MARKET FORECAST 2014 – 2033
BOMBARDIER BUSINESS AIRCRAFT
WWW.BUSINESSAIRCRAFT.BOMBARDIER.COM
CONTENTS
03 INTRODUCTION AND EXECUTIVE SUMMARY
08 ECONOMIC ENVIRONMENT AND OUTLOOK
12 BUSINESS AIRCRAFT MARKET INDICATORS
21 WORLDWIDE FORECAST
28 REGIONAL FORECAST
40 CONCLUSION
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
02
INTRODUCTION AND EXECUTIVE SUMMARY
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
03
INTRODUCTION AND EXECUTIVE SUMMARY
INDUSTRY
NET
ORDERS
576
537
271
194
Estimated units, 2012 – 2013
Other Manufacturers
Bombardier
343
Sources: Manufacturer disclosures and Bombardier estimates.
Excludes Very Light Jet and Large Corporate Airliner segments.
During 2013,
for the fourth
consecutive
year, Bombardier
recorded more
orders than
any other
manufacturer
2012
64%
305
53%
2013
Bombardier Aerospace is pleased to present its 2014 edition of the Business Aircraft Market Forecast. The forecast includes Bombardier’s long-term vision of the business jet market and an in-depth look at the
market drivers of the major regions of the world.
Bombardier continues to grow its leadership position in the business jet manufacturing industry. During 2013,
for the fourth consecutive year, Bombardier recorded more orders than any other manufacturer, with 305 net
orders, representing approximately 53% of the industry’s total net orders. Bombardier’s delivery performance
was also strong in 2013, with 180 unit deliveries representing a 32% share of industry deliveries.
We remain confident in the strong long-term potential for the business aircraft industry. We maintain our
focus on strengthening Bombardier’s market leadership position by continuing to invest in our development
programs: the Global 7000, Global 8000, and Learjet 85 with the Challenger 350 recently entering into
service in June this year.
With the most comprehensive product portfolio in the industry and our commitment to leadership in
customer satisfaction, coupled with our solid product development roadmap, Bombardier is well-positioned
to benefit from the next business aircraft industry upturn. This forecast focuses on the three business jet
categories in which Bombardier competes: Light, Medium and Large aircraft. The Very Light and Large
Corporate Airliner categories are excluded.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
04
INTRODUCTION AND EXECUTIVE SUMMARY
INDUSTRY
ORDERS AND
DELIVERIES
Units, 2004 – 2013
1,800
Annual Orders
Annual Deliveries
1,400
1,000
600
200
-200
-600
Sources: Deliveries from GAMA, orders from
manufacturer disclosures and Bombardier estimates.
Excludes Very Light Jet and Large Corporate Airliner segments.
-1,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
THE BUSINESS JET MARKET IN 2013
The business jet industry continues to make progress towards a recovery from the steep industry downturn of 2009-2010. Many market indicators continued to show improvement in 2013 while others remained
relatively unchanged.
Industry order intake saw incremental improvement in 2013 over 2012, allowing the industry to record a book-to-bill ratio of one for the second year in a row. Bombardier Business Aircraft posted a book-to-bill ratio
of above one for the third year in a row.
The level of pre-owned aircraft for sale, an indicator that is highly correlated with new business jet demand,
saw strong improvement at the end of 2013 and has continued to improve during Q1 2014. But despite the
reduction in pre-owned inventory for sale, aircraft resale values remain relatively low. The gap between new
and used aircraft pricing remains wide and is restraining demand from customers looking to trade in their
existing aircraft against the purchase of new aircraft. However, we predict that continued progress in the pre-owned market will lead to a recovery in resale values in the medium-term.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
05
INTRODUCTION AND EXECUTIVE SUMMARY
Stock markets posted strong gains in 2013 while corporate profitability improved and the number of
billionaires worldwide continued to increase beyond historical figures. The U.S. business jet market showed
signs of improved market confidence, with increased business jet orders. We expect North American demand
to continue improving over the medium-term as corporations and high net worth individuals (HNWIs) revisit
plans to replace aircraft which were put on hold during the downturn. Certain markets, notably China and
Latin America, were very active for business jet orders during 2013. Demand in the European market remained
subdued due to ongoing economic uncertainty. Overall, demand for Large category business jets continued
to be strong while demand in the Light category continued to be impacted by conditions in the pre-owned
market.
Industry deliveries are expected to be slightly up in 2014 from 2013 based on the collective delivery guidance
of manufacturers and new aircraft programs that will begin delivering this year. The situation for industry
orders is expected to remain challenging in 2014 but is expected to improve starting in 2015.
We forecast 22,000 business aircraft deliveries over the next 20 years. This forecast will detail the expected
timeline and magnitude of the business jet industry comeback.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
06
INTRODUCTION AND EXECUTIVE SUMMARY
BUSINESS JET
FLEET FORECAST
3,000
12,800
1,750
Units, 2013 – 2033
9,200
32,450
22,650
15,200
Source: Bombardier Business Aircraft Market Forecast.
Fleet 2013
Excludes Very Light Jet and Large Corporate Airliner segments.
Deliveries
Retirements
Fleet 2023
Deliveries
Retirements
Fleet 2033
BUSINESS JET VALUE PROPOSITION AND LONG-TERM VISION FOR THE INDUSTRY
Business jets are known to provide cost-effective, fast, flexible, safe and secure access
to their users’ destinations. In a series of studies conducted between 2009 and 2013,
BUSINESS JET MARKET HISTORY AND FORECAST
Historical
Delivery Units
Revenues
NEXA Advisors evaluated the impact of business jet ownership on small to large
Forecast (2014 - 2033)
2004-2013
2014-2023
2024-2033
Total
6,125
9,200
12,800
22,000
$161 Billion $264 Billion
$353 Billion
$617 Billion
companies, as well as government agencies. Its most recent study on business aviation
and the world’s top performing companies concluded that companies using business
jets were likely to outperform non-users on revenue growth, innovation, employee
satisfaction and market share.
In addition, the less quantifiable but equally important benefits of business jet use
Source: Bombardier Business Aircraft Market Forecast.
include on-demand flight schedules, the ability to conduct business privately during
flights, more direct access to companies’ sites (which may not be well-served by
Our 20-year delivery
forecast predicts
22,000 business jet
deliveries valued
at $617B
scheduled airlines), and reduced fatigue on a company’s most frequent travellers.
We are confident in the collective strength of the long-term market drivers of business jet industry growth.
These market drivers include continued wealth creation, expanding globalization of trade, replacement aircraft
demand, market accessibility and the increasing adoption of business jet use in high growth economies.
This confidence is reflected in our 20-year delivery forecast, which predicts 22,000 business jet deliveries
valued at $617B1. We predict 9,200 deliveries worth $264B from 2014 to 2023, and 12,800 deliveries worth
$353B from 2024 to 2033.
1
All dollar amounts in the 2014-2033 Bombardier Business Aircraft Market Forecast are in 2013 USD unless otherwise stated.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
07
ECONOMIC ENVIRONMENT AND OUTLOOK
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
08
ECONOMIC ENVIRONMENT AND OUTLOOK
WORLD GDP
GROWTH
FORECAST
% change year-over-year,
2010 - 2016
4.3
3.1
2010
Source: IHS Global Insight, April 2014.
2011
2.5
2.4
2012
2013
2.9
2014
3.4
2015
3.6
2016
The Bombardier Business Aircraft Market Forecast is based on an econometric model that relates market
indicators, including world Gross Domestic Product (GDP), pre-owned aircraft inventory and stock market
indices, to expected aircraft orders and deliveries. Our long-term view of the market also considers the
expected rate of both business jet fleet penetration and economic growth in each of the forecast regions.
GDP GROWTH
Global growth in the first half of 2013 was relatively slow, similar to that of the latter half of 2012. During
the second half of 2013, the advanced economies gained some momentum, and while emerging economies
slowed over the same period, they still contributed to more than two-thirds of total global growth, according
to the International Monetary Fund’s (IMF’s) World Economic Outlook (April 2014). Overall, the world
economy in 2013 experienced a real GDP growth rate of 2.4%, according to IHS Global Insight 2.
Global economic activity is expected to further improve in 2014. According to IHS Global Insight, the world
economy in 2014 is expected to grow at an annual rate of 2.9%, with a moderate acceleration over the mediumterm and then steadying at 3.3% per year on average over the next 20 years. Historically, when the world
economy has grown by an annual rate of 3.0% or more, the business jet industry has typically experienced
solid growth. In the mature economies, the 2014 upturn will be primarily due to growth in the United States
and recovery of the Eurozone. In emerging and developing economies, a slower increase is expected primarily
due to structural and policy challenges continuing in China’s economic transformation. India, Latin America
and parts of developing Asia are to experience a slight growth improvement during the year.
2
IHS Global Insight is the world’s largest economics organization providing economic and financial information on countries, regions and industries.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
09
ECONOMIC ENVIRONMENT AND OUTLOOK
MSCI
Industry Orders
350
1,400
MSCI World Index
Q1 2004 – Q1 2014
450
1,600
250
1,200
150
1,000
50
800
-50
600
-150
400
-250
-350
200
Source: MSCI World Index from Morgan Stanley,
orders from manufacturer disclosures and Bombardier estimates.
Excludes Very Light Jet and Large Corporate Airliner segments.
