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Business jet market to be dominated by Bombardier and Gulfstream

Industry Sector

Aerospace

Published

26 November 2012

Author

Matt Bodimeade

Type of News

Market

The business jet market has been forecast to increase at a compound annual growth rate (CAGR) of 4.28% over the next five years, with the industry set to hit a value of $22.68 billion by 2017.

Business jet is a term describing a jet aircraft, usually of smaller size, designed for transporting groups of up to 19 individuals. Business jets may be adapted for other roles, such as the evacuation of casualties or express parcel deliveries, and some are used by public bodies, government officials or the armed forces.

Key factors set to fuel growth within the business jet market include the increase in demand from emerging economies, the economy recovering from the global downturn and the increase in corporate profits.

Aviation analysts say there are signs of a recovery in the market for business aircraft, after years of pain. But the recovery, if it comes, is likely to be spotty, and may be too late for some. The industry has been through a strenuous period of late as the demand for business jets is largely motivated by company profits. The market witnessed a severe downfall in the global economy in the year 2009. Another notable reason is that developing countries such as India and China have a very low number of business jets compared to their economy and country size, which hampers the business jet penetration.

One company that has been unable to recover from the downturn is Hawker Beechcraft, who recently announced they would be abandoning the business jet market. The once-venerable Wichita, Kan., firm that makes the King Air and Beech and Baron lines said that it will shed its jet aircraft component and concentrate on smaller piston-powered and turboprop airplanes.

An increasingly sharp divide between the upper end of the market and the rest has been predicted for the future. Over the next 10 years, 65% of deliveries, measured in value terms, will be of aircraft at the top end of the market, costing more than $25 million each.. Over the past 10 years the split, in value terms, between the top segments of the market and the rest was about 50-50.Business jet

For the larger companies in the market -- Bombardier of Canada, Embraer of Brazil and the Gulfstream unit of General Dynamics -- the outlook is cautiously optimistic. While they produce a wide range of business jets, they are strong in long-range, large-cabin models like the Gulfstream 650, scheduled for its first delivery to a customer by the end of the year, and Bombardier's Global 7000 and 8000 models, planned for service entry in 2016 and 2017, respectively.

Bombardier and Gulfstream are expected to capture shares of approximately 33% and 30% respectively in a market that is expected to expand to nearly $250 billion over the next 10 years, from $198.6 billion in the past, crisis-racked, decade.

For more information on the business jet market, see the latest research: Business Jet Market

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