The business aircraft market should resume expansion in 2019 thanks to factors including US tax breaks, an improved used aircraft market and entry-into-service of several new business jets, according to Honeywell's latest market forecast.
The Global Business Aviation Outlook, released prior to NBAA, also shows surging demand for large business jets.
The Outlook, which takes into account economic factors, production plans and industry surveys, estimates that between 2019 and 2028 manufacturers will deliver 7,700 new business jets, roughly 50 more than Honeywell projected last year for the same 10-year period.
Those 7,700 aircraft will have an estimated market value of $251 billion, up 1-2% from last forecast.
The recovery will not start this year; Honeywell expects deliveries in 2018 of new business jets will remain flat year on year, or perhaps decline slightly from last year's roughly 640 deliveries.
But Honeywell expects new aircraft deliveries will increase by 50-60 aircraft in 2019, a roughly 8-10% year-on-year jump.
"This is mainly due to first-year production of all these new aircraft that will enter service," says Honeywell's senior manager of marketing strategy Gaetan Handfield.
Indeed, Bombardier recently received Global 7500 certification, and it expects 5500 and 6500 certification in 2019. Textron Aviation expects imminent Cessna Citation Longitude certification, while Gulfstream Aerospace received G500 certification this year and expects G600 certification any time.
Of all new aircraft delivered in five years, North American customers will take an estimated 61%, while 16% will go to Europe and 12% will go to Latin America, where a slump in Mexico and Colombia offset Brazil's economic improvement, Gaetan says.
Asia-Pacific customers will take 7% of new jets in five years, and Middle East and African operators will take 4%, the Outlook shows.
Similar to last year's survey, operators intend to replace the equivalent of 20% of their fleets with new aircraft in the next five years.
Notably, European operators plan to replace 33% of their aircraft, a 14 point year-on-year jump that reflects at least two factors: UK and German market strength and easing of Brexit anxiety, Gaetan says.
The Outlook also shows surging interest in larger-cabin aircraft, a segment hit hard by the recession last decade. Those jets will account for an estimated 62% of units in the next five years, and 87% of sales value.
"It's the highest I've seen in a long time," Gaetan says, noting the share of large aircraft fell into the 40% range following the recession and has more recently been 50-55%.
He attributes the jump partly to recent US tax changes letting owners deduct, in the first year they own a business aircraft, 100% of its cost.
The Outlook also points to a tightening used-aircraft market, which suffered an inventory glut following the recession.
The number of for-sale "recent model jets" – those less than 10 years old – declined 30% in the last year, Honeywell says.
"It means we are turning the corner," says Gaetan. "It means that pricing should start going up on the used market."
As used aircraft prices climb, new aircraft become more attractive.
"I think that's what we are going to see over the next two years – more buyers transitioning from the used market to the new," Gaetan says.