Historically, when the
world economy has
grown by an annual rate
of 3.0% or more, the
business jet industry has
typically experienced
solid growth
0
2004
Industry Orders (Units)
MSCI WORLD INDEX
VS. BUSINESS JET
INDUSTRY ORDERS
-450
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
In the next decade, the growth of emerging markets is expected to shift and continue at a much slower but
steady pace. By 2025, emerging markets will capture just over half of world GDP, and China will become the
largest economy in the world, according to The Conference Board, Inc.’s Global Economic Outlook 2014.
MSCI WORLD INDEX
Economic growth drives wealth creation which, subsequently, influences worldwide demand for business
jets. The Morgan Stanley Capital International (MSCI) World Index is an aggregate stock market index, based
on representative securities listed in major financial exchanges around the world, and is a strong indicator of
wealth creation. Stock markets have significantly rebounded since their low point in 2009 as the MSCI World
Index has more than doubled from March 2009 to March 2014. The MSCI World Index is highly correlated
with business jet orders, showing a parallel historical growth pattern, as shown in the MSCI World Index vs.
Business Jet Industry Orders chart.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
10
ECONOMIC ENVIRONMENT AND OUTLOOK
Population, 2012 - 2014
2012
2013
2014
+16%
World:
Number of Billionaires
NUMBER OF
BILLIONNAIRES
2012 = 1,226
2013 = 1,426
2014 = 1,645
+68%
450 471
524
+45%
+46%
347
206
+18%
246
157
186
-6%
107
Source: Forbes.com March 2012, 2013 and 2014
North America
Europe
+75%
227
China
138
156
Asia Pacific
107 126 126
CIS
+17%
65
100 114
Latin America
70 84 66
48 55 56
Middle East
India
16
+81%
20
29
Africa
GROWTH IN HIGH NET WORTH POPULATION
Aircraft deliveries to HNWls, often defined as individuals with a net worth of $50M or more, account for
about one third of the overall business jet market. Many of these deliveries are to HNWIs who have reached
billionaire status. In March 2014, Forbes estimated a record number of billionaires at 1,645 worldwide, an
increase of 219 over its 2013 estimate. The most significant growth rate occurred in Africa and Europe which,
during 2013, saw a year-over-year increase of 45% and 41%, respectively. Looking at
growth in the past two years, Africa’s billionaire population increased by 81% from
WORLD HIGH NET WORTH INDIVIDUALS
NET WORTH ≥ $500M
2012 to 2014; from 16 to 29 billionaires. Africa had the smallest number of billionaires
AG R
19% C
Population and Dollars, 2011 - 2013
growing at the fastest rate in the world during this time period. Latin America was
in second place with a percent growth of 75% from 2012 to 2014, from 65 to 114
Population
Total Wealth ($B)
billionaires. China and the rest of Asia Pacific were very close in billionaire growth rates
12% CAGR
4,680
5,625
5,910
2011
2012
2013
6,475
2011
Source: Wealth-X World Ultra Wealth Report 2011, 2012 and 2013
8,605
9,140
between 2012 and 2014, with China having 71 more billionaires than the rest of Asia
Pacific in 2014.
2012
2013
The HNWIs just below billionaire status – with net worth of $500M to $999M – are also
just as important to the business aircraft industry. During a time when much economic
uncertainty lingered throughout the world, HNWIs remained relatively unscathed,
reaching record highs in both population and net worth. The world population of individuals with a net worth
of $500M or more increased by 12% compounded annually in each of the past two years. The collective
net worth of this demographic grew by 19% during this time. The growth in wealth generated by the HNWI
community during a period of comparatively weak worldwide growth gives us increased confidence in our
positive outlook for the business aviation market.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
11
BUSINESS AIRCRAFT MARKET INDICATORS
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
12
BUSINESS AIRCRAFT MARKET INDICATORS
Business Aviation
m
m
s
xi
ta
F
ow ull
ne
rs
A
s
as s
cl e
t- lin
r s ir
Fi l a
a
ci
er
al
ci s
er ne
m i rli
om a
st
co e s
w li n
Lo a i r
ir
F
ow rac
n e ti o
rs na
hi l
p
co
C
J
pr etog c a
r a rd
m
s
On-demand flight
B
c h ra n
ar de
te d
rs
Scheduled flight
hi
p
Commercial Aviation
Customer flown - hours per year
AIR TRAVEL
OPTIONS
Level of customer involvement required to fly
Source: Bombardier Business Aircraft
ON-DEMAND AIR TRAVEL AND AIRCRAFT MANAGEMENT SERVICES
Businesses in the on-demand air travel market endeavour to provide cost-effective solutions for business
jet travellers who do not wish or are unable to acquire and operate an aircraft of their own. The benefits
of business jet travel are thus extended to users who would otherwise find this
method of travel cost-prohibitive. Several options for private jet travel exist
today in the space between traditional commercial air travel and full business jet
ownership. This market consists of air charter operators and fractional aircraft
program providers.
AIR CHARTER MARKET
The air charter market has seen significant growth in the past 50 years since
Executive Jet Aviation started the world’s first business jet charter company.
At the end of 2013, the worldwide charter and air taxi fleet stood at almost 3,800 aircraft, spread across nearly 1,200 operators. Eighty of the charter and air taxi operators have aircraft fleets consisting of 10 or more aircraft. The collective fleet of these large fleet operators has grown by 18% over the 2009-2013 period from 1,075 aircraft to 1,270.
The United States and Europe remain the largest markets for air charter demand today and account for just over 70% of the world charter and air taxi fleet. In recent years, fleet growth in this market has been
strongest in regions such as Africa, Asia and Latin America where expanding trade has increased demand for point-to-point travel.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
13
BUSINESS AIRCRAFT MARKET INDICATORS
Air charter operators continue to invest in modernizing and expanding their fleets and have begun launching
partnerships to enter new markets. One example of this is VistaJet, a European provider of bespoke private jet
services, which announced in 2013 its plans to expand into the United States through an agreement with Jet
Aviation, a U.S. certificated air carrier, and Wheels Up, a membership-based private aviation company.
FRACTIONAL MARKET DYNAMICS
Fractional aircraft ownership has existed since the late 1980s. This alternative to
full ownership allows several users to acquire ownership interests in the same
aircraft in exchange for the aircraft’s shared utilization.
Fractional ownership is suitable for customers who typically fly between 50 and
200 hours per year but do not want to purchase and manage an entire aircraft
of their own. Contracts are usually signed for five years and shares start at onesixteenth of an aircraft’s purchase price, equivalent to 50 hours of flight time a
year. Under a fractional ownership program, users have access to an aircraft when
required or access to any other aircraft within the fractional program provider’s
fleet, should additional capability be required. The piloting, fueling, maintenance
and licensing of the aircraft are the responsibility of the fractional company.
There are currently four large operators in the fractional ownership industry: NetJets, Flexjet, Flight Options
and CitationAir. These four companies operate 85% of the overall fractional fleet.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
14
BUSINESS AIRCRAFT MARKET INDICATORS
BUSINESS JET
FRACTIONAL FLEET
1.000
Units, 2004-2013
700
900
800
600
500
400
300
200
Source: Ascend
Includes the 4 major fractional providers: Flexjet,
NetJets (all subsidiaries), CitationAir, Flight Options.
Over the next 20
years, fractional
operators are
expected to account
for approximately
10% of business
jet deliveries
100
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
During 2004-2013, the four key fractional operators took delivery of 630 business jets in the Light to Large
aircraft size categories, equivalent to approximately 10% of cumulative business jet deliveries during this
period. NetJets’ deliveries accounted for the largest portion, with 65% of all fractional industry deliveries
during this time. The company has announced plans to add up to 670 new aircraft to its fleet over the next
decade.
In the last few years, the depressed business jet market forced consolidation of the fractional industry.
In 2009, the fractional operators went through a period of fleet rationalization, resulting in a substantial
reduction of the industry’s order backlog. In February 2012, CitationAir announced plans to gradually exit the
fractional ownership market. In September 2013, Flexjet, Bombardier’s fractional jet ownership division, was
acquired by a group led by Directional Aviation Capital through a newly-formed entity, Flexjet, LLC. Following
the acquisition, Flexjet placed a firm order for 115 business aircraft (25 Learjet 75; 60 Learjet 85; 20 Challenger
350; and 10 Challenger 605 jets) with options for an additional 150 business jets.
In 2013, new fractional aircraft share sales and redemptions remained steady over the previous year, while
both fractional fleet utilization and aircraft deliveries have increased, indicating evidence of a moderate but
steady recovery in this market. In the near-term, demand from existing fractional operators will be mainly for
fleet replacement while demand for additional aircraft will come from markets where fractional ownership is
just being introduced. NetJets, for example, has announced plans to open a new division in China to serve the
fast-growing Chinese business jet market.
