Honeywell's Forecast

Forecast: Business aviation will be just fine.

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||| |---|---| | | | | Advanced new models, like Dassault's Falcon 2000EX, are expected to fuel future bizjet sales.| Honeywell intended to release its 10-year forecast of business jet aviation sales at the 2001 NBAA Convention in New Orleans. Shortly after the attacks on September 11th, the convention was postponed. Despite the shock waves reverberating a week later, Honeywell released its original forecast with no disclaimers, because like many in the industry, Honeywell analysts believe that business aviation will emerge from the events of September 11th stronger than ever. The forecast is based on responses from more than 2,000 chief pilots and flight department managers Honeywell surveyed.

8,900 Bizjets over Next 10 Years The forecast envisions a 10-year market for 8,900 turbine-powered aircraft, valued at more than $136 billion. New models, better avionics, emerging markets and tougher regulations will all contribute to the expected strength of the market. In addition, Honeywell forecasts that by 2011 there will be 175 deliveries (worth about $10 billion) of commercial aircraft outfitted as bizjets (Boeing BBJ and Airbus ACJ, in addition to custom modifications). The market, say the forecast's authors, will continue to be driven by the introduction of new, more capable models, with several high-dollar models in development from major airframers.

The market for corporate jets will be even stronger, says Honeywell, especially for fractionally owned jets, as the airlines become an even less desirable mode of executive and personal travel. With a backlog of 2,700 aircraft, the major bizjet makers have a strong cushion, and despite a slowing of orders last summer, new opportunities arose, including a large order from United Airlines' startup fractional division. Despite expected slowing in the second half of the year, turbofan deliveries in the first six months were the strongest ever, the 400 bizjets representing a 10 percent increase over 2000's record levels.

In the short term, the forecast's authors predict a market that remains steady at around 800 units per year, with new models, especially super-midsized offerings, driving sales to levels of around 1,000 a year by the end of the forecast period. Over the next five years, Honeywell forecasts the delivery of 4,034 bizjets, a 30 percent increase over the previous five-year period, when 3,108 new business jets were delivered.

Fractionals Will Continue to Grow Honeywell noted in its forecast that while fractionally owned aircraft account for only six percent of the world fleet today, fractional orders account for 45 percent of the current business jet orders. By 2011, the forecast's authors predict, fractionals will account for 15 to 17 percent of the world fleet.

Breakdown by Segment Long range and ultra-long-range jets (e.g. Falcon 900EX, Global Express, Gulfstream G-V) will sell at a rate of about 140 a year over the next 10 years. Buyers will purchase approximately 900 large bizjets (Falcon 2000, Challenger 604). Manufacturers will sell 2,340 medium and medium-heavy jets (Citation Sovereign, Gulfstream G-200, Bombardier Continental Jet, Falcon 50EX and the Hawker Horizon). Expected sales of light and medium jets (Lear 31 and 45; Citations Excel, Encore and Bravo; Hawker 450 and Beechjet 400A) will be 2,886 units. Very light, or entry-level jets, (Premier I, CJ1 and CJ2, and SJ30-2) will sell at levels of 140 to 150 per year, with sales projected at 1,433 jets over the next decade. Sales of microjets, such as the emerging Eclipse 500 and Safire S-26, were not included in the Honeywell forecast.