Teal Group predicts $62.4 billion Bizjet market

June 14th, 1999

According to the Teal Group a total of 4,887 business aircraft (bizjets) valued at $62.4 billion (in 1999 dollars) will be produced over the 1999-2008 decade, forecast.

Teal Analysts released their annual world business aircraft production forecast at the 1999 Paris Air Show taking place here at Le Bourget Airport.

"After spending the late 1 980s and early I 990s in the doldrums, the bizjet market continues to be in the midst of a terrific growth spurt," said Richard Aboulafia, lead analyst for Teal Group's "World Military and Civil Aircraft Briefing," the 1,400-page competitive intelligence service, in which this and 10 other consolidated forecasts plus 156 separate aircraft programme reports are published and regularly updated.

In 1995, there were 337 bizjet deliveries worth a total of $3.6 billion. This figure rose to 352 jets worth $3.9 billion in 1996, 439 worth $5.9 billion in 1997, and 511 worth $6.7 billion in 1998.

"Preliminary numbers indicate that 1999 will be even better, with deliveries of 539 jets worth some $7.9 billion, and 2000 should be almost as good," said Aboulafia. "Business jets are clearly the hottest segment of the aviation industry, a fact that explains General Dynamics' willingness last month to buy Gulfstream Aerospace for $5.3 billion, more than twice Gulfstream's 1998 sales."

These good times are largely the result of an unprecedented number of new models, a "near-supply push" phenomenon which creates a lot of up-front demand but is not sustainable. Fractional ownership orders are contributing to this upturn.

"Still, the worst years of our forecast period (1999-2008) will be better than any year before 1997," said Aboulafia. "Comparing the forecasted numbers with the previous ten years, when 3,326 jets worth $40.2 billion (again in 1999 dollars) were delivered, the market has grown by over 50%. Profit margins in this segment of the aviation industry tend to be higher than other segments, too."

Of the five major players with an overwhelming share of this market (over 95% of 1999 deliveries by dollar value) Bombardier will be number one in market share, followed closely by Gulfstream, Cessna and Dassault. Raytheon will be fifth, but will be boosted by new models after 2000.

"The other business aircraft manufacturers will either remain niche players, or be absorbed by Bombardier, Cessna or Raytheon," said Aboulafia. "Which, probably, is what they want."

The Teal Group is an aerospace and defence market analysis firm based in Fairfax, Virginia, USA.

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