Bullish On Bizjets?
It's the latest prognostication that business aviation -- and business aircraft manufacturers in particular -- are poised for greatness. "It" is a forecast from a Washington-based think tank/consulting firm, the Teal Group, which predicts substantial growth in demand for business aircraft through the next decade. But that's nothing new. Everyone from individual manufacturers, to the industry's trade association, GAMA, to the FAA is predicting growth. Put it another way: No one is predicting his or her job will be gone in ten years. The "news" is in some of the underlying reasons its authors use to justify their conclusions, as well as the differences between this year's predictions and those made just a year ago. Also, the organization making the predictions is supposedly more independent than the others. In essence, the Teal Group report says that demand for business jets could increase for a variety of reasons. Those reasons include an aging in-service fleet, high utilization rates among so-called "traditional" corporate flight departments and the explosive growth among fractional operators. Also of interest and impact will be the coming market entry of light-light, or micro, jets like the Cessna Mustang, the Eclipse 500, the Adam Aircraft A700 and offerings from other companies like Safire. The recently released report projects as many as 6400 bizjets worth as much as $92 billion in 2004 dollars will be produced over the next ten years.
But how might individual manufacturers fare in the next ten years? Which will see growth and which won't? Good questions. To no one's great surprise, Gulfstream Aerospace will have the largest market share when the bean counters count dollars. Of course, that's because Gulfstream's products are generally the most expensive available in the market for dedicated business aircraft -- as opposed to converted airliners -- and demand for them shows no signs of abating. Bombardier is projected at second place in the dollar-amount sweepstakes, with its wide variety of bizjets from the relatively inexpensive to those that compete directly with Gulfstream. The projected success of the two companies is not the same thing as cornering the market on bauxite ore and cranking out thousands of airframes, though. In fact, when counting new airframes sold, the leader in that measure of market share is projected to be (drum roll, please ...) Cessna.
The projected growth probably won't start for a couple of years, will ramp up during the latter part of the decade, and will then taper off after peaking. Obviously, some companies may not fare as well and it's also obvious that there may be some consolidation within the industry. Equally, some of the projected light-light jets may never make it to market or achieve widespread acceptance. Also, with that many new airframes, there may some pressures placed on supporting industry segments like training, maintenance and FBOs, to pick three. Costs in those areas could well rise substantially, placing unwelcome pressure on airframe manufacturers. Regardless, many observers are unanimous in their predictions for growth; they just differ on its magnitude. Where will you be in ten years?