The business jet aviation industry is likely facing a modest pace for near-term orders due to an uncertain economic and political environment along with a very competitive used aircraft market, per the 26th annual Global Business Aviation Outlook released by Honeywell. The Global Business Aviation Outlook forecasts up to 8,300 new business jet deliveries worth $249 billion from 2017 to 2027, down 2 to 3 percentage points from the 2016 10-year forecast.

“Declining used aircraft prices, continued low commodities prices, and economic and political uncertainties in many business jet markets remain as near-term concerns for new jet purchases, leading to a modest growth in 2018,” said Ben Driggs, president, Americas Aftermarket, Honeywell Aerospace. “That said, there are several new and exciting aircraft models coming to market, which will drive solid growth in new business jet purchases in the midterm and long term.”

Key Global Findings

Deliveries of approximately 620-640 new jets in 2017, a decline of roughly 30 aircraft year over year. This pullback comes on the heels of a moderate decrease in 2016 and is largely due to slower order rates for mature airplane models and a transition to new models slated for late 2017 and 2018.

Operators plan to make new jet purchases equivalent to about 19% of their fleets over the next five years as replacements or additions to their current fleet, a decrease of 8 percentage points compared with the 2016 survey results.

Of the total purchase plans for new business jets, 19% are intended to occur by the end of 2018, while 17% and 14% are scheduled for 2019 and 2020, respectively.

Operators continue to focus on larger-cabin aircraft classes, ranging from the super mid-size through ultralong range, which are expected to account for more than 85% of all expenditures on new business jets in the next five years.

The longer-range forecast through 2027 projects a 3% to 4% average annual growth rate despite the lower short-term outlook as new models and projected improved economic performance will contribute to industry growth.

Declines in five-year operator purchase plans are offset in the long-term forecast by new programs entering service, improved economic performance and higher commodity prices, resulting in only a small decline in the overall outlook.

Breakdown by Region 

Brazil, Russia, India, China (BRIC) – Significant decline in Chinese and Russian purchase plans compared with last year drive lower BRIC results.
Asia Pacific – Impacted by regional tensions, purchase plans are down significantly from last year and back to 2014 and 2015 levels.

Middle East and Africa – Slightly lower purchase plans were reported, impacted by political tensions and ongoing conflict in the region in tandem with a stalled recovery in oil prices.

Latin America – Only region with higher purchase plans in 2017 compared with last year. Slightly lower Brazilian purchase plans compared with 2016 results are offset by significantly higher purchase plans in Mexico.

North America – New aircraft acquisition plans in North America are lower in this year’s survey than last year’s.

Europe – With operators still contending with sluggish growth, the uncertain effects of Brexit, a refugee and migrant surge, and continual threats of terrorism, new jet purchase plans declined significantly in this year’s survey.

Used Jet Market

Despite improvement of 7% year over year in overall inventory levels, asking prices are still declining overall, especially for medium- and long-range aircraft.

On a positive note, the total number of recent model jets (less than 10 years old) listed for resale is down 15% year over year and now represents less than 8% of the installed base.

In proportion to the level of overall listings, however, the share of recent model jets for sale is still more than 30% of total listings in comparison with pre-recession levels of 15% to 20%.

Survey respondents increased their used jet acquisition plans by about 1 percentage point, equating to 25% of their fleets in the next five years. All regions’ used jet purchase plans were up or stable. The increase in used jet purchase plans clearly aligns with the reduction of used inventory for sale and could result in favorable pricing pressure on used jets in the medium term.