Honeywell Global Business Aviation Forecast Sees Three To Four Percent Average Annual Industry Growth In Next Decade

Honeywell Global Business Aviation Forecast Sees Three To Four Percent Average
                    Annual Industry Growth In Next Decade

-- Nearly 10,000 deliveries of new business jets valued at $250 billion
expected through 2022

-- Value of forecast deliveries up 9 percent over 2011 levels

-- 30 percent of buyers planning to replace or purchase new aircraft in the
next five years

-- "BRIC" country purchase plans lead all world regions

-- Large cabin jets account for more than 40 percent of new purchase plans

-- Survey points to continued modest growth over the next two to three years

PR Newswire

ORLANDO, Fla., Oct. 28, 2012

ORLANDO, Fla., Oct. 28, 2012 /PRNewswire/ -- NBAA – In its 21st annual
Business Aviation Outlook, Honeywell (NYSE: HON) is forecasting nearly 10,000
new business jet deliveries worth about $250 billion from 2012 to 2022.


The 2012 Honeywell survey reflects an approximate 9 percent increase in
projected delivery value over the 2011 forecast. The expected gains come from
pricing increases and a change in expected business jet mix, which reflects a
continued trend toward larger business jet models.

Honeywell forecasts 2012 deliveries of approximately 680 to 720 new business
jets, a single-digit increase over levels reported last year.

"Next year's totals are anticipated to be of similar magnitude, reflecting the
protracted nature of the global economic recovery," said Rob Wilson,
president, Honeywell Business and General Aviation. "Over the medium term, a
return to historical growth conditions supported by globalization, wealth
creation in developing nations and new aircraft development should boost
orders and support accelerated growth beginning mid-decade. Despite the
economic challenges our industry has been dealing with for the past 40 months,
we believe some progress is being made."


In its latest survey, Honeywell found that about 30 percent of operators
interviewed have plans to purchase a new business jet over the next five years
either as a replacement or in addition to the respondent's fleet. This level
of interest has been largely stable for the past three survey cycles, and
compares favorably with results of 25 percent or less that were the norm until
2006, but below the peak of 40 percent in 2009. This year, about 20 percent of
those with plans to purchase a new business jet intend to make it by 2013,
with a similar proportion planning 2014 and 2015 purchases. The survey does
not allocate specific years beyond 2015. This is similar to last year's
results and leads to a relatively stable level of projected demand in the near

Higher purchase expectations continue to be placed upon larger aircraft,
implying they will command the bulk of the value billed from now until 2022.
This class of business jet is expected to account for nearly 70 percent of all
expenditures on new business jets. Volume growth between now and 2022 will
also be represented by this class of aircraft, reflecting more than one-third
of additional units and two-thirds of additional retail value.

"The trend toward larger cabin aircraft with ever-increasing range
expectations and advanced avionics continues to be reflected in this year's
survey," said Rob Wilson, president, Honeywell Business and General Aviation.
"As a full spectrum supplier to the industry, Honeywell has been successful in
building strong content levels on most of the more popular super midsize and
larger aircraft in production or scheduled to enter service over the next few

"The Honeywell operator survey has been an invaluable tool for the industry
over the past two decades," explained Carl Esposito, Honeywell Aerospace Vice
President of Marketing and Product Management. "The annual outlook has helped
guide our own product decision process that has led to focused investments
such as designing and developing optimized propulsion offerings, flight
efficiency upgrades, innovative safety products, and enhanced services."


Regional purchasing results are nuanced according to each market's maturity,
economic environment and other characteristics. Emerging markets generally
show higher but historically more volatile levels of demand, as well as a more
pronounced preference for larger aircraft. As developed markets' performance
strains under both economic sluggishness and business lifecycle transitions,
emerging markets have been shaping the industry's growth, backlog and
portfolio composition or mix.

The overall level of forecast aircraft demand coming from outside North
America continues to increase as projected. This year, roughly 53 percent of
projected demand comes from North American operators, down two points from the
2011 survey.

