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Ascend by Cirium, Expert view

The Business Jet Market Flies High Again

October 21, 2021

With business jet flight activity and secondary market transactions having one of the best years on record, the increase in new deliveries for 2021 is expected to be modest.

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Syed Zaidi Aviation Analyst, Accredited Member (ASA)

By Syed Zaidi, Principal Aviation Analyst, ASA accredited member at Ascend by Cirium

With business jet flight activity and secondary market transactions having one of the best years on record, the increase in new deliveries for 2021 is expected to be modest. COVID-19 brought the industry to a standstill, but thankfully the impact was short-lived.

We’re now looking at rapidly reducing preowned inventory levels, improving market values and significant overall optimism in the industry.

Manufacturers are enjoying book-to-bills approaching 2, thus seizing back some pricing power, and the majority of their product lines are sold out through 2023 at least. A lot of the excitement this past week at NBAA BACE came from the introduction of Honda’s HondaJet 2600 concept and Gulfstream’s G400/G800 (strategically launched in a smaller ceremony in Savannah just before NBAA).

Honda debuted the HondaJet 2600 as the first U.S. transcontinental offering in the light jet segment, with a unique over-the-wing engine mount configuration greatly reducing vibrations and in-cabin noise compared to traditional light jets. When launched, the type will compete with Cessna’s CJ4 and Embraer’s Phenom 300, both of which boast installed fleets of over 600 aircraft. A lot of conversations also revolved around the Bombardier Challenger 3500 upgrade to the existing Challenger 350 and Cessna’s announcement of Gen2 versions of the Citation M2 and XLS, which are incremental upgrades aimed at retaining and increasing market share against rivals that already offer similar in-cabin technology improvements.

Gulfstream launched the G400 and G800 into an already overcrowded heavy (large, long-range) segment, which now supports more aircraft in development and in production than ever before. The G400, due in 2025, is touted as an ‘entry-level’ option to the heavy segment. There isn’t really a true competitor at this end of the market, with the closest in production type being the Falcon 900LX offering a slightly smaller cabin, but more range. At $34.5 million, the G400 may potentially take some demand from the super midsize segment just below it for operators looking to up-gauge, albeit at a much higher price point. However, it is more likely to cannibalize market share from larger existing participants in the heavy segment. While it does fill a gap in the market, the jury is still out on whether this gap is due a lack of product offerings or simply an absence of demand. We are inclined towards the latter, owing to the limited success of the Falcon 900LX and the Legacy 650E.

The G800 was developed under wraps in conjunction with its larger sibling, the G700 and is slated to enter service in 2023, offering the highest range of any purpose-built business jet with 8,000nm at M0.85.

While very few operators will need that range, the selling point could be the impressive high speed (M0.90) range of 7,000nm with a true three-zone cabin with crew rest. The G650ER is already a solid contender but may now be perceived as a ‘value’ option in the segment with the $71.5 millionG800 likely to eventually replace the G650/650ER in production.

While the G700 and G800 will have a few years head start against the Falcon 10X (due in 2025), Bombardier’s Global 7500 has already enjoyed two successful years of production as the market leader in cabin size and maximum range. Ascend by Cirium forecasts business jet deliveries in the heavy segment to grow by just 4-5% per annum on average over the next decade, so the new entrants may inevitably compete for more market share instead of adding any material growth to the sector.

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