ATLANTA — Next year is expected to mark the bottom of a long down cycle in the business aircraft market, with the next wave of market expansion beginning in 2012, according to a new forecast released Sunday evening by Honeywell Aerospace.
Honeywell's outlook forecasts demand for up to 11,000 new business jets in the 11 years from 2010 to 2020, with a value of $225 billion.
The long-term outlook calling for a measured recovery remains essentially unchanged from a year ago.
The upturn expected to begin in 2012 is due to a combination of deferred demand and more solid rates of global economic recovery.
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The company released the forecast in Atlanta on Sunday evening ahead of this week's National Business Aviation Association convention. The show runs Tuesday through Thursday.
This year, the forecast estimates between 675 and 700 jets will be delivered, down from 849 a year ago.
And next year, deliveries are expected to remain below 700 jets — potentially down slightly from 2010 shipments.
Operators have become more cautious about the strength and pace of the recovery, said Rob Wilson, Honeywell Aerospace president of business and general aviation.
Although they are anticipating a return to improved business conditions, "they have tempered near-term expectations and buying decisions as reflected in the current delivery forecast," Wilson said in the forecast.
Honeywell compiled its outlook by surveying 1,200 corporate flight departments, aircraft manufacturers and other sources from the world.
In 10 of the past 12 years, Honeywell's forecast has been 91 to 99 percent accurate.
The exceptions were in 2001, when the forecast was completed before the Sept. 11 terrorist attacks, and in 2008, before the credit crisis and global economic downturn emerged into view, said Charles Park, Honeywell's director of market analysis.
One surprise in this year's outlook was that the five-year purchase expectations of buyers in North America rose from a year ago, Wilson said.
Fifty-eight percent of the demand for business jets in the next five years is expected to come from North American buyers, followed by Europe, Latin America, Asia-Pacific, and Africa and the Middle East.
Thirty percent of those
surveyed said they planned to add to or replace their fleet of business jets during the next five years.
"We were pleasantly surprised by that and see it as a good sign of demand returning to the business jet market," Wilson said.
The main reasons for buying aircraft remain consistent with previous surveys — age of the plane, range improvement and cabin size.
Near-term, however, the economic downturn is expected to temper new orders of business jets and deliveries into 2011.
"A year ago, we thought we would see a little more traction in the market than we've enjoyed so far," Park said.
That said, manufacturers are selling new airplanes, Park said. Wilson said airplane sales today are outpacing order cancellations.
And there are still several thousand aircraft on order, many of them new models scheduled for delivery after 2011. The outlook also said that significant global demand remains.
"We're out of the mode of cancellations taking over deliveries," Wilson said. "We characterize the situation as stabilized and now progressing toward positive output."