Opportunities abound in business jet market

Citation

(2008), "Opportunities abound in business jet market", Aircraft Engineering and Aerospace Technology, Vol. 80 No. 1. https://doi.org/10.1108/aeat.2008.12780aaf.012

Opportunities abound in business jet market

Opportunities abound in business jet market

Business jet manufacturers are enjoying a booming market for their products, according to Forecast International's newly-released study on “The Market for Business Jet Aircraft” spurred on by a proliferation of new aircraft models, an exodus on the part of business travellers 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 stabilise, significant growth in other segments will lead to considerable opportunities for profit and expanded market share, the report said.

Forecast International projects that 14,978 business jets, worth some $192 billion, will be produced from 2007 through 2016. The Connecticut-based market research firm includes the new class of VLJ in its projections, and predicts that 5,783 VLJs will be built during the 2007-2016 timeframe, accounting for nearly 39 per cent (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. Indeed, all of the established business jet manufacturers are currently revamping their product lines to some extent.

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.

Another problem in the industry, according to Forecast International Senior Aerospace Analyst Raymond Jaworowski, is that “existing sizeable 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 USA, 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.”

For further information, please contact: Forecast International Inc., Tel:+1203 426 0800.