New large corporate aircraft that can fly further and an industry push to sustainable aviation fuels are bright spots as the world’s biggest business jet makers assemble in Las Vegas to showcase offerings at the sector’s largest gathering.
The National Business Aviation Association (NBAA) annual corporate aircraft show started on Tuesday against a backdrop of slowing global economic growth, trade tensions between the United States and China and Brexit uncertainties, factors seen softening demand for corporate jets in the next two years, industry executives and analysts say.
“We’re optimistic but at the same time, in the short and medium term we have to be cautious,” said Gaetan Handfield, senior manager of marketing analysis for Honeywell Aerospace.
Honeywell’s 2019 business aviation outlook sees 7 600 new business jet deliveries worth $248 billion from 2020 to 2029, down one to two percentage points from the company’s 2018 forecast.
Deliveries were up this year almost 13% during the first half of 2019, according to data from the General Aviation Manufacturers Association (GAMA).
Deliveries, expected to rise 7% in 2020 according to Honeywell, are fuelled by the ramp-up of new models offering longer ranges and amenities such as beds and hot showers at 40 000 feet.
General Dynamics’ Gulfstream, Bombardier, Textron’s Cessna, Dassault Aviation and Embraer SA saw order backlogs grow seven percent in the first half of 2019, the first rise since the 2008 financial crisis, said aviation analyst Rolland Vincent.
An NBAA highlight this year could be the widely-expected launch of a new Gulfstream long-range jet.
Buyers eager to make non-stop trips between far-flung cities like New York and Tokyo are looking for long-range jets.
Others prioritise fuel efficiency and encourage the use of sustainable fuels and carbon-offsets at a time when the aviation industry faces “flight shame” protests by climate change activists.
Jetmakers will fly aircraft into Las Vegas using a blend of biojetfuels, although industry usage of alternatives to kerosene remains limited.
In an industry where sales are usually aligned with economic growth, analysts remains cautious given uncertainty in Europe with Brexit and in the US, the world’s largest market for business jets, where President Donald Trump faces an impeachment probe.
“New deliveries will ramp up due to new products introduced, only to begin a cyclical decline as world economic weakness further manifests itself,” said aviation analyst Brian Foley.
US economic growth is slowing in 2019, with economists forecasting growth of around 2.5%, below the Trump administration’s three percent target.
Foley expects new sales to remain roughly flat next year, but sees softer demand in 2021 which will lead to fewer planes delivered in 2022.
Brian Proctor, president of Dallas-based private jet consultancy Mente Group said sales of pre-owned planes are picking up after a slow start, with some buyers looking to purchase by year’s end to take advantage of favourable tax rules introduced by the Trump administration.
He said buyers want to purchase ahead of next year’s US presidential election under existing rules.
“Because of the uncertainty they are speeding up decisions because they want to know what the rules are,” said Proctor, also chairman of the International Aircraft Dealers Association.
Sales of pre-owned business jets are down 19% in volume for the first eight months of 2019, on an annual basis, but aircraft for sale are spending less time on the market, Vincent said.
“Buyers appear to be moving quicker when they find the asset they want,” he said.