Order intake expected to settle at 'normal' level as bonus depreciation tax break is no longer available in USA
After a record-setting fourth quarter, general aviation manufacturers expect orders to settle down to more normal levels this year, but with underlying growth fuelled by the US economy.
Despite projecting a flat year, the industry saw deliveries rise 10.3% in 2004, to 2,963 aircraft, propelled by economic growth and a tax break for US buyers on aircraft ordered for delivery by the end of this year.
With manufacturers rebuilding their depleted backlogs, but being cautious in ramping up production rates, orders are expected to slow to more normal rates as aircraft availability becomes a constraint. In addition bonus depreciation, which stimulated sales in the second half of last year, is no longer available for new US buyers.
Although manufacturers are unable to pin down the proportion of orders attributable to accelerated depreciation, most saw benefit across their product ranges, says Jim Schuster, chief executive of Raytheon Aircraft and chairman of the General Aviation Manufacturers Association (GAMA). "There is no doubt that shipments were boosted by bonus depreciation," he says.
Although the GA recovery is linked directly to US economic growth, and is broad based, internationally sales to specific industrial sectors have also increased. Bombardier's European orders are at record levels, fuelled by growth in the basic materials and commodities sectors, says Peter Edwards, president, business aircraft. The weak US dollar is also boosting European sales, he says.
GRAHAM WARWICK / WASHINGTON DC
Source: Flight International