Manufacturers are optimistic again as latest census figures show the world fleet of corporate aircraft is once more on the increase
The worst appears to be over for the corporate aircraft industry. The worldwide economic slowdown that has engulfed the industry for the past two years - causing shrinking orders, curtailed production output and reduced prices - has begun to ease and optimism is returning to the market.
Flight International's corporate aircraft census presents a clear picture of the true growth trends in the industry from 31 August 2003 to 31 August 2004. According to Flight International's sister data organisation AvSoft, the world's turbine business aircraft fleet has nudged ahead by just over 4% to 21,735 jets and turboprops compared with 20,850 aircraft in last year's census. Not surprisingly, the jet fleet continues to widen its lead over turboprops, although in this year's census, jet numbers have risen by less than 1% to 12,690 aircraft, while turboprops have climbed nearly 3% to 9,160.
Cessna historically out-delivers all other manufacturers and the past 12 months have been no exception. The in-service inventory rose by 154 Citations to 4,094 aircraft - nearly 19% of the worldwide turbine fleet, including 251 Bravos, the mainstay of the NetJets Europe fleet, and 351 Excels. Following a big increase in sales last year, the Wichita, Kansas-based airframer expects to deliver 180 jets this year, boosted by the introduction of its Excel upgrade, the XLS, and the service entry this quarter of the light CJ3, mid-size Sovereign and revamped Citation X.
Following a four-month production shutdown early last year, Bombardier's business aircraft inventory has climbed from 2,759 to 2,828 in-service aircraft in the current census. Although 79 new aircraft have entered service in the past year, including 17 super mid-size Challenger 300s - which makes its census debut, along with the Learjet 40 light business jet and superlight Learjet 45XR - 10 aircraft have been retired or parted out: four Learjet 24s, three 25s, two 35s and one 36. The expected arrival of the superlarge Global 5000 in the world's turbine fleet over the next six months will be a further boost for the Canadian airframer, which is expecting a recovery in business jet sales to offset weakening regional jet deliveries.
Gulfstream's in-service fleet has climbed in the past 12 months from 1,129 to 1,182 aircraft, including 28 G500/G550s, 16 G400s and five G300s. Over the same period, the General Dynamics-owned company has completed the revamp of its entire product line. The work began two years ago and its effects will start to be felt by the world's turbine fleets this year. Most of the change is at the top of its range as the company strives to retain a foothold in the increasingly competitive large-cabin and long-range sectors. At the large-cabin end, the G400 will be replaced by the G450 by the end of this year, and the G300 by the G350 early next year. The long-range G500 is set to join the family by year-end, and in 2006 may be followed by the mid-size G150, a replacement for the G100. In August, Gulfstream celebrated the roll-out of the 100th G200 at Israel Aircraft Industries in Tel Aviv. The aircraft will join NetJets' fractional fleet later this year as Gulfstream begins work on a larger derivative of the super mid-size aircraft, formerly the Galaxy business jet.
Dassault saw a 3% rise in its fleet to 1,461 aircraft. The French airframer has indicated robust sales activity in the USA and positive signs of a strengthening European market. The manufacturer targets deliveries of about 60 aircraft this year - 20% more than in 2003. And Dassault can expect to gain an even larger share of the large-cabin and long-range fleets over the next three years as its new market entrants - the Falcon 900DX, a defuelled 900EX powered by three Honeywell TFE731-60s, and the all-new Falcon 7X - enter service.
Historic brands
Raytheon has seen jet turbine fleet numbers rise from 6,380 to 6,797 aircraft over the last 12 months, with the turboprop inventory climbing 7% to 5,084 aircraft. The reinstatement of the Hawker and Beechcraft brands had a degree of success in reigniting interest in these historic lines, with sales and inventories of the Hawker 800XP and 400XP - a revamped Beechjet 400A light jet - continuing to rise. A $300 million order from NetJets for 20 400XPs and 20 800XPs will help boost fleet numbers in the USA and Europe over the next two years as deliveries to the largest fractional provider begin. Meanwhile, the confidence in these established brands has not hastened the service entry of the much-delayed super mid-sized Hawker Horizon, now scheduled for early next year.
The widebody market has been worst hit by the soft global economies of the past two years. The retreat by cost-conscious customers to smaller cabins has left Airbus and Boeing Business Jets reeling as their in-service fleet numbers for the A319 Corporate Jetliner and BBJ creep forward by only three and eight aircraft, respectively. To compensate, both manufacturers have sought, with a degree of success, to exploit the growing market for long-range business-class airliner shuttles.
Turboprop recovery is slow but steady. Raytheon dominates this sector of the market with about 57% of the in-service fleet and the Beechcraft King Air alone accounts for the lion's share of the manufacturer's total fleet, with 4,682 aircraft. Outside North America, this twin turboprop has found overwhelming success in the South American market. Demand for an aircraft that can access the region's rugged terrain and short, remote airstrips has resulted in King Air numbers rising by 7% to 543 aircraft in the past 12 months. In that period, Raytheon has completed its programme of scrapping most of the 53 Starship twin-pusher turboprops in a move designed to drive down support costs. Since production was halted in 1995, the manufacturer says spares costs for the unique design have become prohibitive and AvSoft says only six Starships remain in service.
