The number of general aviation aircraft delivered worldwide in 2010 continued its fall, from a record high 4,270 piston, turboprop and turbojet-powered aircraft in 2007 to 2,015 this past year. But positive gross domestic product (GDP) indicators and other factors however signal a relatively near-term trough and return to growth.
"Traditionally we like to say that we have a lag of about 18 months between [GDP growth] and the beginning of the increased deliveries," says John Rosanvallon, GAMA chairman and president of Dassault Falcon, adding that the recession "officially" ended for the US in the third quarter of 2009 and global GDP was up 5% in 2010. "I think it may be a bit longer, because this downturn was really unique."
According to statistics released 22 February by the General Aviation Manufacturers Association (GAMA), airframers delivered 889 piston-powered aircraft in 2010, down 8% from 2009; 363 turboprop-powered aircraft, down 18% from 441 aircraft in 2009, and 763 business jets in 2010, down 11% from 763 from the 870 delivered in 2009.
Though deliveries did decline, the rate of decline for business jets deliveries in particular appears to be showing signs of abating. Between 2008 and 2009, business jet deliveries dropped 34%, compared to just 11% last year. Countering the decline in units was a 1.2% increase in billings to $19.7 billion from $19.5 billion in 2009. Rosanvallon says the increase was due to a more favourable mix of large, long distance business jets in the year.
Several trends are apparent in the 2010 numbers, the most significant of which the continued dominance of international markets in leading the recovery. "The trend is confirmed," says Rosanvallon of the continued relative decline of US and European markets for aircraft. According to GAMA, the US accounted or 42% of business jet deliveries in 2010, down from a 49% share of the deliveries in 2009. Europe experienced a similar change.
The highest growth area last year was Latin America, which increased its share of business jet deliveries from 9% in 2009 to 14% in 2010. The Asia-Pacific region and the Middle East and Africa had similar gains. Rosanvallon largely discounted the potential effects of political turmoil in the Middle East, saying the region "is not a very significant part of the backlog" for airframers and continued unrest would not be a major impact.
Other positive trends globally include increases in flight activity and corporate profits and a decrease in the availability of used business jets.
According to GAMA, business jet flights in the US increased 10.8% compared to 2009, and European activity was up 5.5%. Globally corporate profits, which directly drive aircraft purchases, were up 46% in 2010, says Rosanvallon, and correspondingly up 26% in the US.
Factors positively impacting the US market last year included a bonus depreciation extension that boosted sales in the fourth quarter of 2010. For 2011, Rosanvallon says the "first ever 100% expensing of investments" provision signed into law in December, along with a continuation of the 50% bonus depreciation allowance lasting through the end of 2011 should prove beneficial. The expensing measure, designing to spur the economy, allows companies to deduct the full cost of a new business aircraft from revenues.
The availability and price of used aircraft continues to be "a major concern for the industry" in relationship to growth, says Rosanvallon. According to GAMA, used aircraft inventory in December was 14.8% of active fleet, 1.5% lower than the used inventory one year ago. "The average asking price is still depressed and the average time to sell is still too long," he says.
Slowing purchases of new or used aircraft is a continued dearth of financing, particularly for small aircraft and light to midsize business jets, says Rosanvallon. "78% of US business jet purchases were cash in 2010, an increase from 2009," he says.
Source: Flight International