Business Travel News October 27, 2008 - (Page 10)

BTN RESEARCH Corporate Jet Supply Rising As Demand Appears To Decline BY JAY BOEHMER The business aviation market continued to set records in aircraft deliveries this year and is on target to surpass them again in 2009. However, an industry forecast released this month points to some weakening in demand among corporate flight department deployments of private aircraft. Honeywell this month released its annual forecast at the National Business Aviation Association conference in Orlando, noting that corporate flight department budgets for this year “did not account for substantially higher fuel costs.” To cope with such economic realities, some flight departments are reporting “reduced flying activity or flights at slower cruise speeds to economize on fuel to remain within funded budget levels,” Honeywell said, based on its survey of 1,866 corporate flight departments worldwide released this month. Citing Federal Aviation Administration and European air traffic control figures, Honeywell expects “reduced business aircraft flight activity in the U.S. and Europe for the rest of this year and potentially impacting 2009 flight operations.” lization plans reported in the rest of the world are generally more favorable.” According to a BTN survey of 200 corporate travel buyers, only 38 percent said their company makes use of business aviation aircraft. Of the respondents who said their companies do, 43 percent own their aircraft and ternative transportation options for their travelers,” said Dominion director of travel and corporate services Donna Kelliher. “Where they once had nonstop service, they now face a connection, sometimes in combination with a monopoly market price, and it becomes a viable alternative.” CORPORATE JETS STILL A MINORITY COMPANIES THAT MAKE USE OF BUSINESS AVIATION AIRCRAFT No 62% Yes 38% Source: A BTN survey of 200 corporate travel buyers dustry slowdown in 2003.” The forecast notes deliveries of business jets totaled 1,200 this year, up from 1,020 in 2007, “despite an uncertain economy.” Honeywell said 1,400 new business aircraft are slated for delivery next year. “New aircraft sales have remained at record levels” said Rob Wilson, Honeywell Aerospace president of business and general aviation. “2008 will add to the string of record years the industry has experienced and order intake across most business jet categories remains strong, consistent with last year’s forecast. Aircraft backlogs currently equate to nearly three years’ worth of deliveries, so 2008 and 2009 still shape up to be strong.” The Federal Aviation Administration in its aerospace forecast released at the be- ty concerns and high incidences of commercial flight delays “have made fractional, corporate, and on-demand charter flights practical alternatives to travel on commercial flights.” FAA earlier this year projected the number of active general aviation aircraft in use to grow at an annual rate of 1.3 percent through 2025, rising in number from an estimated 225,007 in 2007 to 286,500 by 2025— 61,493 new aircraft landing in the U.S. market. FAA expects jets preferred by corporate aviation departments, “the more expensive and sophisticated turbine-powered fleet,” to grow faster than smaller aircraft, increasing by 5.6 percent a year. FAA also said, “The number of general aviation hours flown is projected to increase by 3 percent Access the 2008 Online Black Book see btnonline.com/blackbook As corporate flight departments set budgets for next year, Honeywell said many are accounting for high fuel costs with the hope of increasing aircraft usage, “but we also note that for the first time in a number of years, U.S. survey respondents indicated they intend to use their aircraft less in the near term,” Honeywell said. “Uti- 17 percent fractionally own a share in a corporate jet. Honeywell said fractional fleet operators account for about 10 percent to 12 percent of the backlog for business jets, “but have seen inroads made in their overall share of backlog and new deliveries by the large number of orders placed by traditional operators and charter providers over the last several years.” About onequarter of BTN survey respondents said their companies deploy charter aircraft. Meanwhile, several charter and fractional ownership companies said the broadening of commercial airline capacity cuts this year has made business aviation alternatives more viable. “Capacity cuts are creating opportunities of late where businesses have no other choice than to seek alwww.BTNonline.com Kelliher added, “The industry has benefited from the deficiencies we have in some other areas. It boils down to productivity issues. In some cases, it’s a lot more economical for a company to charter or get a fractional to run that citypair.” Despite the lift commercial capacity cuts can give private aviation, Honeywell this month said “taxes, user fees, noise regulations and ease-of-use issues such as temporary flight restrictions in the United States” continue to pose concerns on flight usage among corporate flight departments. Still, Honeywell said companies continue to expand their fleets. The forecast reports shows this year has set a “record delivery pace” for business jets, representing the fifth consecutive year of expansion “since the last in- MOST BUSINESS JETS USERS HAVE OWNERSHIP STAKE ARRANGEMENTS THROUGH WHICH CORPORATIONS ACCESS BUSINESS AIRCRAFT Charter 24% Own 43% Other 8% Fractionally own 17% Lease 8% Source: A BTN survey of 75 corporate travel buyers whose companies use corporate jets ginning of the year noted that “the demand for business jets has grown over the past several years” and business use of general aviation aircraft is expected to “expand at a more rapid pace” than leisure use this year and ahead. FAA said securi- yearly over the forecast period. Much of the increase reflects increased flying by business and corporate aircraft as well as steady if relatively small annual percentage increases in utilization rates for piston aircraft.” ■ jboehmer@btnonline.com ■ 10 Monday, October 27, 2008 Business Travel News http://www.btnonline.com/blackbook http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News October 27, 2008

Business Travel News- October 27, 2008
Contents
Inside Track
Profiles In Travel Management
BTN Research
Forum
Lodging
Travel Management Tech
Destinations
Washington Wire

Business Travel News October 27, 2008