Piaggio's P180 Avanti twin-turboprop fleet has expanded in the past 12 months, climbing by 31 units to 80 in-service aircraft. The Avanti has found notable success in North America, particularly as a fractional-ownership aircraft, where more than 24 units are on order for New York-based Avantair.
For single-engined aircraft, the market is mixed, although all the manufacturers have made fleet gains in the past 12 months as acceptance of commercial single-engine instrument flight rules operations gathers pace outside Europe. Switzerland's Pilatus made significant gains, with its in-service PC-12 fleet climbing from 373 to 400 aircraft. New Piper has seen its inventory climb from 1,040 to 1,146 aircraft, thanks largely to the boost in turboprop conversions for the PA-46 Malibu piston and steady growth in Malibu Meridian sales - the census shows a fleet of 171 compared with 139 aircraft last year.
Competitive market
With an increase of only nine TMB700s to 247 in-service aircraft, EADS Socata has recorded the smallest rise in the single-engine sector in the past 12 months. The French manufacturer is struggling to compete for sales of its six-seat, high-speed turboprop in the increasingly competitive marketplace and is pinning its hopes on securing certification in Europe of the low-stall-speed TBM700C. The aircraft was introduced two years ago for the North American market, where the census records an in-service fleet of 47 aircraft of this type.
Instrumental to the turnaround in the corporate aircraft market is the reduction in the inventory of used aircraft, which last year stood at about 17% of the turbine fleet - around 5% above the historical average. Rick Engles, chief executive of international aircraft broker Vance and Engles, says the used-aircraft fleet now stands at around 12%, with the older and small-cabin types dominating this market. "The supply of good used aircraft is drying up," he says, "and the availability of large-cabin aircraft is particularly low." Engles says users who had been forced to downsize or leave the industry are now coming back and have a requirement to travel globally.
Large cabin
Used large-cabin Gulfstreams such as the GIV and GV, the Dassault Falcon 900EX and 2000 and Bombardier's Global Express are all sought after, while the smaller-cabin types, particularly light and mid-sized aircraft such as the Citation X are proving harder to shift, he says.
With the supply of good used aircraft drying up, prices of new aircraft have begun to firm up. Textron says the used Citation inventory has returned to its historical level of 13% of the fleet and prices were up 2% on the 36 new Citations delivered in the second quarter. Raytheon says most newer jets have been sold, and while good used turboprops are still available, inventories are down. Gulfstream says exposure to the used-aircraft market has been drastically reduced, with four traded-in aircraft sold at break-even in the second quarter compared with earlier losses.
For some operators of older turbine types, help is at hand with a plethora of engine and avionics upgrades to extend aircraft longevity and cut noise and operating costs to meet with current regulations.
However, for other operators, the cost of upgrading 20-year-old or older aircraft to meet the requirements of US reduced vertical separation minimum rules, scheduled for January next year, and Chapter 3 noise compliance, has become prohibitive. Many unpopular types, such as the Gulfstream II and Hawker 125-600/700, have been sold to countries with less regulated airspace, notably African and South American countries, particularly Nigeria, Liberia and Venezuela. Here the market for second-hand aircraft continues to grow. Owners of much older types, such as the 40-year-old Lockheed Jetstar, Learjet 23 and Hawker 125-1A, are increasingly selling the aircraft for spares as they realise the capital they have tied up in their equipment. Numbers of these types are falling at a rate of about 15 a year, says AvSoft.
North America's dominance of the corporate aircraft market remains unrivalled. This year's census shows the US fleet has climbed from 15,630 to 16,011 aircraft - which represents nearly 74% of the world's in-service fleet. As the bar chart shows, the continent's corporate jet fleet has grown 73% between 1999 and 2004 but, more surprisingly, this rate of growth is matched across all the world's regions, except Asia, where the fleet has grown by 66% during the same period.
High expectations
South America saw its corporate jet fleet jump by 83% in the last 12 months, from 691 to 977 this year, representing the continent's largest increase. Mexico's corporate jet fleet, at 444 in-service aircraft, represents 45% of the regional fleet. Despite high expectations for emerging countries such as China and India, fleets in these regions have remained stagnant and show little signs of fulfilling their promise for the foreseeable future.
The full listings for the Corporate Aircraft Census are available to Flight International subscribers on our website, www.flightinternational.com via the Business Aviation (This Week) section. Data compiled by AvSoft, Myson House, Railway Terrace, Rugby, Warwickshire, CV21 3HL. Tel: +44 1788 540898; fax: 44 1788 540933. Totals are derived from the base country of the aircraft and not the country of registration. The figures are correct as of 31 August.
KATE SARSFIELD / LONDON DATA SUPPLIED BY STEVE BUTLER / AVSOFT
Source: Flight International
