TEAL GROUP BIZAV OVERVIEW (PART 1)
Category: Aircraft Sales – Forecasts
Author: Richard Aboulafia
Teal Group Business Aviation Overview (Part 1)
12,768 business jets forecast over 10-year period
Welcome to the nineteenth annual Teal Group Business Jet Overview. Over this month and in the August issue of World Aircraft Sales Magazine, we will look at the market, where it’s going and the players involved. We’ll offer our forecast, including assumptions and segment details and then we’ll give our assessment of the manufacturers and new product development prospects. But before anything, we have an introductory section which may be helpful.
SUMMARY OF FINDINGS
Want to spend more time with friends or family? You can avoid reading this overview by looking at the charts and remembering the following points:
• Business aircraft for sale have been hit harder by the economic crisis than any other aerospace market. After unprecedented growth, the market is falling at an unprecedented rate. All meaningful indicators – utilization, prices, used aircraft availability, and corporate profits – indicate a prolonged and painful down turn. Financing business jets is also more difficult than financing jetliners. Delivery numbers are falling fast, and we won’t see a recovery to the 2008 peak level for many years to come.
• Our forecast assumes a three-year downturn. The key demand drivers – economic growth and corporate profits – will only recover in late 2010. It will take some time to reduce record inventories of available jets for sale. This means new business jet deliveries won’t start to recover until 2012. The trough year of our forecast – 2011 – will see business jet deliveries reduced by 40% relative to 2008. Our forecast then calls for a five-year recovery period with 10% growth per year starting in 2012.
• Using these assumptions, we forecast production of 12,768 business aircraft worth $195.9 billion (in 2009 dollars) over the next ten years. This includes 9,300 business jets worth $153.9 billion, 575 corporate versions of jetliners and regional jets for sale (RJs) worth a combined total of $29.6 billion, and 2,893 business turboprops worth a total of $12.4 billion.
• Of the traditional business jets, over 50% of these (by value) will be Class Four and Five (high-end) models. At the other end of the spectrum, we are down-grading Very Light Jets (VLJs) from “oversold” to “irrelevant.” Our forecast includes just 2,272 of these, including 1,095 Mustangs, 915 Phenom 100s, and 262 HondaJets (and nothing from anyone else).
• For comparison, the last ten years (1999-2008) saw production of 10,568 business aircraft worth $159.2 billion (also in 2009 dollars). This includes 7,696 jets worth $134.5 billion plus 381 jetliners and RJs worth $14 billion and 2,491 turboprops worth $10.7 billion.
• For further comparison, last year’s Teal Group forecast called for 18,401 business aircraft (including 14,289 jets) worth $270.6 billion in 2008-2017. This market has taken a very heavy blow. Our last forecast also stated “We’re still concerned about using these unusually good times as a forecasting base year.” This has proven to be a serious problem in most business aircraft forecasts over the past two years, including ours. When the market resumes its growth, it will start from a much lower base.
• Looking at traditional business jets, Gulfstream and Bombardier will be the market leaders (24.8% and 23.2% respectively, by value of deliveries), followed by Cessna (19.2%) and Dassault (16.8%) at the second tier. Hawker Beechcraft will have 8.8% and Embraer 6.4%. Honda will have the remaining 0.8%. The
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