Over the next 20 years, fractional operators are expected to account for approximately 10% of business jet
deliveries.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
15
BUSINESS AIRCRAFT MARKET INDICATORS
[As % of total in-service fleet, Q1 1990 – Q1 2014]
Business jet deliveries, 4-qtr moving average
[Units, Q1 1990 – Q1 2014]
Pre-owned Aircraft Inventory Level
Pre-owned aircraft inventory level
20%
250
Percent of fleet for sale
(period average):
13.7%
9.7%
15%
12.1%
14.7%
200
15%
12.4%
150
10%
100
5%
50
0%
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11
New Aircraft Deliveries
PRE-OWNED
MARKET AND NEW
AIRCRAFT DEMAND
0
'12 '13 '14
PRE-OWNED AIRCRAFT MARKET DYNAMICS
Approximately 50% of new business jet demand comes from existing owners replacing their aircraft, typically
5-10 years after initial delivery. For aircraft owners looking to sell an existing aircraft in order to buy a new
model, the duration of time it takes to sell their aircraft and the sell price can make or break the business case
of a new aircraft purchase. The demand for new aircraft is therefore directly linked to the prevalent conditions
in the pre-owned aircraft market.
The relationship between the pre-owned market and the market for new aircraft is illustrated in the Pre-owned
Market and New Aircraft Demand chart. Business jet deliveries are used as a proxy for new aircraft demand.
Historically, a balanced pre-owned market was prevalent when the available inventory of pre-owned aircraft
for sale, expressed as a percentage of the total in-service fleet, remained between 11% and 12%.
When the pre-owned fleet for sale has exceeded 12%, the supply of aircraft outpaced the demand. As a
result, aircraft resale values dropped and many replacement aircraft buyers put their decisions to replace
their aircraft on hold. For aircraft manufacturers, the sudden reduction in demand for new aircraft from the
large pool of replacement buyers meant that aircraft prices needed to be lowered in the short-term in order
to sell off aircraft that had already been produced. Over the longer-term, manufacturers readjusted aircraft
production rates to match the level of demand.
Conversely, when the fleet of aircraft for sale dropped below 11%, the supply of pre-owned aircraft became
scarce and resale values increased. Replacement buyers increasingly chose to replace aircraft and strong
demand for new aircraft resulted.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
16
BUSINESS AIRCRAFT MARKET INDICATORS
AIRCRAFT
RESIDUAL VALUES
5-Year Residual Values as
Percentage of Original List Price
[%, 2011 – Q1 2014]
Light
Medium
82%
81%
62%
51%
77%
75%
59%
49%
56%
45%
57%
50%
Large
Source: Aircraft Blue Book and Business & Commercial
Aviation Purchase Planning Handbook.
Residual values expressed as an
end-of-period, un-weighted average of all
aircraft models within each size category.
2011
2012
2013
Q1 2014
At the end of 2007, pre-owned inventory was at a low of 10.5% of the business aircraft fleet. However, the
sudden rise in the number of aircraft put up for sale the following year was a leading indicator of the business
aircraft market downturn that started in 2008. By early 2008, many owners were experiencing difficulty
selling their aircraft which, in turn, made new aircraft purchases less likely. Pre-owned inventory then peaked
at 17.8% in Q2 2009.
From mid-2009 until now, sales of pre-owned aircraft have increased annually and inventory has declined.
By the end of 2013, pre-owned inventory had fallen to a healthier level of 12.7% and continued to improve,
reaching 12.4% at the end of Q1 2014. We expect pre-owned inventory to stabilize at 11% to 12% of the fleet in the medium-term.
Aircraft resale values are an important pre-owned market indicator and are influenced by general market
conditions as well as a host of aircraft-related determinants. The average resale (or residual) value of a fiveyear old business jet at the end of Q1 2014 was 60% of its original Business & Commercial Aviation Magazine
(B&CA) list price. Residual values remain weakest in the Light aircraft category, as shown in the Aircraft
Residual Values chart, in which five-year old aircraft are valued at 50% of their original list price. Residual
values in the Large aircraft category remain healthy as five-year old aircraft are valued at 77% of their original
list price, close to the category’s historical average of 80%. Given the relationship between pre-owned aircraft
inventory and residual values, we expect that as the available inventory of aircraft for sale continues to
decrease and stabilize over the medium-term, residual values will improve and stabilize as well.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
17
BUSINESS AIRCRAFT MARKET INDICATORS
BUSINESS JET
DELIVERIES AND
RETIREMENTS BY
AGE GROUP
2,665
Units, 1965 - 2013
2,665
In Service & Parked
Retired
% Retired
73%
3,376
Total deliveries:
Total retirements:
2013 Fleet:
2,785
3,375
2,775
1,245
1-5
6-10
11-15
16-20
4%
1,075
21-25
26-30
Aircraft Age Groups
32%
1,225
1,133
1,210
3%
1%
0%
0%
Source: Ascend and Bombardier estimates.
We forecast
4,750 worldwide
business aircraft
retirements
between 2014
and 2033
1,793
1,555
1,540
0%
16,670
1,470
15,200
9%
1,625
893
610
31-35
36-40
325
>40
BUSINESS AIRCRAFT RETIREMENTS
The world’s business aircraft fleet continues to age. At the end of 2013, the average age of the worldwide
business jet fleet was 16.6 years. Around 3% of these aircraft (435 units) were more than 40 years old, which is
considered well into typical aircraft retirement age.
To date, the total number of permanent retirements of business jets has been low, equivalent to only
approximately 8% of total deliveries since 1965. However, as a result of emerging environmental concerns,
new regulations and airspace modernization, the retirement of older business jets is expected to accelerate.
Environmental regulations include restrictions pertaining to airport noise in Stage 2 business jet operations
and those of the EU Emissions Trading Scheme (ETS). Stage 2 jet operators are facing progressively more
restrictions around the world and operating limitations are expected to increase in the future. The ETS will
have a larger impact on aircraft with older technology engines that burn more fuel and emit more greenhouse
gases. Similarly, planned airspace modernization in the United States (FAA NextGen), in Europe (SESAR) and
elsewhere will require advanced flight deck avionics technologies that may not be feasible or cost-effective to
retrofit on older aircraft, rendering these types of aircraft obsolete.
These dynamics will affect the number of retirements in the overall business jet fleet and the quantity of
aircraft that retire within the forecast period will vary considerably by region. The regions that currently have relatively small business jet fleets, such as China, will experience comparatively fewer retirements.
And naturally, the regions with well-established fleets and older aircraft will experience the greatest number
of retirements, helping to drive replacement demand. We forecast 4,750 worldwide business aircraft
retirements between 2014 and 2033, of which 70% are in North America.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
18
BUSINESS AIRCRAFT MARKET INDICATORS
BUSINESS JET
MARKET
SEGMENTATION( )
1
In Prod. 37
In Dev. 14
VERY LIGHT
Bombardier
Cessna
LIGHT
L70
L75
L60XR
CJ4
XLS+
Latitude
New aircraft
programs are an
important driver
for business jet
market growth
Others
CL350
CJ2+
M2
CJ3/CJ3+
LARGE CORPORATE
AIRLINERS
LARGE
CL605
G5000
G6000
F7X
F8X
CL850
Mustang
Global
7000
Global
8000
Sovereign+ Citation X+ Longitude
F2000S
F2000LXS
F900LX
F5X
Phenom
100
Phenom
300
Gulfstream
Source: Bombardier Business Aircraft.
L85
Dessault
Embraer
(1) Segmentation is largely determined by a
combination of cabin volume, range and price.
MEDIUM
Legacy
450
Legacy
500
G150
G280
Legacy
600
Legacy
650
Lineage
1000E
G450
G550
G650
G650ER
Hondajet
SJ30-2
PC-24
Eclipse
550
ACJ
318/319
BBJ
1/2/3
BBJ Max
8/9
NEW AIRCRAFT PROGRAMS
The availability of more capable and efficient aircraft supports demand for replacement aircraft and attracts
first-time buyers to enter the market. Thus, new aircraft programs are an important driver for business jet
market growth.
Next generation aircraft have more range and lower fuel consumption at comparable price points. This is due
to continued technological improvements, notably in the development of new engines, new materials, and
more advanced aerodynamics.
The launch of new airplane programs reflects manufacturers’ abilities to incorporate the latest technological
breakthroughs in their product lines as well as their confidence in the marketplace going forward. New aircraft
designs also feature continued advancements in safety systems, reflecting the industry’s constant focus on
safety, which has positioned business aviation as one of the world’s safest forms of transportation, according
to the International Business Aviation Council (IBAC).
The introduction of new business aircraft models like Bombardier’s Learjet 70 and Learjet 75 jets in 2013 and
the Challenger 350 jet in 2014 has generated increased demand in the Light and Medium size categories. New models expected to enter the market, such as the Bombardier Global 7000 jet in 2016 and Global 8000
jet in 2017 in the Large size category, are similarly expected to generate increased demand.
Our forecast takes into account new aircraft programs expected in the short- and medium-term as well as
estimates for the long-term and considers the effects these aircraft will have on business aircraft demand. In summary, the increase in the availability of new aircraft positively affects business jet market growth.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
19
BUSINESS AIRCRAFT MARKET INDICATORS
INDUSTRY
BACKLOG
Estimated units, 2004 - 2013
Estimated value $B, as of Q4 2013
Estimated Units
Estimated Value ($B)
3,500
3,000
Medium
2,500
10.0
Light
2,000
3.6
1,500
Large
34.2
1,000
500
Sources: Manufacturer disclosures and Bombardier estimates,
aircraft prices from B&CA Purchase Planning Handbook 2013.