Honeywell first spotlighted growth in the BRIC countries (Brazil, Russia,
India and China) last year. In 2011, these results led the survey with 50
percent of respondents reporting acquisition plans. This has since lowered to
46 percent  but with a firming profile. While last year less than one-third of
BRIC purchases were planned to happen within two years, this year more than 40
percent of those surveyed say they intend to begin purchasing activity in the
next two-year timeframe. Some signs of uncertainty regarding business
conditions do show up in this group's timing profile, with a marked increase
of purchases not allocated to a specific year or placed by default in 2017.

Together, the emerging market results from BRIC countries reflect a slight
tempering of enthusiasm compared to a year ago but are still quite strong when
compared with other regions, or with results accrued during the more than 20
years Honeywell has been conducting this survey.

The Asia Pacific region, where many of the industry's major players have high
expectations for long-term future growth, reports 34 percent of its operators
as interested in new purchases. This is lower than the 45 percent reported
last year but remains above the world average and results in an aggregate
share of world five-year projected demand of about 7 percent, off two points
from 2011 levels.

Fleets in this region have been growing at double-digit rates throughout the
past five years. This year more than a third of respondents planning to buy
will do so within the first year, which improves chances of actual order
placement and continued above-average near-term growth. When comparing
purchase timing in Asia Pacific between the past two surveys, it is evident
that this front-loaded profile was already in the making, with the timing of
the bulk of acquisitions having simply shifted a year. The overall decline in
purchase plans can therefore be partially attributed to a pause in backfill,
probably influenced by a moderation of past exuberance and an economic
tempering affecting the region's major economies.

"It is critical to understand that demand from this part of the world remains
well above the world average, and we do not believe the 2012 results represent
in any way a change in the region's fundamental underlying growth drivers or
commitment to business aviation," Wilson noted.

The share of projected five-year global demand attributed to the Middle East
and Africa remained near the center of its historical 4 to 7 percent range
again this year.

In the Middle East and Africa, 32 percent of respondents plan to buy a jet,
down from 38 percent last year. Despite the fall off, the portion of
respondents planning to expand their fleets in lieu of simply replacing an
aging plane almost doubled. Operators in the region shared direct candid
responses to our survey indicating their purchases may happen further into the
next five-year timeframe, potentially influenced by recent political

Latin America's survey results indicate 39 percent of operators have new jet
purchasing plans, which is an improvement over last year's 32 percent.
Furthermore, planned acquisitions are more front-loaded than the world
average, with almost 70 percent of this region's projected purchases timed to
happen within the first three years of the survey period. As with the Asia
Pacific market, backfilling appears to have eased, albeit to a lesser extent.
As a result of the improved purchase plan levels, Latin America's share of
total projected demand increased nearly five points from a year ago to 18

North America, the industry's mainstay market, has had new jet purchase plan
levels remain stable, totaling about one-fourth of all operators, for the past
five years. However modest interest levels might be when compared
withemerging markets, North America represents more than half of projected
global demand for the next five years based on the region's historically
dominant installed business jet base, affirming the region's place in the
industry's future.

Timing of North American acquisitions has been deferred compared with previous
results, suggesting that despite overall similar interest levels demonstrated
by potential purchasers, short-term conversion plans could be postponed.

Europe's purchase expectations were up slightly this year, at 33 percent and
are roughly in line with levels in the previous two surveys. The European
share of estimated global five-year demand rose by one point to 18 percent in
the 2012 survey. Much of the apparent resilience shown by local operators in
the face oferoding economic conditions is actually just the result of
geographical definition. Russia, with strong local purchasing ambitions, is
included in this region, as are the central and Eastern European states, which
are generally more economically robust.

Ancillary data from the Western European portion of the region conjure an
environment of slowing activity and demand, strongly influenced by complex
problems such as higher unemployment, high government debt and negligible

A comparison of the planned timing for purchases between the past two surveys
also shows a shift toward the latter portion of the five-year window.

