October 12, 2016
Jetcraft’s 2nd Annual Business Aviation Market Forecast: Short Term Hurdles Ahead, but Long Term Optimism Remains
Ten-year forecast predicts ongoing challenges in emerging markets with continued North America dominance; Gulfstream projected to top OEM revenues with Pratt & Whitney Canada taking top spot for engine OEMs.
OCTOBER 12, 2016 (Raleigh, NC) – Jetcraft, the leader in business aircraft sales, marketing and ownership strategies, today released its second annual business aviation market forecast. The 2016 report calls for 7,879 unit deliveries representing $248 billion in revenues (based on 2015 pricing) to be realized over the next 10 years.
The forecast also examines key macroeconomic trends – a slowdown in wealth creation, the migration of ultra-high net worth individuals (UHNWIs) from emerging market economies and the fluctuation of oil prices – and evaluates the impact such factors will have on the business aviation sector througout the coming decade. Overall, this year’s predictions are lower than last year’s report in terms of deliveries and revenues. Yet, despite challenges, there are bright spots on the horizon led chiefly by continued growth of the North America market.
“Last year, we highlighted the unpredictability of our industry since 2008, and the impact of global events during the past 12 months have certainly continued this trend,” said Jetcraft’s Chairman Jahid Fazal-Karim. “As global factors continue to influence the business aviation market, we are uniquely positioned—through our 20+ offices worldwide—to qualitatively test our forecast’s assumptions and the impact of these global factors on the ground, providing a cumulative view that joins our analysis with real-world business transactions, ” he added.
Forecast Calls for 2021 to Be a Peak Year for Deliveries
This year Jetcraft predicts a marked decrease of 10% in unit deliveries and 9% in revenues from last year. This is largely due to the continued waning influence of emerging market economies as consumers of business aviation.
The forecast sees a muted business cycle recovery peaking in 2021, with delivery of 932 units representing $29.4 billion in revenues, before beginning a three-year drop as part of a softer downturn. The projected downturn, however, will be less severe as compared to last year’s forecast.
Additionally, Jetcraft’s analysis indicates the continuation of a trend post-2008, and a return to a more North America-dominant market as overall unit deliveries throughout the forecast period will disproportionately decrease in international markets.
Other Key Forecast Findings Include:
- At 30.6%, Gulfstream will secure the highest revenue market share over the forecast period primarily as a result of extending its family of large aircraft.
- Cessna will regain market leadership in unit deliveries securing 24.4% of all new aircraft deliveries over the forecast horizon.
- Pratt & Whitney Canada will replace Rolls-Royce as the market share leader among engine OEMs.
- Honeywell will be the dominant player among avionics OEMs securing a 45% revenue market share.
- As a new entrant, HondaJet will provide an incremental contribution to deliveries in the very light jet segment, as its delays in securing certification have led to customer back-up.
Affects of the Pre-Owned Market
While pre-owned business aircraft inventory is lower than the historical average level of 13% (inventory as a percentage of in-service fleet), there is little evidence of an increase in residual values for 5-year old aircraft (a key benchmark due to the typical ownership period in North America). This has led to lags in purchasing and a slowing of the overall market.
Despite its predicted hurdles, the Jetcraft forecast remains optimistic toward the future of business aviation. “Business aviation is at the mid-point of a recovery run in the current economic cycle,” said Chad Anderson, President of Jetcraft. “Jetcraft’s recent results, the company’s best since its formation 54 years ago, give credence to the fact that some solidity is returning and there is activity, albeit muted, in emerging markets.”
Jetcraft’s full “10 year Business Aviation Market Forecast” will be available for download on https://www.jetcraft.com/knowledge/market-forecast/ from 10:00 a.m. ET on October 12, 2016.
Jetcraft is the leader in international aircraft sales, marketing and ownership strategies, managing and maintaining more than 20 regional offices globally. The company’s unparalleled success over more than 50 years in business aviation has earned it a world-class reputation, along with an exceptional customer base, a wide network of connections and one of the largest inventories within the industry. The Jetcraft team is a passionate, multi-disciplined one, with outstanding expertise and an unwavering commitment to client experience. At Jetcraft, our integrity and tireless determination to achieve a successful outcome are a part of each and every single task we undertake.