October 19, 2014 / 9:39 PM / 3 years ago

Business jet sales to keep rising but some purchases delayed

The Bombardier?s Global 6000 business jet stands on the tarmac at the airport in New Delhi July 2, 2012. REUTERS/Adnan Abidi

NEW YORK (Reuters) - Business jet buyers are expected to take delivery of as many as 675 new aircraft worth about $20.5 billion this year, a slight rise over deliveries worth $20 billion 2013, according to a forecast by Honeywell International Inc (HON.N).

The outlook for the next decade shows demand for 9,450 jets worth about $280 billion. That’s up from 9,250 jets worth $250 billion in last years’ long-range forecast, Honeywell said.

But the global survey of 1,500 corporate flight departments, released on the eve of the National Business Aviation Association conference, found that companies had reduced their five-year plans to replace or add to their fleets, with the biggest demand change coming from the Asia-Pacific region.

Corporate fleet managers, including governments and charter companies, plan to make new jet purchases over the next five years equal to, on average, about 23 percent of their fleets, down from about 28 percent in the 2013 survey, Honeywell said.

Buyers in the Asia-Pacific region showed the biggest drop in buying plans, down about 12 percentage points, while buying expectations in the Middle East and Africa, Latin America, and North America fell by 8, 11, and 6 percentage points, respectively, the survey found.

Plans by buyers in Europe, however, jumped 6 percentage points, despite the inclusion of Russia, where purchase plans fell due to economic uncertainty and sanctions.

“Even with a lower purchase expectation from Russia, Europe was still up, which I think is a good sign for the Western European economies,” said Brian Sill, president of business and general aviation at Honeywell Aerospace.

Buyers remain most interested in large-cabin business jets, but interest in mid-cabin and small-cabin jets improved in the latest survey. “That’s good news because they had been languishing for the last few years,” Sill said.

The launch last week of two new large-cabin aircraft by Gulfstream Aerospace Corp, a unit of General Dynamics Corp (GD.N), is among the factors expected to fuel purchases over the longer term. Fractional ownership companies also are starting to renew their fleets, Sill said. Fractional operator Flexjet was one of the two launch customers of the new Gulfstream G500 and G600 models.

In terms of market share, demand from North America slipped 2 percentage points to 59 percent. The share of so-called BRIC countries (Brazil, Russia, India and China) fell to 29 percent in the latest survey from 42 percent last year.

“Brazil had very strong purchase expectations, despite the economy being in a bit of a slowdown,” Sill said.

Reporting by Alwyn Scott; Editing by Meredith Mazzilli

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