Honeywell forecasts moderate business aviation industry growth for 2012

Honeywell issued the 20^th edition of its annual Business Aviation Outlook, forecasting sales and delivery of approximately $230 billion in new business jets from 2011 through 2021. This represents approximately a two percent increase in total expected industry sales value compared to the prior ten-year horizon Honeywell forecasted in 2010.

For 2011, Honeywell Aerospace estimates deliveries of 600-650 new business jets, down approximately 15 percent from 732 in 2010 due to continued slow global economic recovery. While 2012 deliveries are expected to be below 700 airframes, Honeywell anticipates higher delivery levels than in 2011. While five-year buyer interest remained steady versus 2010, based on the reduced economic growth outlook and this year’s survey responses, the industry appears to be positioned to begin another period of expansion in 2012, which is consistent with Honeywell’s current industry outlook.

Honeywell surveyed more than 1,500 flight departments around the world for its annual business aviation outlook.

Aggregating all regions, five-year purchase expectations remain at a 30 percent level. Purchase expectations trended up in Asia and the Middle East, but retreated in other regions, most noticeably in Europe and to a lesser extent Latin America. “The level of caution continues to be tied to concerns specific to each region,” said Rob Wilson, president of Honeywell’s Business and General Aviation business unit. “We noted over the last two years that the timing of planned purchases in the five-year window was heavily shifted in most regions to the post-2010 timeframe. That still remains the case, with roughly 80 percent of planned purchases timed for 2013 or after.” 

One bright spot is the earlier demand timing coming from Brazil, Russia, India and China (BRIC) countries and the Middle East. Acting on these purchase plans in 2011 and 2012 is critical to providing the industry momentum as current backlogs will not sustain delivery levels indefinitely despite recent book to bill ratios exceeding one at some manufacturers.

“This year, operators outside North America displayed mixed attitudes about the strength and pace of this nascent recovery,” added Wilson. “They are still looking beyond the current economic climate and anticipating a return to improved business conditions, but some regions have tempered near term expectations and buying decisions as reflected in this year’s forecast.” Despite the tepid pace of global economic activity, North American operators responding to the Honeywell survey indicated their overall new jet purchase plans for the five-year horizon were largely unchanged for the second year in a row.” 

The survey showed the more cautious European and Latin American purchase plans were offset by improved buying plans in Asia and the Middle East leading to an overall five-year demand for new jets resembling last year’s levels and similar to those seen in the 2007-2008 time frame. Despite the economic uncertainty, there have been relatively few program cancellations and delays. 

“The pipeline of new high-value models supporting long-term growth remains strong,” said Carl Esposito, vice president for marketing, strategy and product management at Honeywell Aerospace. “This year’s survey continues to indicate that international demand will still remain significant and contribute to longer-term growth.”

“The survey shows a mixed environment for business aviation growth as reflected by the individual market challenges of a recovering global economy,” Esposito said. “The retail value of jet shipments has not declined to the same extent as unit deliveries due to the relative strength of large cabin aircraft offsetting losses in other sectors.”