SUBSCRIBE TO TMCnet
TMCnet - World's Largest Communications and Technology Community

TMCNet:  Aviation analyst sees slow growth in business jet market [The Wichita Eagle :: ]

[August 20, 2014]

Aviation analyst sees slow growth in business jet market [The Wichita Eagle :: ]

(Wichita Eagle (KS) Via Acquire Media NewsEdge) Aug. 19--When it comes to aviation, Wichita is not the next Detroit, an aviation forecaster said Tuesday at the Wichita Aero Club luncheon.

"No. Absolutely not," said Rolland Vincent, president of Rolland Vincent Associates.

He hears the question, and it bothers him.

"We're very optimistic about Wichita," Vincent said.

Vincent forecasts demand for 9,391 business jets in the 10 years from 2014 to 2023 valued at $257 billion.

He predicts the biggest portion of the deliveries -- 39 percent -- to be ultra-long-range jets, followed by large long-range jets at 18 percent. Large jets will take 10 percent of the market, super-midsized 13 percent, midsize jets 8 percent and light jets 4.5 percent, the forecast said.


He expects makers of business jets to deliver 718 this year, up from 678 last year.

The market for business jets has not rebounded for a number of reasons.

For one, buyers are flush with cash, but they're risk averse. They've lived through the worst economic downturn of their lives and are still trying to recover, Vincent said.

Operators aren't flying as much or, in some cases, at all.

"We're still not seeing flight operations back where we'd like to see it," he said.

Twenty to 30 percent of the fleet is inactive relative to 2007 levels, he said.

There's also an oversupply of used light and midsize jets on the market.

In addition, there's new competition, especially from Brazil-based Embraer, which has taken some market share from Wichita manufacturers.

"More of that is coming," Vincent said.

Plus there are stricter credit requirements by aircraft lenders.

During the recession, orders cratered, backlogs evaporated, used inventory on the market spiked, and prices for used planes plummeted, he said.

The good news is that the U.S, which operates 60 percent of the world's business jet fleet, is showing signs of economic recovery.

The stock market has recovered nicely, and corporate profits are in good shape, Vincent said.

Latin America has a high concentration of business jets among wealthy individuals.

And China's growth in its gross domestic product, while down, is the best in the world. China is going to be Wichita's export market for years to come, Vincent said. The country is building 70 airports right now, he said.

At the same time, the business jet customer is evolving, and so are manufacturers.

In the past 50 years, people have become taller and heavier, and they want planes with larger cabins.

They also want airplanes with longer range.

"But that's not what we do here -- yet," Vincent said.

Wichita concentrates on the light and midsize part of the market.

"The market has paused" on those segments, he said.

Textron Aviation, however, has the new Citation Latitude and Longitude in the works, which have stand-up cabins.

The merger of Beechcraft Corp. into Cessna Aircraft is good news, Vincent said.

"There's a lot of strength there," he said.

Commercial aviation When it comes to commercial aviation, the Boeing 737 has been a staple in Wichita for decades.

Spirit AeroSystems builds dozens of the fuselages each month.

"This town loves single-aisle airplanes," Vincent said.

Boeing has steadily ramped up deliveries as orders continue to climb, he said.

"They've reached stratospheric levels," Vincent said.

Boeing and Airbus have seven to nine years of work ahead of them based on their order books.

Although the current market is not sustainable, Vincent said, he expects a good run over the next seven to 10 years.

Reach Molly McMillin at 316-269-6708 or mmcmillin@wichitaeagle.com. Follow her on Twitter: @mmcmillin.

___ (c)2014 The Wichita Eagle (Wichita, Kan.) Visit The Wichita Eagle (Wichita, Kan.) at www.kansas.com Distributed by MCT Information Services

[ Back To Technology News's Homepage ]

OTHER NEWS PROVIDERS







Technology Marketing Corporation

800 Connecticut Ave, 1st Floor East, Norwalk, CT 06854 USA
Ph: 800-243-6002, 203-852-6800
Fx: 203-866-3326

General comments: tmc@tmcnet.com.
Comments about this site: webmaster@tmcnet.com.

STAY CURRENT YOUR WAY

© 2014 Technology Marketing Corporation. All rights reserved | Privacy Policy