8,300 NEW BUSINESS JETS up for deliveries through 2027

 

The rise of millionaires and billionaires in India and other emerging markets are pushing growth in the business aviation sector with connectivity a top priority

The business jet aviation industry is likely to see 8,300 new deliveries of business jets valued at USD249 billion from 2017 through 2027—a modest growth compared to previous years as political and economic uncertainties hover in the air across the world and new innovative ways to getting private flights enterthe market.

But many emerging markets in Asia and South Asia like India are likely to see significant purchase orders within the forecast period with the number of the new rich rising.

 

Honeywell, a Fortune 100-software- industrial company that delivers industry specific solutions, aviation and aerospace in particular, said in its latest Global Business Aviation Outlook 2017- 2027 the global purchase for business jets in the next 10 years will be lower and most buyers would prefer largest jets for maximized space.

The $249 billion purchase projection of

Honeywell is about 2-3 percentage points lower 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,” Ben Driggs, president, Americas Aftermarket, Honeywell Aerospace, said in a statement.

“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.”

For 2017, new deliveries for business jets would total only 620-640 by end- December, down by 30 aircraft compared to 2016. The decrease was attributed to slower order rates for mature airplane models and a transition to new models slated for late 2017-2018.

Honeywell pointed out operators plan to make new jet purchases equivalent to about 19 percent 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 surveyresults.

Otherhighlights in the report:

* Of the total purchase plans for new business jets, 19 percent are intended to occur by the end of 2018, while 17 percent and 14 percent 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 percent of all expenditures on new business jets in the next fiveyears.

* The longer-range forecast through 2027 projects a 3-4 percent 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 for ecast by new programs entering service,improved economic performance and higher commodity prices, resulting in only a small decline in the overall outlook.

 

Middle East & Africa

Political tensions and ongoing conflicts around the region and the stalled recovery in oil prices are pulling down purchase plans for new business jets in the Middle East and Africa.

The share of projected five-year global demand attributed to the Middle East and Africa is 4 percent this year, in line with the historical range of 4-7 percent.

“In the Middle East and Africa, 18 percent of respondents said they will replace or add to their fleet with a new jet purchase, down from 21 percent last year but in line with the overall world average,” said Honeywell.In line with the global average, about 36 percent of operators responding to the survey plan to schedule their new purchase within the first two years of the five-year horizon, it added.

South Asia

India is generating much of the growth in South Asia in business aviation with its growing population of millionaires and billionaires.

 

According to global property consultant Knight Frank's 2016 Wealth Report, the number of ultra high net worth individuals (UHNWIs) or those with a net worth of over $30 million in India, grew by 290 percent over the last decade.

India has currently about 2 percent of the world's millionaires (13.6 million) and 5 percent of the billionaires (2,024), with many based in the country's financial capital of Mumbai followed by Delhi, Kolkata and Hyderabad.

The new wealthy in India is pushing the private jet market up, encouraging many start-up companies to venture in this barely scratched $450 million a year industry.

With fixed costs associated in owning an aircraft such as license, pilot salary, jet fuel, hangar maintenance and other operational expenses involved, many millionaires and billionaires in India, opt to hire private jet companies, which typicallyuse business or private jets.

Startups like JetSetGo, BookMyCharters and JetSmart are cashing in on these markets, including executives of various factories, politicians and holidaymakers who want to explore India conveniently.

JetSetGo, which has access to 75 private jets and helicopters in India, estimates its earnings for 2017 to reach up to $17 million.

Used Jets and Flight Activity

Turning to used jets and flight activity, Honeywell said the pace of flight activity in the past year has recovered somewhat with survey respondents in all regions of the world except Asia reporting higher utilization in 2017.

With respect to the used jet market:

* Despite improvement of 7 percent 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 percent year over year and now represents less than 8 percent 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 percent of total listings in comparison with pre-recession levels of 15 to 20 percent.

* Survey respondents increased their used jet acquisition plans by about 1 percentage point, equating to 25 percent 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.

The South East Asia business jet market is valued at USD3392.43 million in 2016. The market is anticipated to reach USD4896.00 million by 2021 growing at a CAGR of 9.61% during the forecast period.

The long range air carriers have accounted for a major share in the market followed by the mid-range and low- range aircrafts. The increasing business investments and activities in the Asia-Pacific Region require increased connectivity within the region and other parts of the world.

Increasing business activities within India, China, Brazil, etc. and the need for connectivity in countries with established business sectors like the US, Europe, caused the spike in demand for the mid and low range carriers for travels.

The rise of Supersonic Business Jets by 2021

One of the major areas of development that the Business Jets manufacturers have been involved is the introduction of t h e supersonic business jet (SSBJ). These business jets are planned to be small but powerful enough to travel at speeds akin to Mach 1.0 and are typically designed to carry about 10- 12 passengers.

At present, SSBJs are only a concept where several manufacturers have been working on the designing of these jets. One of them is Aerion Corporation which is focusing on fine- tuning and improving the aerodynamic properties of an aircraft to enhance the levels of speed and improve the performance of the aircraft.

Aerion's proposed supersonic business jet claims that it would include progressive & demonstrated wing technology; along with advanced propulsion systems and technologically advanced structural materials, manufacturing techniques as well as integrated in-flight systems.

Aerion is teaming up with NASA's Dryden Flight Research Center to test the supersonic business jet prototype.