Business jet demand is beginning to stabilize and should rebound in 2011 after a turbulent time in which the industry's products became an emblem of American corporate excess.
Aviation industry officials and other experts told the annual Reuters Aerospace and Defense Summit this week that deliveries of corporate jets would likely fall in 2010, then bounce back in 2011 and beyond.
The business jet market had a hard landing in 2009. Demand tumbled after five years of annual delivery increases.
Shipments of business jets stood at 615 this year to the third quarter. That was down about 38 percent from 988 delivered in the nine months a year earlier, according to the General Aviation Manufacturers Association, which tracks non-commercial aviation.
Small business jets generally have seen a steeper fall in deliveries than larger-cabin models, but jet manufacturers across the spectrum are seeing increased flying hours, fewer cancellations and modest new orders.
"Utilization is up, if you look at the business jets," Pratt & Whitney President David Hess told the summit. "I think some of the used inventory is starting to stabilize and maybe shrink a little bit."
General Dynamics forecast last week that 2011 would be a "growth year" for its Gulfstream jet division. Textron said in late October that while it expected demand for corporate jets to be softer in 2010 than 2009, recovery could arrive in 2011.
"We think orders are going to pick up in the 2011-2012 timeframe," Marion Blakey, chief executive of the Aerospace Industries Association, told the summit. "That means there will be some lag of business jets behind the rest of the commercial picture."
Some said a recovery could take even longer to play out.
"The fall is over, we hope," said Teal Group aerospace analyst Richard Aboulafia. "That's not the same as a recovery and the great years that we enjoyed in 2007 and 2008."
Aboulafia said growth might not return to the business jet market until after 2012.
UNFAIRLY ATTACKED
Business-jet demand fell this year as the recession forced cuts in corporate spending. Frozen credit markets also made purchases by people and smaller companies more difficult.
Blakey and other Summit speakers said US politicians deserve some of the blame for an estimated 19,000 job cuts as American jet makers pared production.
"General aviation aircraft has taken an unnecessary pummeling by the negative political rhetoric that was out there," Blakey said. "That has depressed sales more than we would expect in a normal downturn."
Some US lawmakers last year criticized auto executives, calling them arrogant for using their jets to fly to Washington to seek taxpayer money to help their businesses.
The furore extended to banking and other executives whose companies received federal bailouts. Some companies such as Citigroup cancelled orders for new jets, while others grounded the perk.
At the summit, aerospace industry executives defended their use of corporate jets, calling them a necessary business tool.
"It's a way to get a whole lot more hours out of the day, which for busy people is very efficient," said Goodrich Chief Financial Officer Scott Kuechle.
Some large companies make senior executives use company planes instead of flying commercial, arguing that it is a safety requirement for prominent business leaders.
In coming years, rising demand in China and elsewhere in Asia might serve as a catalyst for business jets. More airports in China are becoming accessible for them and the government has cut the required time for pilots to file flight plans.
"There is expected to be -- because of the wealth creation in China -- an explosion of business jet orders there over the next 10 years," said Tom Captain, global and US aerospace and defense leader at Deloitte.