Bombardier
continues to
hold the largest
backlog among
business jet
manufacturers
0
2004 2005 2006 2007 2008 2009 2010
2011
2012
2013
Industry Total = $47.8B
BACKLOGS
Backlogs refer to aircraft orders not yet delivered and are a strong predictor of short-term deliveries.
Manufacturers adjust their production rates based on their current backlogs and expectations regarding the
number of orders they can obtain in the future. Production rate changes are costly and complex. Challenges
involved include the expenses associated with workforce adjustments and the required supply chain and
scheduling changes needed. Manufacturers therefore aim to optimize deliveries, while minimizing fluctuations
in production rates.
We estimated the industry backlog at the end of 2013 at close to 1,200 aircraft, with a value of $47.8B,
relatively unchanged in both aircraft units and value from 2012. The Large category makes up the greatest
portion of the backlog in value, followed by the Medium and Light categories, respectively. We estimate
that about two-thirds of the unit backlog is from traditional customers, such as corporations, HNWIs
and government agencies. The remaining one-third is from orders for fractional operators, reflecting the
significance of the fleet replenishment plans recently launched by these operators. Approximately 30% of the
total unit backlog is made up of aircraft in development; that is, aircraft which have not yet entered service.
Bombardier continues to hold the largest backlog among business jet manufacturers. Moving forward, as
industry orders increase, backlogs for the rest of the industry will also improve, translating into increased
production rates as manufacturers adjust output to meet market demand.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
20
WORLDWIDE FORECAST
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
21
WORLDWIDE FORECAST
1994-2003
4,390 units
$92B
35
Constant 2013 $B
Units, 1994 - 2033
Constant 2013 $B, 1994 - 2033
40
30
2004-2013
6,125 units
$161B
25
20
15
2014-2023
9,200 units
$264B
10
2024-2033
12,800 units
$353B
5
Source: GAMA and Bombardier
Business Aircraft Market Forecast.
We forecast 9,200
aircraft deliveries
across the Light,
Medium and Large
categories of
business jets from
2014 to 2023
0
94
96
98
00
02
04
06
08
10
12
14
16
18
20
22
24
26
28
30
32
1,400
1,300
1,200
1,100
1,000
900
800
700
600
500
400
300
200
100
0
Units
BUSINESS JET
INDUSTRY 20-YEAR
REVENUE AND
DELIVERY OUTLOOK
REVENUES AND DELIVERY UNIT OUTLOOK
Business aviation market indicators remained mixed in 2013, delaying the timing of the market upturn
predicted in 2013 by one year. Industry delivery growth will lag order intake by one year as manufacturers
rebuild the backlogs necessary to support higher production rates. Business jet deliveries for 2014 are
expected to be modestly up compared to 2013, at just over 600 aircraft. Deliveries are expected to accelerate
from there and we forecast that the industry will surpass the 2008 delivery peak as early as 2017.
We forecast 9,200 aircraft deliveries valued at $264B across the Light, Medium and Large categories of
business jets from 2014 to 2023. In comparison, the industry saw 6,125 deliveries valued at $161B from 2004 to
2013.
During the 2024-2033 period, deliveries for the three size categories are projected to amount to 12,800
aircraft valued at $353B. By 2033, manufacturers are expected to deliver approximately 1,350 business aircraft
annually.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
22
WORLDWIDE FORECAST
FLEET PENETRATION
RATES BY REGION
Fleet per $100B in GDP, 2003, 2013, 2023F
69 68
Leading Market
62
Penetration index =
Business Aircraft Fleet
Region’s GDP in $100 Billion
42
37
2003
2013
2023F
Source: Ascend, IHS Global Insight.
Penetration index defined as business aircraft fleet
per $100 Billion of GDP. Includes all business jets.
19
15
10
1
4
3
Greater
China
5
7
Asia Pacific
8
2
India
20
7
12
Europe
10
15
Middle East
23 24
17
Africa
40
26
26
CIS
Latin
America
15
North
America
LONG-TERM FLEET FORECAST OUTLOOK
Business jet penetration is a measure of the number of business jets in a region relative to the size of that
region’s economy, as represented by its GDP. The penetration rate of business jets by forecast region is highly
variable. North America, the most established market for business jets with the world’s largest fleet, has a
modest fleet growth rate. In contrast, China’s business jet fleet, which is very small relative to the size of its
economy, is now entering a rapid growth phase.
To forecast the likely trajectory of the business jet penetration for each region, projected GDP growth is used
in combination with regional adoption factors. These factors are defined by the estimated adoption and
acceptance of business jets as well as the progressive removal of market barriers within a region, notably the
lack of adequate infrastructure and regulatory limitations.
As a regional economy grows, the expected growth of business jet fleet in that region can be predicted over
the longer-term. Longer-term business jet fleet growth by region is best represented by an expected market
maturity curve resembling an “S” shape, with the fastest growth occurring in the early phase of market
adoption and slowing growth as the market matures. Business jet deliveries can be derived from the change in fleet size while also considering aircraft retirements.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
23
WORLDWIDE FORECAST
FORECAST BY AIRCRAFT SIZE CATEGORY
The following section presents the forecast of the business jet market broken down into the Light, Medium
and Large size categories, which are defined through a combination of price, range and cabin volume.
In recent years, demand has improved for Medium and Large aircraft. As business jet purchases have soared
outside of North America, the need for larger and more capable aircraft has increased. In North America,
business jet adoption was historically driven by Light aircraft sales. However, the demand for business jets
is shifting towards emerging markets, where it is not uncommon to encounter buyers purchasing a Large jet
as their first aircraft, especially in markets such as China, Russia and the Middle East. Moreover, as aircraft
productivity increases, customers can get more performance and cabin size at similar prices. For these
reasons, we expect the fleet of Large and Medium aircraft to grow at a faster pace compared to Light aircraft.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
24
WORLDWIDE FORECAST
The Light
category will
generate a
total of 9,100
deliveries from
2014 to 2033
LIGHT CATEGORY
The Light category includes business jets with B&CA equipped prices typically between $9M and $21M,
offering ranges of 2,000 NM to 3,100 NM and cabin volumes of 300 ft3 (8.5 m3) to 700 ft3 (19.8 m3). Compared
to other business jet categories, the Light category is differentiated by relatively low purchase prices and low
operating costs, combined with sufficient range for missions within a region.
In this category, Bombardier delivers three types of aircraft to the market: the Learjet 60 XR, Learjet 70 and
Learjet 75 aircraft. In addition to these aircraft types, Bombardier is currently developing the Learjet 85 which
achieved its first flight in April 2014. This clean-sheet aircraft is primarily made of composite materials and,
once it enters into service, will be the largest and most comfortable Learjet ever built. Having entered into
service in 2013, the Learjet 70 and Learjet 75 jets feature an all-new designed interior, a new cabin management
system, the Bombardier Vision™ flight deck, improved aircraft performance and low operating costs.
Following the recent economic downturn, demand in the Light category has lagged compared to that of the
Medium and Large categories. The level of pre-owned inventory in the Light category has reduced measurably
over the past two quarters (13.2% of the Light aircraft fleet but remains higher than that of the Medium and
Large categories). Residual values in this category remain the lowest in the overall market. Our forecast takes
into account a delay in the timing of the Light category recovery.
In 2004, the Light category represented about 50% of overall deliveries. Going forward, it is forecasted that
the Light category will generate a total of 9,100 deliveries from 2014 to 2033, representing 41% of overall
industry unit deliveries. These deliveries are valued at $105B, which is 17% of the overall delivery revenues
forecasted over this 20-year period.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
25
WORLDWIDE FORECAST
The Medium
category will
generate a
total of 7,650
deliveries from
2014 to 2033
MEDIUM CATEGORY
The Medium category features aircraft with equipped prices typically between $20M and $42M, offering
ranges from 3,100 NM to 5,000 NM and cabin volumes of 700 ft3 (19.8 m3 ) to 1,500 ft3 (42.5 m3). The Medium
category offers greater cabin comfort and superior range compared to the Light category. These aircraft are
often the backbone of large corporations’ business jet fleets. Bombardier leads in deliveries in the Medium
category with its Challenger family of aircraft.
Bombardier now offers three well-known products in this category including the Challenger 350, Challenger
605 and Challenger 850 jets. The Challenger family of aircraft are productivity-enhancing business tools, with
the widest, most spacious cabins in their category. In particular, the Challenger 350 which recently entered
service features a redefined cabin experience; larger windows, a flat floor and cabin width similar to some
ultra-long-range aircraft, as well as a new cabin management system. This aircraft also features a state-ofthe-art avionics suite and superior aircraft performance. Each Bombardier aircraft in this category offers low
operating costs, high reliability, and can be customized with leading-edge cabin communication equipment.
In this size category, pre-owned inventory accounts for 12.5% of the overall Medium size fleet; close to
pre-recession levels. Thus the Medium size category is predicted to turn around quickly and promising growth
is expected for these aircraft over the next 20 years.
From 2014 to 2033, it is forecasted that the Medium category will generate a total of 7,650 deliveries,
representing 35% of overall industry unit deliveries. These deliveries are valued at $226B, representing 37%
of the overall delivery revenues forecasted during this 20-year period.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
26
WORLDWIDE FORECAST
FORECAST BY
CATEGORY
Units and Revenues ($B), 2014 - 2033
$617B
$286B
(46%)
22,000 units
40
5,250
(24%)
35
30
7,650
(35%)
Light
Medium
Large
Source: Bombardier Business Aircraft Market Forecast.
