(MENAFN- Khaleej Times) In the fast growing Middle East and African business aviation market operators plan to replace 26 per cent of their fleets with new jets in the next five years as up to 9,250 deliveries of new business jets valued at over $250 billion are expected through 2023, according to an industry forecast released here at the world's largest gathering of business aviation manufacturers, service providers, business aircraft owners and operators.
Honeywell Global Business Aviation Forecast released at the National Business Aviation Convention at the Las Vegas World Trade Centre said while global business aviation market would see four to five per cent average growth over next decade, in the Mena region, the level of purchase plans is near the world average despite a year of significant political upheaval and ongoing conflict.
Operators in the region indicate their purchases may happen sooner in the next five-year window than expected last year, with about 47 per cent of purchases planned before 2016 despite the regional distress.
Globally, operators plan to replace 28 per cent of their fleets with new jets in the next five years.
According to the General Aviation Manufacturers Association, an industry trade group, deliveries of new business jets halved from their 2008 peak of 1,315 to 672 last year, Deliveries have fallen for four straight years, with the business staging a slow and uneven recovery from the aftermath of the financial crisis that reduced the order backlogs of many smaller manufacturers, forcing some to cut production or exit the market.
The 2013 Honeywell outlook reflects an approximate three to four per cent increase in projected delivery value over the 2012 forecast." Despite slightly lower unit deliveries, the expected value comes from pricing increases and a continued change in expected business jet delivery mix, which reflects the ongoing trend toward larger business jet models," Honeywell said.
It forecasts 2013 deliveries of approximately 600 to 625 new business jets, a single-digit decrease over levels reported last year. The reduced deliveries expected in 2013 are largely due to new program delays rather than deterioration in demand.
"2014 industry deliveries are anticipated to be up modestly, reflecting recovery in supply-side constraints and some gains linked to the projected pace of global economic recovery," said Rob Wilson, president, Honeywell Business and General Aviation.
In its latest survey, Honeywell found that the operators interviewed plan to make new jet purchases equivalent to about 28 per cent of their fleets over the next five years either as a replacement or in addition to the their current fleet.
Of those new business jet purchase plans, 19 per cent are intended to occur by 2014, with larger shares of more than 22 per cent each year scheduled for 2015 and 2016 purchases. The survey does not allocate specific years beyond 2016. This is slightly improved from last year's results and leads to a modest gain in projected demand in the near term.
Higher purchase expectations continue to focus on larger cabin aircraft classes ranging from super-midsize through the ultra-long range and business liner, implying these types of aircraft will command the bulk of the value billed from now until 2023. This large cabin group is expected to account for more than 80 per cent of all expenditures on new business jets in the near term. Volume growth between now and 2023 will be led by this class of aircraft, reflecting nearly 60 per cent of additional units, and nearly 85 per cent of additional retail value.
"The trend toward larger cabin aircraft with ever-increasing range expectations and advanced avionics is seen more strongly than ever in this year's survey," Wilson said.
The survey, which polls 1,500 flight departments around the world, found there is an increasing trend towards aircraft at the top half of the spectrum €“ from super mid-size through the ultra long-range and VIP-configured narrow-body airliners. These models are expected to account for more than 56 per cent of the total deliveries and 83 per cent of the -deliveries value.
Demand for new aircraft varies considerably across the regions. North America, notably the USA, looks set to re-emerge.
The report predicts that 61 per cent of projected demand between 2013 and 2017 will come from the continent's operators €“ an eight per cent hike over the previous year. North America represents more than half of projected global demand for the next five years. In contrast, the purchase expectations from Brazil, Russia, India and China have fallen by four per cent to 42 per cent, the forecast says. On the upside, however, around 40 per cent of buyers within these countries planned to make new purchased within the next two years.
"Together, the emerging market results from BRIC countries reflect a slight tempering of enthusiasm compared to a year ago," says Honeywell.
The outlook for Europe remains bleak. Constrained by its economic straitjacket, it is expected to account for 12 per cent of new business jet deliveries over the next five years €“ a fall of six per cent -compared with the 2012 forecast.
"We continue to see underlying macro trends that support potential demand for business jets, making the industry's long-term prospects attractive," Wilson said. "Other factors we believe will help accelerate global business aviation growth are long overdue structural and regulatory reforms, which have the potential to unlock significant spending power that would propel aviation expansion," he said.
The number of pre-owned jets for sale today has risen slightly from a year ago. Approximately 12.5 per cent of today's fleet is up for resale, down from a high of nearly 16 per cent reached in 2009.
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