Moving forward

Locally, the fleet has been growing, with the arrival of new types such as the Embraer Phenom 100 and Legacy 600, as well as the more familiar Gulfstreams, Globals and Citations.

“Quite a few of these aeroplanes have been new,” said Bell. “They’ve been on order for a few years, but they haven’t been cancelled and the operators have taken deliveries of their aeroplanes in accordance with their requirements.”

While the fleet has grown and utilisation of company-owned aircraft has remained steady, ad hoc charter of business aircraft continues to be lower, with many operators reporting that enquiries remain significantly lower than the levels experienced in 2007.

Globally, it has been a tough year for business aviation, with the manufacturers largely bearing the brunt of the continued downturn.

At the recent National Business Aviation Association expo in Atlanta, Honeywell Aviation released its latest business aircraft market forecast, which does not expect deliveries to start increasing until 2012, both as a result of lower demand from in and outside of North America.

“This year, operators outside North America have become more cautious about the strength and pace of the recovery. While they are still looking beyond the current economic climate and anticipating a return to improved business conditions, they have tempered near-term expectations and buying decisions, as reflected in the current delivery forecast,” said Rob Wilson, president, Business and General Aviation, Honeywell. “Despite the slow pace of economic recovery, North American operators responding to the Honeywell survey indicated their overall new jet purchase plans for the five-year horizon were largely unchanged from a year ago.”

The survey by Honeywell also found that while inventories of used business jets had decreased by three per cent, prices are still significantly lower than those in 2008. Part of the reason is that supply continues to be strong.

“Approximately 16-17 per cent of business jets in America are on the market,” said Bell. “Some of those are not actively on the market, but they would sell them if they could get the right price.”

But as AVWest general manager Mick Rowbottom explained, there are different dynamics at different ends of the scale. “The top end of the market has started to firm, such as the Global aircraft and Gulfstream V and 550s, but when you come down a level to your GIVs, Challenger 604s and Hawker 800 and 900 aircraft there are still quite a number on the market and the prices have not firmed at all in those areas at this point,” he said.

Finance for business aircraft is also starting to flow again, according to Steve Padgett, executive chairman of Cessna dealer Aeromil Pacific. “Financing has not been a problem from our perspective. I think financiers are very bush on aeroplanes, whereas they won’t finance boats or some property,” he said.

For many Australian buyers, the high levels of supply coupled with the strong Australian dollar would make ideal buying conditions. But as Padgett explains, the levels of enquiry have not been as high as they have at other times when the Australian dollar has been consistently above the US90c mark.

“Years ago if the dollar went to where it was today, people would be buying aeroplanes left, right and sideways, but it’s been fairly quiet so far,” he said. “I think its just people being conservative about any sort of acquisition, and that is more related to the US economy and the world market than anything else.”

Bell also adds that for some operators, the strong Australian dollar has not had much of an impact on their decision making process. “I think people are buying aeroplanes when they need to use them, they’re not buying them because of the soft US dollar. They are buying them for where there is a genuine need.”

Naturally, sales of new aircraft have been lower, with more tending to seek out quality used aircraft. “We’ve been selling a used aeroplane here and there,” said Steve Padgett. “New aeroplanes have been very quiet.”

“I think that it’s going to take a little while to catch up with that market when there are so many good, used aeroplanes out there,” he added.

“People are buying aeroplanes when they need to use them, they’re not buying them because of the soft US dollar.”

In light of the poor global market conditions, a number of the manufacturers have been putting incentives in place to move both new and used aircraft. This has seen some companies such as Cessna offer prepaid maintenance packages on their aircraft, as well as buyback guarantees on some types.

Broadly though, Bell says that the manufacturers appear to be slowing the development of some of their aircraft, while others, such as the widebody Cessna Citation Columbus, have been axed. “I would say what we are seeing is that even though there are quite a few aircraft on the drawing boards, they are not going to come to market as rapidly as they would in different economic circumstances,” he said.

But some manufacturers are starting to look forward to when demand does again grow, and are developing their products accordingly, particularly those actively involved in large cabin, ultra long range business jets.

On its part, Gulfstream has continued flight testing work on the G650, and the advanced business jet is still on track to enter service in 2012, while the recent NBAA exposition saw the launch of a raft of new business jets which are aimed to enter service later in the decade.

Possibly the biggest announcement came from Bombardier, which announced that it would add two new large cabin, long range members to the Global family, the Global 7000 and 8000, both of which are expected to be popular with existing Global Express and XRS operators in Australia.

The Global 7000 will be the larger of the two aircraft and enter service in 2016. It features a four zone, 74.67 sq m cabin volume. The aircraft will have a range of 7300nm (13,520km) while cruising at Mach 0.85, allowing it to travel nonstop sectors such as London-Singapore and New York-Dubai with 10 passengers on board.

The smaller Global 8000 will enter service in 2017 and features a three zone 63.3 sq m cabin volume. The jet’s 7900nm (14,630km) range will allow it to fly nonstop sectors such as Sydney-Los Angeles with eight passengers on board.

And despite announcing that it will lay off production staff, Cessna launched the Citation Ten at NBAA. The Ten is the latest improvement on the speedy Citation X, and introduces new winglets, a 38cm fuselage stretch and new Rolls-Royce AE3007C2 engines rated at 7034lb (31.3kN) which Cessna says delivers a nine per cent improvement in climb performance and a 1.4 per cent improvement in specific fuel consumption. It also introduces the new Garmin G5000 avionics suite.

On its part, Hawker Beechcraft has relaunched the Premier II as the Hawker 200. Compared to earlier Premier models, the Hawker 200 gains new winglets, new Williams International FJ44-3AP engines, an increase in gross weight and a 45,000ft ceiling. The aircraft also features as standard a multiscan weather radar, ADS-B out capability, and a 400 hour inspection interval and 10 year composite airframe warranty.

And while the newly launched aircraft are sure to be on the radar for many operators in Australia, the strong stream of sales tours from the likes of Embraer, Cessna and Bombardier through the region over the past 12 months is likely to continue for the next few years ahead.

Part of the driver for that will be the increasing acceptance and use of business aircraft. “We’re seeing a lot more new people coming into the market. They are people who have money, people who want to buy an aeroplane and they’re all researching the market to see what the best way to go,” said Padgett.

Still, the focus on the short term is still likely to be focused on used aircraft. “I think in the next 12 months we will probably sell a lot more used aeroplanes than we have before, but there is still that traditional buyer who likes the new equipment,” said Padgett.

“We’re seeing a lot more new people coming into the market. They are people who have money, people who want to buy an aeroplane and they’re all researching the market to see what the best way to go.”

Helping that along has been the changing attitudes locally to business aircraft, with many expanding companies and high net worth individuals viewing them as essential business tools rather than rich boy’s toys.

“What’s proven here is that when you need to use business aircraft and the companies are profitable, which they are in Australia in the main, they are kept as an important business tool,” said Bell, adding that the Australian industry has been fortunate not to have faced the same negative press that business aviation has in the US.

Overall, with good buying opportunities for both new and used aircraft available, as well as a strong Australian dollar and financing available, it appears that the local business aviation sector will continue with its forward momentum, and will no doubt continue to play a major role in supporting businesses for some time to come.