All revenues expressed in constant 2013 USD.
The Large
category will
generate a
total of 5,250
deliveries from
2014 to 2033
$226B
(37%)
$105B
(17%)
Total 20 Yrs
25
20
15
9,100
(41%)
Total 20 Yrs
10
5
0
14 15 16
17
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
LARGE CATEGORY
The Large category consists of aircraft with equipped prices typically between $50M and $72M, offering
ranges over 5,000 NM and cabin volumes of 1,500 ft3 (42.5 m3) to 3,000 ft3 (85.0 m3). Large category
business jets offer the greatest capabilities in range, speed and cabin comfort.
In the Large category, Bombardier offers the most technologically-advanced and broadest product line with
the Global family of aircraft that offer a balance of performance and comfort for long-range missions. The first
Global 5000 and Global 6000 jets equipped with the Bombardier Vision™ flight deck were delivered in March
2012. The Global 7000 and Global 8000 aircraft are being developed as extensions to the Global family and
will enter into service in 2016 and 2017, respectively. The Global 7000 and Global 8000 aircraft are designed
to connect customers to more non-stop destinations than any other business jet, combined with extraordinary
performance, flexibility and comfort.
For the 2014-2033 period, the Large aircraft category is expected to experience the fastest percent growth
rate of the three categories. This category was less affected than the Medium and Light categories by the
economic downturn. Large category pre-owned inventory accounts for just 9.6% of the Large category fleet,
the healthiest among the business aircraft categories.
From 2014 to 2033, it is forecasted that the Large category will generate a total of 5,250 deliveries,
representing 24% of overall industry unit deliveries. These deliveries are valued at $286B, representing
approximately 46% of the total delivery revenues during this timeframe.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
27
REGIONAL FORECAST
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
28
REGIONAL FORECAST
INDUSTRY DELIVERIES BY REGION 2014-2023 VS. 2024-2033
CIS
2014-2023: 520
2024-2033: 910
Europe
2014-2023: 1,550
2024-2033: 2,025
North America
2014-2023: 3,875
2024-2033: 4,885
Greater China
2014-2023: 950
2024-2033: 1,275
Middle
East
Africa
2014-2023: 285
2024-2033: 400
Latin America
2014-2023: 380
2024-2033: 715
India
2014-2023: 355
2024-2033: 860
Asia Pacific
2014-2023: 345
2024-2033: 540
2014-2023: 940
2024-2033: 1,190
Source: Bombardier Business Aircraft Market Forecast
REGIONAL FORECAST
The Forecast is broken down into nine geographic regions: North America, Europe, Latin America, Greater
China, Middle East, Asia Pacific, Africa, the Commonwealth of Independent States (CIS), and India. Deliveries for
each region are presented in the world map above in the form of two circles that are proportional to expected
delivery quantities. The inner circle is scaled to represent forecasted deliveries in the 2014-2023 period, and the
outer (larger) circle represents those in the 2024-2033 period. In the following Fleet Growth world map, the
inner circle represents the fleet in 2013 while the outer circle represents the expected fleet in 2033.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
29
REGIONAL FORECAST
FLEET GROWTH BY REGION 2013 vs. 2033
FLEET GROWTH BY REGION
2013 vs. 2033
CIS
2013: 555
2033: 1,875
Europe
2013: 1,440
2033: 4,685
North America
2013: 9,780
2033: 15,225
Greater China
2013: 330
2033: 2,525
Middle
East
Africa
2013: 375
2033: 925
Latin America
2013: 1,790
2033: 3,305
2013: 395
2033: 1,405
India
2013: 125
2033: 1,320
Asia Pacific
2013: 410
2033: 1,185
Source: Bombardier Business Aircraft Market Forecast
Source: Bombardier Business Aircraft Market Forecast
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
30
REGIONAL FORECAST
|
NORTH AMERICA
NORTH AMERICA
FLEET GROWTH
FORECAST
Units, 2013 – 2033
4,885
810
1,300
645
3,875
40
455
1,225
730
9,780 1,765
940
1,520
12,430
Medium
1,415
4,925
4,155
2% C
Large
North America 3 is the birthplace of business
aviation and continues to be the economic
powerhouse of the advanced economies. Overall,
North America saw respectable economic
growth over the course of 2013, particularly in
the United States where the economy grew more
rapidly than expected in the second half of the
year. This was attributable to domestic demand,
inventory accumulation and export growth.
Although this robust progress was then impacted
by a harsh winter in early 2014, growth is
projected to continue at an above potential rate
for the rest of this year. In Canada, the economy
strengthened in 2013, although the necessary
rebalancing from household consumption and
residential construction aimed at exports and
business investment did not fully transpire.
However, annual growth in Canada is expected
ECONOMIC GROWTH: NORTH AMERICA
2013
2014
2014-2033
Average
GDP
GDP(%)
(%)
1.9%
2.4%
2.5%
GDP
GDP($*)
($*)
17,669.2
18,086.0
23,385.6
25%
25%
24%
% of World GDP
*Billions of 2010 USD. Source: IHS Global Insight April 2014
Fleet 2013
to accelerate in 2014 due to stronger external
demand and increased business investment.
North America is a key region of the business
aviation industry. Business aviation dates back to
the 1960s in North America where the budding
business jet industry leveraged the pre-existing
general aviation and military infrastructure.
Consequently, the business aviation industrial
network in this region, including manufacturers,
suppliers, Fixed Base Operators (FBOs) and
dedicated airports, experienced rapid expansion
and is the most established business aviation
infrastructure today.
Given that North America has the largest
number of older business jets in the world,
aircraft replacement is an important driver
of business jet demand in the region. UBS
Investment Research acknowledges the modest
growth of business jet deliveries into North
America in the last several years since the
recession, and maintains its statement from
2013 that “we anticipate further improvement
in North America driven by pent-up corporate
replacement demand” (March 2014). North
America will account for the greatest number of
aircraft replacements in the world between 2014
and 2033.
AGR
8,035
6,860
5,825
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
15,225
2,265
2,425
3,310
Light
90 2,090
750
1,250
Deliveries
Retirements Fleet 2023
Deliveries
Retirements Fleet 2033
Half of the world’s new business aircraft
deliveries went to North America in 2013 (270 units). While historically, half of the
deliveries in the region were usually in the Light
aircraft category, 2013 saw a shift in this trend.
During the year, only 38% of deliveries into
North America were in the Light category, while
deliveries in the Medium and, in particular, the
Large aircraft categories, increased. In 2013,
29% of deliveries into North America were in
the Large category compared to 20% in 2012.
Within the region, deliveries in the United
States were the vast majority, amounting to 251
business aircraft in 2013. At the end of the year,
North America as a whole had approximately
64% of the worldwide installed base.
North America is forecasted to receive the
greatest number of new business jet deliveries
at 8,760 units between 2014 and 2033,
representing a fleet compound annual growth
rate (CAGR) of 2% over the forecast period.
3
For the purposes of this forecast, North America includes
the United States and Canada.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
31
REGIONAL FORECAST
|
EUROPE
EUROPE
FLEET GROWTH
FORECAST
2,025
1,550
540
Medium
1,440
Large
5
40
415
115
70
2,875
645
930
595
AGR
6% C
1,580
1,970
1,300
775
Fleet 2013
4,685
125
795
235
430
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
The European fleet is adjusted to exclude CIS owned
aircraft that are registered in Europe.
215
1,135
720
Units, 2013 – 2033
Light
20
70
510
Deliveries
Retirements Fleet 2023
Deliveries
Retirements Fleet 2033
Europe 4 remains the second largest market
Geographically, Europe is linked to the
2012. The fleets of these two countries, along
for business jets, an industry contributing
economies of Africa, CIS and the Middle East
with those of Austria, France and Spain make
nearly €20B (~$26B) annually to the European
and business aviation plays a critical role in the
up 47% of the entire European business jet fleet.
economy, according to the European Business
air transport value chain by providing users with
The European business jet fleet accounts for
Aviation Association (EBAA). Led by the
an efficient and flexible means of transportation.
approximately 10% of the worldwide business jet
currently improving external environment and
Business aviation connects more than three
installed base.
reduced fiscal austerity, the moderate economic
times the city pairs within Europe, and those
recovery across Europe should continue in
between European and other geographical
the short- and medium-term and stabilize in
regions, compared to scheduled airline service.
the long-term. Economic growth in Northern
Europe remains stronger than that of Southern
Europe. The economies of Germany and the
United Kingdom, two of Europe’s largest, are
expected to experience greater GDP growth in
2014 compared to 2013. France, Italy and Spain,
however, will see below average growth in 2014.
Europe is expected to remain one of the main
markets for new business jet deliveries between
2014 and 2033, at 3,575 unit deliveries, seeing
Demand for business jets in Europe remains
significant fleet growth equivalent to a CAGR of
below the pre-recession average as the after
6% over the forecast period.
effects of the sovereign debt crisis continue
4
to weigh heavily on consumer and business
confidence across the region, although buyer
interest has been on the mend since Q3 2012,
according to the UBS Business Jet Survey.
For the purposes of this forecast, Europe includes the EU27
plus Albania, Andorra, Bosnia, Croatia, Iceland, Kosovo,
Liechtenstein, Macedonia, Montenegro, Norway, Serbia,
and Switzerland.
