet sales will be continuing dissatisfaction with scheduled airline travel, as well as the popularity of fractional ownership and jet card programs that enable easier access to private jet travel.

FMI: www.forecastinternational.com/