Our annual census of the world's business aircraft fleet shows the gap widening between jets and turboprops, with inventories growing despite falling production

A cold economic wind has been blowing through the corporate aircraft market over the past year, battering the world's turbine inventories. Gone are the steep hikes in fleet numbers as manufacturers cut production in the face of slumping sales.

Bombardier, Cessna, Gulfstream and Raytheon have imposed temporary shutdowns and hefty job cuts across their production facilities, and the impact on deliveries will be felt into next year and beyond. Yet the blow will be softened by entry into service of new models during the same timeframe.

Flight International's corporate aircraft census presents a clear picture of the true growth trends in the industry over the past year. According to data research company BUCHair UK, the world's turbine corporate aircraft fleet has nudged ahead by just over 3% to 20,850 jets and turboprops, against 20,200 aircraft in last year's census.

The jet fleet took pole position in 1997 ahead of turboprops, and the gap continues to widen. In this census, turboprop numbers have risen just over 1.5% to 8,938 aircraft, while jet numbers have risen by 4% to 11,900. Cessna is responsible for almost half of the total jet hike, delivering nearly 250 Citations over the past 12 months, including 83 entry-level CJ2s and 71 superlight Excels. This brings the fleet of in-service Citations to nearly 4,000. The manufacturer is predicting a sharp fall in deliveries this year, but the entry into service of the CJ3 light jet and mid-size Sovereign early in 2004 should help to boost production numbers.

Gulfstream has extended and rebranded its aircraft line. The GIV-SP and GV-SP have been replaced by the G400 and G550, respectively, and the large-cabin G300, and long-range G500 have joined the line-up. Gulfstream's inventory has risen in the last year by 80 aircraft. The G500 is set to join the family by year-end, and in 2006 will be followed by the mid-size G150, a replacement for the G100 (formerly Astra SPX).

Bombardier's inventory has climbed from 2,590 aircraft last year, to 2,700 in the current census. These numbers include the Learjet 31A light jet, production of which was halted last December. The slow-selling aircraft will be replaced by the Learjet 40 when it enters service later this year. The Canadian manufacturer has been working to bring other new and upgraded designs to the market in the next 15 months - the revamped Learjet 45XR superlight jet; the super mid-size Challenger 300; and the super large Global 5000.

Dassault saw a 4% rise in its corporate fleet to 1,360 aircraft, including four deliveries of the new super mid-size Falcon 2000EXs, which entered service this year.

Raytheon has seen turbine fleet numbers rise this year from 6,230 to 6,380 aircraft with the turboprop inventory climbing less than 1% to 4,718. Fleet number will be boosted from the fourth quarter of 2004 Raytheon with first deliveries of the Hawker Horizon super mid-size business jet.

Last year, the manufacturer re-established the Hawker and Beechcraft names in an attempt to reignite interest in these historic brands. As well as the Horizon, the Hawker name covers the 800XP and the 400XP - a revamped Beechjet 400A light jet - deliveries of which began in April.

The Beechcraft brand covers the Premier I entry level business jet and the King Air range of turboprops. In an attempt to drive down support costs, Raytheon is removing from service and scrapping most of the 53 Starship twin-pusher turboprops. Since production was halted in 1995, the manufacturer says spares costs for the unique design have become prohibitive.

The soft global economies have had a marked impact on the widebody market. Although fleet numbers of Airbus A319 Corporate Jetliners and Boeing Business Jets (BBJ) nudged forward by four and nine aircraft, respectively, BBJ2 numbers fell by two, as cost-conscious customers began a retreat to smaller cabin types. Airbus and Boeing have begun to explore the market for long-range shuttle versions of their aircraft as they compete head-on in the business-class airliner arena. The Boeing/General Electric BBJ joint venture recently lost a contract to supply formerly all-Boeing PrivatAir with airliner-class business jets for a Lufthansa wet-lease deal.

Turboprop challenge

In contrast, some niche manufacturers continue to see an increase in fleet numbers as the acceptance of single-engine turboprops gathers pace around the world. EADS Socata, which late last year introduced its upgraded TBM 700C for the US market, has seen a rise from 170 to 208 aircraft. The Pilatus PC-12 fleet has increased by 9% to 373 aircraft, while sales of New Piper's Malibu Meridian continue steadily - the census showing a fleet of 139 versus last year's 119.