5
European deliveries are adjusted to exclude deliveries to
CIS-based owners that register their aircraft in Europe.
Europe received 14% of the world’s business jet
deliveries in 2013, at approximately 77 units 5,
up when compared to 65 deliveries in 2012 but
ECONOMIC GROWTH: EUROPE
consistent with deliveries received in 2010 and
2013
2014
2014-2033
Average
GDP (%)
0.2%
1.5%
1.8%
GDP ($*)
17,691.4
17,960.1
21,431.5
25%
25%
21%
% of World GDP
2011. Within the region, the two largest countries
in terms of installed base, Germany and the
United Kingdom, received almost 50% of the
region’s deliveries, a significant increase from
*Billions of 2010 USD. Source: IHS Global Insight April 2014
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
32
REGIONAL FORECAST
|
LATIN AMERICA
LATIN AMERICA
FLEET GROWTH
FORECAST
1,190
225
310
Units, 2013 – 2033
110
1,790
90
435
160
2,480
Medium
3,305
655
780
335
605
3% C
415
Light
365
545
250
940
225
280
15
135
215
AGR
1,980
Large
1,540
1,265
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
Latin America6 was an early adopter of
business aviation, particularly in its two largest
economies, Brazil and Mexico. In 2013, economic
activity across Latin America was less than that
observed during previous years. Countries in
the region with stronger fundamentals were
generally affected less by market pressures in
mid-2013 and early 2014. Regional growth is
projected to be restrained in 2014; however,
there is considerable variation in the outlook for
different parts of the region. Brazil’s economy
is expected to remain subdued in 2014 due to
domestic supply constraints and weaker private
investment growth. On the other hand, after
unexpected weaker growth in 2013, Mexico is
expected to rebound significantly due to a shift
towards a more accommodative fiscal policy and
demand picking up in the United States.
ECONOMIC GROWTH: LATIN AMERICA
2013
2014
2014-2033
Average
GDP (%)
2.4%
2.3%
3.7%
GDP ($*)
5,564.8
5,691.3
8,299.6
8%
8%
8%
% of World GDP
Fleet 2013
Since the business aviation market in Latin
America is relatively mature, business jet
fleet penetration in this region resembles that
of North America. At the end of 2013, Latin
America had the second oldest business jet
fleet in the world, with an average age of 18.5
years. This is reflected in the region’s fleet
growth forecast showing the second most
retirements in the world, at 615 aircraft, between
2014 and 2033. Due to the significant number
of retirements this region, which has the third
largest fleet in the world, replacements will
account for a significant number of aircraft
deliveries in Latin America over the forecast
period.
Deliveries
Retirements Fleet 2023
Deliveries Retirements Fleet 2033
fleet. Latin America as a whole had close to 12%
of the world’s business jet fleet in 2013.
Latin America is expected to continue being a
key market for deliveries of new business jets
between 2014 and 2033. With 2,130 delivery
units expected, the fleet CAGR in this region is
3% over the forecast period.
6
Latin America includes all countries between the Rio Grande
and Cape Horn.
Similar to 2012, Latin America received
approximately 12% of the world’s business jet
deliveries in 2013, at 65 units. Brazil received
almost 45% of these deliveries, a significant
increase from 2012, while Latin America’s fleet
leader, Mexico, received 12% of the region’s
deliveries. In terms of fleet size, Brazil had 27%
of Latin America’s overall business jet fleet as
of the end of 2013. During this time, Mexico had
over one third of the overall region’s business jet
*Billions of 2010 USD. Source: IHS Global Insight April 2014
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
33
REGIONAL FORECAST
|
GREATER CHINA
GREATER CHINA
FLEET GROWTH
FORECAST
1,275
745
950
285
Medium
Business jet aviation is still a nascent industry
in the exceedingly fast-growing economy of
Greater China 7. In 2013, China unveiled longterm social and economic reforms which aim to transform China from an investment-led to a consumption-driven economy.
The Chinese business jet market has faced
several barriers in the past. Underdeveloped
airport infrastructure, high aircraft import
taxes and high user fees have left China
with a comparatively small business jet fleet.
However, conditions in the business aviation
sector are improving year over year. In 2013,
China loosened restrictions on business jets
by simplifying flight approval procedures for
business aircraft. Since December 2013, aircraft
based in China and operated by Chinese pilots
ECONOMIC GROWTH: GREATER CHINA
2013
2014
2014-2033
Average
GDP (%)
7.2%
7.2%
6.1%
GDP ($*)
8,269.8
8,863.4
17,232.1
12%
12%
17%
% of World GDP
5
1,275
405
430
Large
Source: Asian Sky Group, Bombardier Business
Aircraft Market Forecast. Excludes Very Light Jets
and Large Corporate Airliners.
2,525
15
540
Units, 2013 – 2033
Light
25
10
340
120
170
40
330
no longer need flight approval from the Chinese
military; only the approval of the Civil Aviation
Authority of China (CAAC) is now required to fly
throughout the country. In addition, the Chinese
government is taking measures to address the
lack of airport infrastructure. According to the
Chinese government’s 12th five-year plan of 20112015, the total number of airports is expected
to increase from 175 in 2010 to 230 in 2015,
including 56 new airports to be built and 16 to
be expanded or renovated. As a result, demand
for business jets from Chinese buyers should
grow considerably in the coming years.
11% C
AGR
1,130
600
235
Fleet 2013
395
650
270
Deliveries
Retirements Fleet 2023
Deliveries Retirements Fleet 2033
installed base, just slightly larger than the fleet
of India. However, in terms of order intake, China
accounted for 14% of worldwide industry orders
in 2013, excluding block orders, just after North
America and Europe.
By the end of the forecast period, China is
expected to be the third largest market for
business jets. With 2,225 expected business
jet deliveries between 2014 and 2033, this
represents a significant fleet CAGR of 11% over the next 20 years.
7
Greater China includes China, Hong Kong, Macau and Taiwan.
In 2013, the Chinese market accounted for 6% of
worldwide industry deliveries compared to 2% in
2009. With some 330 aircraft, China’s business
aircraft fleet is only 2% of the worldwide
By the end of the forecast period,
China is expected to be the third
largest market for business jets
*Billions of 2010 USD. Source: IHS Global Insight April 2014
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
34
REGIONAL FORECAST
|
MIDDLE EAST
MIDDLE EAST
FLEET GROWTH
FORECAST
715
370
380
Large
395
30
10
110
160
Medium
110
20
745
175
The Middle East 8 remains a promising market
for business aviation. Significant economic
growth is expected in this region as global
economic conditions improve in the coming
years. In Saudi Arabia, where economic growth
is among the highest within the G20 countries,
government investments continued to be the
main driver of private sector growth in 2013.
The positive growth outlook is also supported
by improved domestic consumption and credit
to the private sector. The United Arab Emirates’
non-oil economy is expected to drive the
majority of growth in the country in 2014 as high
oil production levels slow down. In addition, as
Dubai will host the World Expo in 2020, further
economic improvement to key non-oil sectors is
expected. Turkey’s economy, one of the largest
drivers of wealth creation in the region, lost
ECONOMIC GROWTH: MIDDLE EAST
2013
2014
2014-2033
Average
GDP (%)
2.9%
3.3%
3.8%
GDP ($*)
3,177.7
3,282.4
4,880.9
5%
5%
5%
% of World GDP
*Billions of 2010 USD. Source: IHS Global Insight April 2014
economic growth momentum in 2013 as capital
market tensions pushed interest rates up and
credit and private demand decelerated.
Long distances between major cities in the
Middle East and difficult surface transportation
help to support the business aviation industry,
as do the scheduled airline services in the region
that have tended to focus more on long-haul
flights than on shorter routes. However, several
obstacles are limiting the potential expansion of
business aviation operations in the Middle East.
According to the Middle East Business Aviation
Association (MEBAA), a key barrier to overcome
in the region is access, as there are a limited
number of airports designated for business
aviation. Also, a lack of experienced pilots and
other trained professionals, as well as a shortage
of training centres, MROs (Maintenance, Repair
and Overhaul facilities) and FBOs, hinder the
growth of business aviation in the Middle East.
Removal of these barriers will help further
accelerate the forecasted significant growth of
business jet demand in the Middle East.
Saudi Arabia, the United Arab Emirates and
Turkey received the largest number of business
jet deliveries in the Middle East in 2013. Of
7% C
AGR
625
410
225
135
Fleet 2013
220
345
65
195
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
1,405
35
300
Units, 2013 – 2033
Light
55
20
195
Deliveries
Retirements Fleet 2023
Deliveries Retirements Fleet 2033
these, Saudi Arabia received the most, at 38%
of deliveries during the year. Business jets in the
Large category, closely followed by those in the
Medium category, dominated deliveries in the
Middle East; the trend mainly being driven by
the region’s geographical location.
Predictably, these three countries also had the
largest business aircraft fleets in the Middle
East as of the end of 2013, representing more
than 70% of the overall industry fleet within the
region. Turkey was home to 27% of the region’s
fleet in 2013, with Saudi Arabia following close
behind at 26%. Again, due to the region’s
geographical location, jets in the Medium size
category comprised half of the region’s fleet.
