F R 2 - 9 8

Home | Update | LATEST ISSUE | Gallery | FR Profile | Datafiles | FR 2/98 STUDY SEES BOOMING BUSINESS JET MARKET by Norbert Burgner A total of 3789 business aircraft, worth $45,9 billion, will roll off the production lines in Wichita, Montreal, Savannah or Bordeaux-Mérignac until 2006. This is the result of the most recent analysis from the Teal Group's market researchers. Following the economical slump, especially the one in the beginning of the nineties, the branch is now looking at a profitable future. According to the study, the branch's economic growth has stabilized at a healthy level over the past three years. In 1994, 315 business jets worth $3,02 billion were delivered to customers. This number increased to 337 aircraft (3,29 billion dollars) in 1995 and 352 units (3,61 billion dollars) in 1996. For 1997, Teal's chief analyst, Richard Aboulafia, is estimating a total of 408 deliveries worth $5,08 billion. In 1998, 420 jets, worth 5,42 billion dollars will be delivered. It is possible that this level can be maintained through 1999, decreasing to the high-300s in the following years. The study sees three reasons for this positive development: First, the worldwide economical upwind in general, and, secondly, the technology factor with efficient ecological and economical products. The third factor contributing to the branch's upward trend is the stimulation of the market by additional offers, such as partial ownership programs, making it possible to become a partial owner of a business jet for at an entry level below one million dollars. "Just this business alone generates a good 30 percent of the growth", says Aboulafia. The five already dominating manufacturers, Bombardier, Gulfstream, Cessna, Raytheon, and Dassault, will benefit the most from the business jet market's growth. All together, these five companies will share 90 percent of the earnings. Aboulafia prognoses that "...these companies have the necessary means to react fast to the current market changes, and also have enough power to sustain another slump of the market. All the others will either have to play a niche role or will be taken over by the big ones." Currently, approximately 17300 business aircraft are in service worldwide, 8700 of which are jet aircraft. Three quarters of the world's fleet (approx. 5800 jets and 5100 turboprops) are flying in North America which, traditionally, is the largest business aviation market. Approximately 2000 business aircraft (1060 jets) are registered in Europe. South America with a total of 1620 units is the third largest market. Asia is still operating a relatively small fleet of only 768 aircraft. However, the region is the hope for the prospering business aviation branch. Much like the other aerospace industry sectors, business aviation has identified China as the main growth market. However, the development will start at a very low level - the People's Republic received its first business jet, a Lear 60, in 1996. The aircraft was delivered to Hainan Airlines. Last, but not least, the Teal Group experts see a good market potential based on the fleet renewal which will supposedly set off at the turn of the centuries. Richard Aboulafia says: "The used aircraft dealing can possibly make up 85 percent of the business. Just in 1996, 1100 aircraft changed owners. Assuming an average service life of 25 to 30 years, there should arise a significant need for new aircraft between 2000 and 2005." From page 26 of FLUG REVUE 2/98 Home | Update | LATEST ISSUE | Gallery | FR Profile | Datafiles | FR 2/98 Copyright 1998 by Motor-Presse Stuttgart. All rights reserved. Last updated January 9, 1998 FLUG REVUE, Ubierstr. 83, 53173 Bonn, Germany