Teal Group Forecasts Continued Bizjet Growth

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Everywhere one looks these days companies and organizations are positively bullish about business aviation's economic prospects. The latest glowing forecast comes this week from the Northern Virginia-based Teal Group, an aerospace and defense industry consulting and analysis firm. Richard L. Aboulafia, vice president of analysis for the Teal Group, this week released his firm's industry overview and 2007 market forecast, the headline from which is this: "Long term growth looks great. This REALLY is a transformed industry." Aboulafia's analysis looked at a variety of metrics, including historical jet aircraft availability and value dating back to 1964, used jet supply and demand, average selling prices and industry profits -- among other industry variables -- to come up with his firm's 17th business jet forecast. Highlights of that prognostication include deliveries of 12,000 bizjets worth $173.2 billion in 2007 dollars through the next 10 years (2007-2016). Additionally, Aboulafia says those numbers don't count some 424 corporate jetliners and RJs worth $12.3 billion. Of course, there are caveats. Among them: a continued strong economy, a soft landing from any declines and no recession. Hand in hand with those caveats are continued strength in corporate profits and globalization, along with emerging market growth.

Some of the details in the firm's forecast include:

  • A short-term peak in airframes and market value in 2009, followed by a brief decline, rising to another peak in 2015, near the end of the forecast period.
  • Values of lower-end jets will remain essentially flat or climb very slowly toward the end of the period, while more volatility will be present in larger, faster business jets.
  • Existing market shares enjoyed by the "name-brand" manufacturers in the next 10 years -- Bombardier, Dassault, Cessna, Gulfstream and Hawker Beechcraft -- will remain roughly the same when compared to the last 10 years.
  • On the very light jet front, Aboulafia believes there's only room for one or two major new players to succeed in that market, selling between 150 to 200 VLJs each year. Cessna is not a new player; Honda is.
Soon after Aboulafia's 10-year forecast period ends, he believes the industry will see the first generation of supersonic business jets hit the market. Regardless, in looking at the aerospace and defense markets, Aboulafia sees that business jet values may become "ascendant" for the first time since the late 1990s, when compared to combat aircraft. Essentially, market values for new business jets will grow faster than those of new military aircraft for the first time in 20 years, according to Aboulafia. And that can't be a bad thing for the business aviation industry.