The majority of new business-jet orders during the next few years will come from outside North America, according to a yearly industry forecast, reflecting an accelerating industry shift as parts of Europe and the former Soviet Union emerge as the hottest growth markets.
Honeywell International Inc.´s forecast anticipates both a stronger-than-anticipated market during the next 10 years as well as a change in industry dynamics. The industry watches Honeywell´s numbers closely because the Morris Township, N.J., company has a record of predicting business-jet market shifts accurately. Honeywell´s aircraft products include flight-control, navigation and cabin environment control systems.
Overall foreign aircraft orders for the first time are expected to top demand in the U.S. Honeywell´s forecast sees Europe and Asia accounting for more than 36% of all orders during the next five years compared with a roughly 25% share projected a year earlier.
Honeywell estimates total world-wide deliveries through the end of the decade increasing steadily because of rising order rates overseas and continuing robust replacement of business aircraft in the U.S. Its projections include as many as 1,400 aircraft deliveries a year by 2010, up sharply from this year´s anticipated new high of more than 1,000 jets and 861 jets last year. And it expects some of the fastest growth to occur in both the largest and the smallest aircraft models.
Past 2010, Honeywell expects deliveries to stay at or near record-setting levels — nearly 20% above earlier expectations — propelling the industry further from its deep slump after the Sept. 11, 2001 terrorist attacks. Its predictions have tended to be more bullish than other estimates.
During the next five years, North American customers are expected to account for some 49% of all business-jet orders. Honeywell´s report singles out Europe as the most likely second-largest market behind North America, perhaps through the first half of the next decade. The average aircraft replacement rate for European operators is now expected to run twice as high as projected.
By contrast, in 2006 Honeywell saw orders from Asia increasing faster than those from Europe. Today, the company foresees Asian orders running a distant third behind demand in the U.S. and Europe, with Asian customers particularly favoring longer-range jets with more sophisticated navigation and cockpit-control systems.
The analysis reflects the "continued globalization of demand" for aircraft despite high fuel prices and other economic variables, said Rob Wilson, president of Honeywell´s business and general-aviation unit.
As recently as the beginning of 2004, North America absorbed roughly 70% of all new business jets. But partly reflecting slower U.S. economic growth and recent credit- and stock-market fluctuations, this year´s projections show an actual dip in North American purchasing expectations.
Looking out through 2017, Honeywell foresees industrywide total deliveries of about 14,000 new aircraft with an estimated total value exceeding $ 230 billion.
Based on surveys of hundreds of corporate flight departments around the world, and then adjusted to reflect projected economic growth and other factors, Honeywell´s recent annual forecasts were upbeat even before its most recent conclusions. Last year´s rosy predictions, however, ended up underestimating strong growth outside the U.S., particularly in traditional European markets and economically emerging portions of the former Soviet Union.