Forecast International Predicts Mixed Bag For GA
In a new study titled "The Market for General Aviation/Utility
Aircraft 2007-2016, Forecast International projects that makers of
general aviation and utility aircraft will turn nearly 27,140
aircraft worth approximately $22.55 billion over the next nine
The Connecticut-based market research firm, which excluded the
production of business jets from this study (more on that later),
anticipates that production of general aviation and utility
aircraft will peak in 2007 at about 3,243 annual deliveries and
then fall off gradually to a low of 2,452 shipments in 2011, with
annual production thereafter hovering in a band between 2,400 and
2,600 units for the remainder of the forecast period.
"Strong economic growth led to continuous increases in
production levels during the past five years, but this trend is
unlikely to last for much longer," said Douglas Royce, aerospace
analyst at the company. "The general aviation market has
historically been highly sensitive to economic conditions, with the
segment typically being the first in the industry to suffer during
a prolonged economic downturn. The economic boom of the past
years may be slowing, and slower economic growth will lead to
reduced production levels in the years ahead."
Forecast International also anticipates a decline in corporate
demand for twin turboprops in favor of the fractional ownership of
turbofan-powered aircraft. This trend is expected to accelerate
with the appearance of the new class of Very Light Jets (VLJ) now
coming online from makers like Cessna, Eclipse Aviation, Adam
Aircraft, and others.
These VLJs offer the jet aircraft's speed and ability to climb
above weather at prices that are competitive to those of twin
turboprops, but Royce said that Forecast International does not
expect to see demand for twin turboprops end altogether. "These
aircraft offer far more spacious cabins than the typical VLJ, and
not all operators will be willing to trade space for
Of the total number of aircraft produced, 22,477 piston aircraft
will account for the vast majority of units produced (82.8 percent
of the total). Turboprop aircraft manufacturers will turn out
aircraft in lower numbers, for a total production of 4,660 units
(17.2 percent of the total).
Turboprop value of production is projected to amount to $13.7
billion or 60 percent of the total, while the value of production
of piston aircraft will amount to $9 billion or 40 percent of the
total due to the much higher unit prices of turboprop aircraft.
"Overall, the number of piston powered aircraft in the United
States is very likely to remain stable during the forecast period,
and so the market for piston aircraft will likely be driven by the
replacement of aging aircraft with newer models rather than strong
growth in the market overall," Royce said. "International sales
into new markets like Russia, India, and China offer the hope of
high growth in the market, but the creation of the infrastructure
and regulatory environment needed to stimulate demand for new
aircraft in these nations is likely to be a decades-long
Royce noted that the price of purchasing and maintaining general
aviation aircraft for private, non-commercial use is a serious
obstacle to higher growth in the market. "Although the general
aviation/utility market is expected to remain vibrant, we believe
that production levels will peak in 2007 during a period
characterized by what we believe has been extraordinary demand," he
And Speaking Of Bizjets...
Meanwhile, in a separate study, Forecast International says
business jet manufacturers are enjoying a booming market for their
products, spurred on by a proliferation of new aircraft models, an
exodus on the part of business travelers from scheduled airlines,
and lowered barriers to access to private jet travel via jet card
programs and fractional ownership arrangements.
Though build rates in some segments of the business jet market
may soon begin to stabilize, significant growth in other segments
will lead to considerable opportunities for profit and expanded
market share, according to the report entitled "The Market for
Business Jet Aircraft."
Forecast International projects that 14,978 business jets, worth
some $192 billion, will be produced from 2007 through 2016. The
firm includes the new class of Very Light Jets (VLJ) in its
projections, and predicts that 5,783 VLJs will be built during the
2007-2016 timeframe, accounting for nearly 39 percent (based on
unit production) of the overall business jet forecast.
Forecast International expects annual business jet production to
top 1,000 units in 2007, and exceed 1,200 units in 2008 and 1,500
units by 2011. The VLJs are expected to supply much of this growth,
though other types of business jets will also contribute, such as
the popular class of super mid-size business jets.
Taking advantage of the strong market, while also hoping to
stimulate additional demand, business jet manufacturers are
introducing all-new aircraft models as well as improved variants of
existing designs. FI notes all of the established business jet
manufacturers are currently revamping their product lines to some
Not everything is good news within the business jet industry,
however, and the Forecast International study points to a number of
existing or potential problems. Demand in the key North American
market has been cooling off somewhat, amid some signs of market
saturation, though this is being greatly offset by robust growth in
demand from other geographic areas, such as Europe, the Middle
East, and the Asia/Pacific region
Still another potential problem in the industry, according to
Forecast International senior aerospace analyst Raymond Jaworowski,
is that "existing sizable order backlogs have resulted in capacity
bottlenecks for certain manufacturers. As problems go, this is a
nice one to have, but it can lead to customer frustration." To deal
with the bottlenecks, some companies are expanding manufacturing
facilities or adding to their lists of approved completion centers.
Others may keep older models in production a little longer than
planned in order to sop up excess demand and get aircraft to
customers that cannot, or will not, wait for new models.
Another area of difficulty for the business jet industry
involves the tax and regulatory arena. The US, for instance, is
currently the scene of a fierce debate over the possible imposition
of user fees on business and general aviation operators as a
funding mechanism for the FAA. Such fees are being fiercely
resisted by the business and general aviation community, as they
would dramatically increase costs for such operators, but they are
being pushed by the scheduled airline industry.
User fees may yet be defeated in Congress this year but, if so,
according to Jaworowski, "the user fee issue would surely re-emerge
sometime in the near future."