The Middle East has more than doubled the
size of its business jet fleet in the past 10 years,
demonstrating the significant growth potential
of business aviation in the region.
The Middle East region is expected to receive
1,095 business jet deliveries between 2014 and
2033. This is an equivalent fleet CAGR of 7%
over the forecast period.
8
For the purposes of this forecast, the Middle East region also
includes Turkey.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
35
REGIONAL FORECAST
|
ASIA PACIFIC
ASIA PACIFIC
FLEET GROWTH
FORECAST
540
170
155
15
130
105
410
Medium
Large
110
Business aviation in Asia Pacific9 includes a
mix of the well-established business aviation
sector of advanced economies such as Australia
and Japan, as well as that of the emerging
economies such as Indonesia, the Philippines
and Vietnam.
The health of the Japanese economy is
important to the overall region. In order
to counter the relative stagnation of the
country’s economy, the Japanese government
is focused on fiscal and monetary expansion
as well as strengthening structural reforms.
In December 2013, the Japanese government
unveiled details of a ¥5.5T (~$54B) spending
package to mitigate the expected strain on the
economy from a sales tax increase of 5% to
8%, starting in April 2014. This policy is focused
on encouraging corporate investment and
ECONOMIC GROWTH: ASIA PACIFIC
2013
2014
2014-2033
Average
GDP (%)
2.7%
2.6%
2.5%
GDP ($*)
11,019.5
11,304.0
14,534.5
16%
16%
15%
% of World GDP
*Billions of 2010 USD. Source: IHS Global Insight April 2014
Fleet 2013
720
190
1,185
45
360
215
AG
6% C
R
325
500
330
Deliveries
employment, as well as providing assistance to
low-income households. The package includes
¥1.4T (~$13.7B) to promote capital investment
by enterprises in preparation for the Tokyo
2020 Summer Olympic Games. These economic
actions are expected to invigorate the Japanese
economy over the short- to medium-term.
In other emerging countries in Asia Pacific,
growth is expected to dip slightly in 2014
because of tighter domestic and external
financial conditions. These economies will start
to recover in the medium-term assisted by
stronger external demand and weaker currencies.
Indonesia and the Philippines are projected to
become the fastest-growing economies within
the region in the short- and medium-term. The strong economic outlook for these countries
will be supported by robust growth in domestic
demand, strong infrastructure spending and
implementation of structural economic reforms.
The economy of Thailand will be impacted by
internal political uncertainties that affected its
growth in the first half of 2014.
Despite hurdles such as high aircraft handling
costs at airports and limited airport access
in countries such as Japan, Asia Pacific has
20
200
60
110
240
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
35
345
Units, 2013 – 2033
Light
75
30
Retirements Fleet 2023
Deliveries Retirements Fleet 2033
experienced a relatively high delivery and
fleet growth rate. This progress is expected
to continue as economic growth in the region
improves in the short- and medium-term and
stabilizes over the next 20 years.
As of the end of 2013, the fleet in Asia Pacific
accounted for 3% of the worldwide business jet
installed base. Over the last 10 years, Asia Pacific
experienced a two-fold increase of its fleet size
with an estimated 410 aircraft in 2013 compared
to 204 in 2004. More than half of the overall
regional fleet is within Australia and Japan,
with 33% and 18% of the overall installed based,
respectively. The growing business jet installed
base in Asia Pacific is expected to create
significant replacement demand for the mature
markets, such as Australia. Demand for business
jets in the medium-term will be strong in the
countries with rapidly growing economies, such
as Indonesia, Thailand and the Philippines.
Asia Pacific is forecasted to receive 885 aircraft
deliveries between 2014 and 2033, increasing the
fleet by a CAGR of 6% over the forecast period.
9
For the purposes of this forecast, Asia Pacific excludes
Greater China and India.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
36
REGIONAL FORECAST
|
AFRICA
AFRICA
FLEET GROWTH
FORECAST
400
20
75
110
30
Medium
Large
55
285
375
100
35
605
190
175
350
105
240
925
50
140
Units, 2013 – 2033
Light
80
30
85
5
GR
% CA
150
385
260
195
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
Supported by high commodity prices and
strong demand for resource exports, the
African economy has seen strong growth over
recent years. Foreign direct investment (FDI)
continues to flow into the region bolstering
growth, not only in the natural resource sectors
but also in non-extractive industries such as
communications, software, manufacturing and
textiles. Over the last five years, Africa has
received over $325B in FDI according to Ernst
& Young’s 2014 Africa Attractiveness Survey.
Africa is currently aiming to move away from its resource-exporting past and position itself as a manufacturing hub.
Sub-Saharan Africa’s commodity export
revenues are expected to continue driving
the region’s growth in the short-term while
ECONOMIC GROWTH: AFRICA
2013
2014
2014-2033
Average
GDP (%)
3.4%
4.1%
4.6%
GDP ($*)
1,910.0
1,988.2
3,235.1
3%
3%
3%
% of World GDP
Fleet 2013
Deliveries
expanding domestic markets, income gains,
and regional integration will support 5% to 6%
economic growth over the longer-term. The
North African economy is forecasted to grow
marginally in 2014 with increasing economic
growth expected in the mid-term due to reforms
aimed at improving long-term competitiveness
and diversification of the economy.
Business aviation in Africa continues to face
several barriers including high airspace and
airport fees, registration and operational
tariffs. In addition, legal restrictions and
underdeveloped infrastructure including a
shortage of airports, airways and air traffic
control facilities create additional complexity.
Challenges for business aviation in Africa also
include a lack of personnel such as pilots,
aircraft technicians and ground crew. The African
Business Aviation Association (AfBAA), now in
its second year of operation, is addressing the
barriers identified through a multi-year effort
that will enable the African business aviation
industry to continue to thrive.
Retirements Fleet 2023
Deliveries Retirements Fleet 2033
Despite the hurdles impeding growth of the
aviation sector in the region, Africa’s business
jet fleet has more than doubled in the last 10
years, reaching 375 aircraft in 2013. Africa’s
two largest markets for business aircraft, South
Africa and Nigeria, accounted for the bulk of
deliveries during 2013. About 80% of Africa’s
business jets are in Sub-Saharan Africa, where
these two countries account for over 50% of the
entire fleet of business aircraft in all of Africa.
The remaining 20% of the African fleet are in
North Africa, located mainly in Egypt, Libya and Morocco.
Africa will remain an important region for
business aircraft deliveries. Between 2014 and
2033, 685 business jet deliveries are expected
in this region, with a fleet CAGR of 5% over the
forecast period.
*Billions of 2010 USD. Source: IHS Global Insight April 2014
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
37
REGIONAL FORECAST
|
CIS
CIS FLEET
GROWTH
FORECAST
910
275
520
150
Large
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
The CIS fleet is adjusted to include aircraft registered
outside of the region.
With the first business jet deliveries in the region
occurring as recently as the early 1990s, analysts
often point to the rapid expansion of business
aviation in the CIS as an example of how quickly
an untapped market can be penetrated. With
a fleet that nearly quadrupled in size over the
last 10 years, and with 7% of overall industry
deliveries during 2013, the CIS now accounts for a
significant portion of global business jet demand.
The Russian economy, by far the largest in
the region, was one of the hardest impacted
of the G8 economies by the global economic
downturn in 2009 and continues to struggle
to regain its footing. Over reliance on natural
resources, with the gas and oil sectors
responsible for more than 50% of federal budget
receipts, has left the Russian economy heavily
exposed as energy markets become leaner and
ECONOMIC GROWTH: CIS
2013
2014
2014-2033
Average
GDP (%)
2.0%
1.3%
3.1%
GDP ($*)
2,226.3
2,256.2
3,128.4
3%
3%
3%
% of World GDP
*Billions of 2010 USD. Source: IHS Global Insight April 2014
1,875
45
540
555
10
30
20
250
Medium
80
385
Units, 2013 – 2033
Light
10
25
1,045
275
250
AGR
6% C
960
120
125
600
360
70
Fleet 2013
cheaper sources of energy begin to emerge.
Russia had hoped for a modest economic
boost from hosting the 2014 Winter Olympic
Games, although this expectation was quickly
compromised by the geopolitical challenges
in Ukraine, and the subsequent economic
sanctions taken by the EU, the United States and
other countries. Diversification of its economy
away from commodity dependence remains
a key requirement for sustainable growth in
the medium- and long-term. With the IMF
continually lowering its outlook for the Russian
economy in a series of downward revisions
during the first half of 2014, it is believed that
the looming threat of a recession may provide
the impetus for structural reform.
Business leaders rely heavily on business
aviation in the CIS, where great distances over
inhospitable terrain make ground transport
challenging and the commercial aviation network
provides inadequate service outside of major
centres. While high airport fees and bureaucratic
certification and customs processes continue
to hinder growth in the region, business aircraft
infrastructure, which historically has been
concentrated mainly in the Moscow region
(Vnukovo, Domodedovo and Sheremetyevo
170
Deliveries
Retirements Fleet 2023
375
Deliveries Retirements Fleet 2033
airports), has started improving and decentralizing. For instance, in 2013 Bombardier
expanded its Russian customer service network
outside of the Moscow region with the appointment
of Tulpar Technic of Kazan in the Republic of
Tatarstan as a Line Maintenance Facility (LMF)
to support the growing number of aircraft in the
Challenger family operating in the region.
