U.S. corporations including McDonald’s Corp. and BlackRock Inc. are starting to return to the business-jet market after putting off aircraft upgrades since the recession five years ago.
Buyers are opting for larger, longer-range planes even with global shipments poised to fall in 2013, Honeywell International Inc. said in its annual industry forecast today. Jet deliveries in North America, anchored by the U.S., also will increase as a share of the world’s total, the study found.
The U.S. comeback marks a turnabout from recent years, when chief executive officers deferred fleet renewals as the worst slump since the Great Depression crimped profits and made corporate aircraft a low priority -- and potential public- relations embarrassment. Now Fortune 500 CEOs are shopping again and hunting for the most luxurious models.
“They just basically went dormant during the downturn and now they’re coming back on,” said CEO Larry Flynn at Gulfstream Aerospace, the General Dynamics Corp. unit that makes the new G650 jet. “It’s a significant market opportunity.”
Global deliveries in the so-called super-midsize segment and larger will rise more than 10 percent this year and by less than 10 percent in 2014, according to Morris Township, New Jersey-based Honeywell, whose products include business-jet engines. It released the forecast at the National Business Aviation Association convention in Las Vegas.
Biggest Cabins
The category includes planes such as Bombardier Inc.’s Challenger 300 and Gulfstream’s G280, each seating about 10 people, on up to models such as the G550 and the G650, which is able to seat as many as 19 people. Planes in the super-midsize class and bigger will account for more than 80 percent of business-jet spending “in the near term,” Honeywell said.
They’re a bright spot in a market that continues to dwindle. Global deliveries in 2013 will be in a range of 600 to 625 aircraft after last year’s 649, according to Honeywell’s survey, which is based on a survey of 1,500 corporate flight departments.
Once seen as a coveted corporate perk, business jets became symbols of business arrogance in 2008 when U.S. automaker CEOs flew to Washington in private aircraft to lobby Congress for federal assistance to the industry.
“The stigma attached to bizjets during the recent recession and a focus on cost cutting among corporate customers are two reasons we see demand lagging corporate profit growth,” Joseph Nadol, a JPMorgan Chase & Co. analyst in New York, said in an Oct. 14 report.