NBAA: Mid East business jet purchase expectations have weakened says Honeywell

That was the view from the Honeywell annual Business Aviation Outlook which was issued at the NBAA Convention today in Atlanta.

Honeywell   forecasts delivery of approximately 11,000 new business jets from 2010 through 2020, generating estimated industry sales in excess of $225 billion. This represents approximately a 10 percent increase in total expected industry sales value versus the prior ten year horizon forecasted in Honeywell’s Business Aviation Outlook in 2009.

For 2010, Honeywell Aerospace estimates deliveries of 675-700 new business jets, down 16-17 percent from 849 in 2009 mainly due to continued global economic weakness as well as overarching concerns about government debt, austerity programs, export growth, financing costs, and general availability.

Expected deliveries in 2011 will also fall below 700. Five-year buyer interest has softened from 2009, and new purchase plans are slightly below 2007-2008 levels observed in the 2007-2008 industry growth period. However, based on survey responses and factoring in economic growth forecasts, the industry should begin another period of expansion in 2012.

Purchase expectations from the MENA region showed an enormous drop. Last year some 55% of operators in the region were expecting to be in the market for new aircraft. This year that dropped to 29% - a figure described by Rob Wilson, the president of Honeywell’s business aviation division as “cautious.”

“These more cautious international purchase plans have resulted in overall five-year demand for new jets resembling levels similar to those we saw in the 2007-2008 time frame , but still above those seen in the post 9/11 recovery cycle.

“Despite a torpid recovery, there have been relatively few program cancellations and delays,” continued Wilson, “so the pipeline of new high-value models supporting long-term growth remains strong. Our survey indicates that international demand will still remain significant and contribute to longer-term growth.”

The revisions in purchase plans came from lowered fleet replacement rates. Fleet expansion demand actually increased by about two points compared to last year. “Middle East and selected African economies have become more cautious in their outlook for sustained economic growth, no doubt stemming from the leveling out of oil prices through much of the year and the outlook for slower increases in oil demand coupled to the reduced pace of economic growth,” Wilson said. “Operators in these regions still expect to be active buyers – at or near the world average rate.”

The survey carried out by the US company showed that  large jets will continue to be the most in demand with the reasons for companies wishing to purchase new aircraft were for more range, newer fleets, a bigger cabin, more speed and warranties.

The call for more range and bigger cabins was being answered by the manufacturers, Wilson said.