"We continue to see underlying macro-trends that support potential demand for
business jets, making the industry's long-term prospects attractive," Wilson
said. "Other factors we believe will help accelerate global business aviation
growth are long overdue structural and regulatory reforms, which have the
potential to unlock significant spending power that would propel aviation
expansion," he said. "Product development, in the form of aircraft with higher
productive potential, or even air traffic control systems with higher capacity
and efficiency also create new markets and should continue to support expanded
use of business aircraft as a key tool in the global economy."


Shifting from jet purchases to flight activity, over the course of the past
year, thepace of recovery has effectively paused on several fronts. This
leaves much of the ground lost by operations during the 2009 recession still
to be recaptured. A full recovery remains several years away at current and
near-term projected rates of flight activity.

Among the indices followed by Honeywell, jets for sale and flight activity
merit special attention.

The number of fielded jets for sale today is diminishing slowly. Approximately
12 percent of today's fleet is in play, down from a high of more than 15
percent reached in 2009. Current levels are almost normal in light of the past
decade's history, and recent trends indicate the number should continue to
shrink slowly.

Younger inventory (jets 10 years old or less) usually make up less than 20
percent of what is for sale, but this year their ranks have hovered around a
quarter of all listings. This is down from record averages of about 30 percent
reached in 2009. More crucially, improvements recently stopped, adding another
cautionary note to overall market trends.

Prospects for improved levels of flying activity in the near future are
modest. Honeywell expects American business jet cycles to close this year with
a small contraction of about 1 percent, mostly attributed to sluggish
corporate operations, offset in part by relatively strong charter operations.
Next year should bring growth in the low single digits, presaging a slow,
multiyear path back to historical normalcy.

European activity in 2012 — which does not include Russia in this case — is
expected to decline approximately 3 percent. Another contraction of equal
magnitude is expected in 2013, driven not only by weak economic prospects in
Western Europe but by recent fleet declines. Renewed recovery in flight
volumes is not anticipated until 2014. On a brighter note, recent Russian
Business Aircraft Association figures indicate that flight activity levels in
this fleet are expanding at mid-single-digit levels.

Operator reported planned changes in business jet utilization in regions
outside Europe and North America mirror the lugubrious pace of improvement
expected in the mature regions with neutral to very modest plans for increased
levels of activity.


Flight activity for charter-like operations and fractional ownership appears
to be doing relatively well in the U.S., but not translating into many new
aircraft deliveries. Fractional operators have taken only five new jets this
year, while shedding 11 other aircraft. NetJet's large order of 425 aircraft
from Bombardier and Cessna have boosted backlog figures, and should yield
stronger delivery performance later if economic growth resumes a more
quotidian pace in developed economies.


In this year's survey two common themes emerged from operator responses around
the world. Demand from developing markets, while significantly higher than
mature markets, now is more reflective of cooling economic conditions. In
addition, economic conditions, elections and government responses to budget
growth, debt and aircraft-related legislation and regulations in all areas of
the world will naturally play into near-term purchase plans. Operators in
every region expressed concerns over the regulatory environment — particularly
user fees and tax laws. Still, when looking ahead, most operators surveyed
believe that local economic growth will be stable or improve in the near term.


Honeywell's forecast methodology is based on multiple sources including, but
not limited to, macroeconomic analyses, original equipment manufacturers'
development plans shared with the company, and expert deliberations from
aerospace industry experts. As its most distinctive feature, Honeywell also
taps into information gathered from interviews conducted during the
forecasting cycle with over 1,500 non-fractional business jet operators
worldwide. The survey sample is representative of the entire industry in terms
of geography, operation and fleet composition. This comprehensive approach
provides Honeywell with unique insights into operator sentiments, preferences
and concerns and provides considerable insight into product development needs
and opportunities.

Based in Phoenix, Arizona, Honeywell's aerospace business is a leading global
provider of integrated avionics, engines, systems and service solutions for
aircraft manufacturers, airlines, business and general aviation, military,
space and airport operations.

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manufacturing leader, serving customers worldwide with aerospace products and
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SOURCE Honeywell

Contact: Christopher Barker, Honeywell Aerospace, +1-602-365-2347,,; Paul Cabellon, Waggener
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