Aviation

Business jet softness concentrated in large-cabin jets

Attendees of the 2015 National Business Aviation Association Convention look at a Gulfstream G650 at Henderson Executive Airport near Las Vegas. Industry experts say large jets like the G650 are driving overall business jet deliveries lower this year.
Attendees of the 2015 National Business Aviation Association Convention look at a Gulfstream G650 at Henderson Executive Airport near Las Vegas. Industry experts say large jets like the G650 are driving overall business jet deliveries lower this year. File photo

When a general aviation group came out with its shipments report for the first half of 2016, it confirmed what aircraft broker Janine Iannarelli has been seeing most of the year: lackluster demand for business jets.

“I think this year is a foregone conclusion: It’s going to be flat,” said Iannarelli, president of Par Avion Ltd. in Houston, which primarily brokers sales of pre-owned business jets super-midsize and larger.

According to the General Aviation Manufacturers Association’s shipments report, manufacturers worldwide shipped 4.3 percent fewer business jets in the first half of 2016 – 292 total – compared with 305 jets in the same period last year.

Industry experts generally think that, like Iannarelli, it’s going to be a flat – if not slightly down – year for total business jet deliveries.

But there’s a caveat.

Lower total deliveries of business jets in 2016 will most likely be driven by falling demand for large-cabin, long-range jets, they said. Demand and deliveries will most likely be up for small and midsize jets – including those manufactured in Wichita by Bombardier Learjet and Textron Aviation Cessna – but not enough to offset a delivery decline in large jets.

Indeed, while Bombardier delivered nine fewer Learjet 75s in the first half, Textron Aviation saw a 14.5 percent year-over-year increase in Citation jet deliveries: 79 compared with 69 in the first half of 2015.

Textron Aviation Cessna's Kevin Steinert discusses the business jet maker's newest -- and biggest -- airplane, from the National Business Aviation Association Convention in Las Vegas. Video by Jerry Siebenmark / Nov. 18, 2015)

And according to an Eagle analysis of the GAMA data, shipments of just small and midsize jets was actually higher in the first half of 2016 from the first half of 2015 by nearly 11 percent.

In the first half of 2016, 157 small and midsize jets were shipped in the period compared with 142 the year before, according to the analysis. That includes small and midsize jets made by Cessna, Embraer, Gulfstream, Honda Aircraft and One Aviation, maker of the Eclipse 550 small jet.

“Where we’re seeing the softness is large-cabin (jets),” said aviation forecaster Rolland Vincent.

Vincent’s firm, JetNet iQ, is expecting 662 total business jet deliveries in 2016. That would be down 7 percent from 2015’s total of 712 business jet deliveries.

He said that’s not unexpected, because large-cabin jetmakers such as Bombardier, Dassault Falcon Jet and Gulfstream have each announced lower production rates for their various aircraft.

GE’s Passport turbofan for Bombardier’s Global 7000 business jet achieved FAA certification on April 29, 2016. Watch Passport’s arduous journey ahead of its first installation on Bombardier’s flight test vehicle. (Video courtesy of GE Aviation)

Earlier this year, Bombardier said it would slow its monthly output of Global 5000 and 6000 jets. Vincent said the pullback in Global production alone would account for 50 fewer large jet deliveries this year compared with last year and account for “a big chunk” of the total fewer deliveries his firm expects this year.

Bombardier cited falling demand in Russia, the Middle East and China. Those markets have traditionally been the strongest consumers of large business jets.

Customers in those “far-flung” regions need the large jets that have the range to get them to London or New York, said independent business aviation analyst Brian Foley, “and those far-flung places aren’t doing too well.”

Nor is the oil industry, which also has been a strong market for large jets.

“It’s been a hard go for the big-cabin jet,” Foley said. “Alternatively, North America is doing pretty good.”

North America, and the U.S. in particular, continues to be the strongest market geographically for business jets.

“The most active market remains the United States, and I think Europe and the rest of the world look to it as the great savior” for new and used business jets, Iannarelli said.

And if demand is good in the U.S., that’s good for Wichita, Foley said.

“The airplane ideally suited for our market is small to midsize jets,” he said. “You don’t need a (Gulfstream) G650 to go from New York to L.A.

“The shoe is on the other foot,” Foley said. “Maybe the big-cabin jets were a little overheated because there was more demand than aircraft.”

Foley thinks that the drop in large-jet demand may be just a correction in that segment of the market.

“It’s not a horrible thing,” he said. “If anything, we’re in a more sustainable range of deliveries now.”

Jerry Siebenmark: 316-268-6576, @jsiebenmark

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