Newcomers poised for service entry over the next 12 months - Myasischev with its M101T and Czech/Taiwanese joint venture Ibis Aerospace with the Ae270 Spirit - will be hoping to carve a slice of this entry level market, which is predicted to grow in the next decade as numbers of air-taxi operators and owner/pilots increase with demand.

The dominance of the single-engine turboprop is under threat from new entry-level jets under development, with the majority due for service entry in 2006. These are designed, say the manufacturers, to unlock demand for new aircraft among the thousands of owners and operators of ageing piston twins and turboprops. Aircraft in this new entry-level sector will fly faster and higher than their turboprop counterparts at a much lower cost. Honeywell conservatively forecasts a market for around 8,000 aircraft over 10 years.

Last year, Cessna entered this market with the launch of its $2.3 Citation Mustang personal jet, having originally planned to develop a turboprop single to bridge the gap between its piston-powered aircraft and its Citation business jets. More than 300 orders have been received so far.

Other players include market leader Eclipse Aviation with its $1.25 million Eclipse 500, for which over 2,000 orders have been received. Safire Aircraft is proceeding with its $1.4 million Safire Personal Jet. But Adam Aircraft Industries' $2 million all-composite, twin boom A700, which made its first flight in July, looks to be first to market, with certification planned for later this year.

The introduction of the new entry-level aircraft could help to widen the appeal of business aviation and open up the market to new buyers, whom manufacturers' current ranges are failing to attract.

Used inventories

The soft market for new aircraft is not helped by the large used inventory, with around 17% of the turbine fleet on the market - around 5% above the historical average. The US government is doing its bit, with some success, to kick-start the market with its accelerated-depreciation, tax-relief measures for new aircraft and on equipment for upgrades on used aircraft.

For many operators of older types of around 20 years or more, the cost of upgrading to meet the requirements of the US reduced vertical separation minimum (RVSM) and Stage 3 noise compliance has become prohibitive. Rick Engles, partner and president of international aircraft broker Vance & Engles, says: "To retrofit aircraft for RVSM can cost $500,000.When the value of your aircraft is less than $2 million, there is little incentive to upgrade, particularly when for around $4 million you can buy a well-equipped, quality, low-time model such as a Raytheon Hawker 800."

The effect of the new regulations, particularly in the USA, has resulted in a shift of unwanted types such as the Gulfstream II, BAe 125-600/700 to many African and South American countries, notably Nigeria, Liberia and Venezuela, where the market for second-hand aircraft is growing.

But even here, there is little or no demand for first-generation business jets. Many types around 40 years old, such as the Lockheed Jetstar, Learjet 23 and Hawker 125-1A, have been sold for spares, Engles says. "For example, of the 92 Learjet 23s built, 63 have been parted out, while 36 of the 60 Hawker 125-1A built have been sold for parts."

US dominance

The readiness of these African and South American nations to absorb older types has had a dramatic impact on those continents' fleet inventories. Africa saw its fleet jump by almost 19% in the last year from 587 in the last census to 728 this year, representing the largest continental increase.

The total was boosted by Kenya, which almost doubled its inventory from 41 to 71 aircraft. The South American inventory has risen from 1,207 to 1,326 turbine-powered aircraft in the same period, with Venezuela recording a 9% hike in its fleet to 279 aircraft, and regional leader Brazil boosting its inventory by 65 aircraft to 608 turboprops and jets.

Fleet increases have been recorded on every continent this year, but North America's dominance of the corporate aircraft inventory is more apparent than ever with over 15,600 jets and turboprops - two-thirds bigger than the remaining continents combined.

Within North America, the USA's dominance is unrivalled and increasing, with a fleet of over 14,800 aircraft based there, around 95% of the region's turbine fleet. Even if China reaches potential, it is unlikely to rival the size or appeal of world's largest aerospace market.

The full listings for the Corporate Aircraft Census are available to flight international subscribers on our website: www.flightinternational.com data supplied by BUCHair UK, 78 High Street, Reigate, Surrey, RH2 9AP, UK. Tel: +44 (0) 1737 224747 Fax: +44 (0) 1737 226777. Totals are derived from the base country of the aircraft and not the country of registration. The figures are correct as of 5 August.

Source: Flight International