Despite the uncertainty around the near-term
prospects for the Russian economy, the mediumand long-term outlook for the region remains
positive. IHS Global Insight forecasts a return
to 3% GDP growth by 2016 for the CIS region.
Further, as barriers to growth in the region
are slowly removed, there is also significant
potential for growth of the business jet industry
based on higher adoption rates. At the close of
2013, despite the explosive growth in business
jet deliveries over the last decade, the CIS region
still had less than half the fleet size of the North
American market when scaled and compared on
an aircraft per GDP basis.
The CIS is forecasted to receive 1,430 business
jet deliveries between 2014 and 2033,
representing a fleet CAGR of 6% over the
forecast period.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
38
REGIONAL FORECAST
|
INDIA
INDIA
FLEET GROWTH
FORECAST
860
210
13% C
355
Medium
100
Large
India has seen tremendous economic growth
over the past decade. From 2004 to 2013, the
country’s economy almost doubled in size,
making it one of the fastest growing economies
within the G20. In India’s much-anticipated 2014
general election, the Bharatiya Janata Party
gained a majority government. Many policy
experts believe the change will bring a stable
government capable of effecting reforms aimed
at opening markets, upgrading infrastructure,
streamlining bureaucracy and improving
competitiveness. Economists predict a gradual
recovery in the Indian economy throughout the
medium-term, with strong long-term growth
potential if reforms are implemented promptly.
Weaker than normal economic growth in recent
years did not deter business aircraft dealings
ECONOMIC GROWTH: INDIA
2013
2014
2014-2033
Average
GDP (%)
4.6%
5.3%
6.5%
GDP ($*)
1,989.4
2,094.4
4,207.6
3%
3%
4%
% of World GDP
1,320
10
325
125
AGR
5
455
475
180
130
Fleet 2013
in India, as evidenced by the country’s 9.4%
average growth per annum in the business jet
fleet during 2004-2013. However, the relatively
rapid pace of business aircraft fleet growth
has outpaced the growth in infrastructure
and support spending required, which has
resulted in bottlenecks. A clear example is the
lack of adequate business aviation facilities in
the Mumbai region. India’s business aviation
growth potential in the near-term continues
to be weighed down by high fees, taxes and
bureaucracy. India’s government has made some
progress in improving landing and over-flight
permit wait times but more progress is needed
in order to allow business aviation in India to
flourish.
370
115
125
15
55
55
Source: Ascend, Bombardier Business Aircraft Market Forecast.
Excludes Very Light Jets and Large Corporate Airliners.
15
280
Units, 2013 – 2033
Light
5
540
180
Deliveries
Retirements Fleet 2023
Deliveries Retirements Fleet 2033
rest of Asia. Within India, access to second and
third tier cities through commercial aviation is
inadequate, making companies in industries such
as mining and oil and gas highly dependent on
business aviation to transport employees and
executives to locations that are hard to access.
India is expected to receive 1,215 business
jet deliveries between 2014 and 2033, and is
forecasted to be the fastest growing region in
terms of business aircraft fleet growth over the
next 20 years, at fleet growth equivalent to a
CAGR of 13%.
Although India’s 2013 deliveries were weak,
close to 17% less than the five-year average
of deliveries in the region between 2009 and
2013, many factors support a strong outlook
for business aviation in India over the longterm. Continued globalization and a burgeoning
economy bode well for continued aircraft
fleet penetration. Geographically, India is wellpositioned to link Western economies with the
*Billions of 2010 USD. Source: IHS Global Insight April 2014
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
39
CONCLUSION
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
40
CONCLUSION
In 2013, the business aviation market continued
to show signs of a gradual recovery from the
economic downturn of 2009-2010. Economic
indicators that are highly correlated to business
jet demand were strong during the year.
In particular, the world billionaire population and the MSCI World Index values reached record
numbers. In 2014, world GDP is expected to
grow by about 3%, with higher growth expected
in 2015 onward, promising increased business jet orders.
Strong growth of the business
jet market is expected over the
2014-2033 period
remain challenging in 2014, industry deliveries
growing and are beginning to more readily
are expected to increase slightly this year driven
accept business jets as productivity-boosting
by the introduction of new aircraft programs.
tools. Other market drivers which will contribute
Conditions in the Light market continue to
to the long-term growth in business aircraft
Most business aviation market indicators were
remain challenging and a recovery in this
demand include wealth creation, globalization of
stable throughout 2013. However, the level of
segment of the market will lag the recovery
trade, and greater market accessibility through
pre-owned aircraft inventory, the strongest
of the Medium and Large categories.
fractional and branded charter utilization.
Strong growth of the business jet market is
As presented throughout the 2014 edition of the
expected over the 2014-2033 period. Alongside
Business Aircraft Market Forecast, the long-term
the considerable replacement demand coming
prospects for business aviation remain strong.
leading indicator for the new aircraft market,
experienced significant improvement in Q4 2013
and has continued to improve in the first part of 2014.
from mature business aircraft markets, growth
With the largest portfolio of products, spanning
Business jet orders and deliveries saw
will be driven by business jet demand coming
the Light to Large categories, Bombardier is
incremental improvement in 2013. Although
from emerging markets such as China, Russia
well placed to take advantage of the industry’s
the situation for industry orders is expected to
and India, as these economies are rapidly
projected growth.
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
41
FORWARD LOOKING STATEMENTS
This presentation includes forward-looking
Certain factors that could cause actual results
Uncertainties” in the Management’s Discussion and
statements. Forward-looking statements generally
to differ materially from those anticipated in the
Analysis of BOMBARDIER’s Annual Report. Readers
can be identified by the use of forward-looking
forward-looking statements include risks associated
are cautioned that the foregoing list of factors that
terminology such as “may”, “will”, “expect”, “intend”,
with general economic conditions, risks associated
may affect future growth, results and performance
“anticipate”, “plan”, “foresee”, “believe” or “continue”
with BOMBARDIER’s business environment (such
is not exhaustive and undue reliance should not be
or the negatives of these terms or variations thereon
as the financial condition of the airline industry,
placed thereon. The forward-looking statements set
or similar terminology. By their nature, forward-
government policies and priorities, and competition
forth herein reflect BOMBARDIER’s expectations as
looking statements require BOMBARDIER to make
from other businesses), operational risks (such as
at the date hereof and are subject to change after
assumptions and are subject to important known
regulatory risks and dependence on key personnel,
such date. Unless otherwise required by applicable
and unknown risks and uncertainties, which may
risks associated with doing business with partners,
securities laws, BOMBARDIER expressly disclaims any
cause BOMBARDIER’s actual results in future
risks involved with developing new products and
intention, and assumes no obligation to update or
periods to differ materially from forecasted results.
services, warranty and casualty claim losses, legal
revise any forward-looking statements, whether as a
While BOMBARDIER considers its assumptions to
risks from legal proceedings, risks relating to the
result of new information, future events or otherwise.
be reasonable and appropriate based on current
Corporation’s dependence on certain key customers
information available, there is a risk that they may
and key suppliers, risks resulting from fixed-term
not be accurate. For additional information with
commitments, human resource risk and environmental
respect to the assumptions underlying the forward-
risk), financing risks (such as risks resulting from
looking statements herein, please refer to the
reliance on government support, risks relating to
sections on BOMBARDIER’s aerospace segment
financing support provided on behalf of certain
and BOMBARDIER’s transportation segment in
customers, risks relating to liquidity and access to
the Management’s Discussion and Analysis of
capital markets, risks relating to the terms of certain
BOMBARDIER’s Annual Report.
restrictive debt covenants and market risks, including
currency, interest rate and commodity pricing risk).
Global 5000, Global 6000, Global 7000, Global
8000, Learjet 60 XR, Learjet 70, Learjet 75, Learjet
85, Challenger 350, Challenger 600, Challenger 605,
Challenger 850, Bombardier Vision and The Evolution
of Mobility are either Unregistered or Registered
Trade-Mark(s) of Bombardier Inc. or its subsidiaries.
All monetary amounts are expressed in 2013 U.S.
dollars, unless otherwise stated.
For more details, see the heading entitled “Risks and
B O MB A RDIER B USIN ESS A IRCRA FT | WWW.B USIN ESSAI R CR AFT.BOMBAR DI ER .COM | MARKET FORECAST 2014-2033
42
RESOURCES
Resources used in the Bombardier Business Aircraft Market Forecast:
African Business Aviation Association (AfBAA)
Aircraft Blue Book Price Digest
Ascend
Asian Sky Group
B&CA – Business & Commercial Aviation Magazine
CAAC – General Administration of Civil Aviation of China
The Conference Board Global Economic Outlook 2014
The Economist Intelligence Unit (EIU)
Ernst & Young’s 2014 Africa Attractiveness Survey
European Business Aviation Association (EBAA)
Forbes
GAMA – General Aviation Manufacturers Association
IBAC – International Business Aviation Council
IHS Global Insight
International Monetary Fund (IMF)
JETNET
MEBAA – Middle East Business Aviation Association
Moody’s Analytics
Morgan Stanley Capital International (MSCI) World Index
NEXA Advisors
UBS Investment Research
U.S. Bureau of Economic Analysis
U.S. Bureau of Labor Statistics (CPI-U)
Wealth-X
World Bank