Phoenix-based Honeywell Aerospace has earned respect throughout the industry for its eagerly anticipated 10-year business aviation forecast, released to coincide with the annual NBAA Convention. The company revealed the purchase-expectation forecast here on Sunday and the news was generally positive. That came as a surprise to a lot of people, including Rob Wilson, Honeywell Aerospace president for business and general aviation.
Times have been good at Honeywell, and if the survey results prove correct they will stay that way. In recent years, the powerplant and avionics supplier has weighed a plunge into the 10,000-pound-thrust engine category and has also been at the forefront of the new synthetic-vision certification in the PlaneView cockpit flying in large-cabin Gulfstreams. NBAA Convention News spoke with Wilson to get his thoughts on the state of the industry in light of the survey’s upbeat results.
How did you feel about the results of your company’s annual forecast?
Quite frankly, I was very nervous about what this forecast was going to tell us and I’m very pleased with the outcome. I think it balances the global nature of the business, the fact that it’s a more mature global market now and the fact that softness in the United States doesn’t translate into a catastrophic market decline in business aviation, which I think we have seen in the past.
What in particular did you find surprising?
Even with the softness in the fuel prices, the purchase expectation still held very strong in North America, which is probably the biggest surprise for me personally. I think it really is a testament to the productivity and the efficiency of business aviation. I just look at the customers I deal with and the way they use business jets.
It is an essential business tool these days, especially for multinational companies.
They’re moving their supply chains over to Asia and India, they are sending executives and even middle-level executives all over the world and it’s a productivity enhancement, so yes you can say there is some headwind, but it really gets overcome by the fact that it’s a very valuable tool.
Your company’s forecast is holding strong, yet many economic clues could point toward a potential slump.
I would say that one of our biggest surprises from this survey is exactly how strong the expectations are for the business aviation customer to buy either fleet replacements or additions. Last year I think we showed a little bit of a dip in the purchase expectation in North America. We see that this year it gained five points over the 2007 levels, even in spite of the fuel costs, and in spite of the economy.
As the used aircraft inventories begin to show signs of softening, how does that affect your forecast?
If you look at used aircraft as a percentage of the total fleet, that inventory is rising but if you start to get really selective and look at airplanes fewer than five years old, that inventory is not rising dramatically.
If you look at what is driving the increase in inventory, it’s typically older airplanes and very small airplanes. So you look at where the overall demand’s being driven, and the fact that if people are going to buy new; they’re typically not going to look at a used airplane as a substitution unless it’s less than five years old. So are the right airplanes out there available? That’s still a tight market. It’s something that we are watching closely and it’s an indication of softness, but I wouldn’t say that it is influencing a negative aspect of our survey.
In fact if you look back over history, the used inventory level that it is today still consistent with where we’ve had substantial delivery increases year over year in the past even in light of this type of inventory level.
Many indications show that due to various pressures flight hours are down across the board. Does that concern you?
I would say it’s two different things: Let’s talk hours. Usage is off slightly, most definitely. You get the FAA data, Eurocontrol data, you’re anywhere between 6 to 10 percent off in hours, and it varies by class. So what we’re seeing is some of the smaller airplanes, or more importantly the older airplanes, having lower utilization and on the higher end of that range, say 8 to 10 percent down in hour usage. When you look at newer airplanes and long range and ultra long range, [it’s] relatively flat. We don’t see a drop in usage at all.
Some manufacturers like Snecma have put the engine before the airplane. Will Honeywell commit to the architecture and the core of a 10K engine before you have a firm order?
We’re in a unique situation. We feel that we have that engine already out in service.
It’s gathering a few hours and a great reputation, it has technology advances, and as time passes we’ll infuse it with a higher operating temperature such that physical size of those parts that are on the HTF7000 won’t need to be dramatically different.
Frankly, we’re not going to come out with an engine until there’s an airplane to put it on. And as we look very closely at the types of airplanes that would require thrust in the range of 10,000 to16,000 pounds, you’re talking about large-cabin class, long-range cabin-class airplanes that would be requiring new technology or airplanes that we feel would go under major redesign in the next few years.
As OEMs evaluate the programs, and push or pull some of these programs out in time, we push our development commensurate with that. So right now, we’re just refining and improving our technology levels so we’re able to answer the marketplace with an engine when those requirements are clearer. If an OEM came to us tomorrow, ready, we would be able to deliver the engine consistent with his development cycle time.
Does Honeywell have any interest in entering the VLJ engine market?
We have no plans. In any business you play the cards you are dealt and we definitely
don’t have a strong product to build upon at that thrust class. If you look at all the opportunities to invest in propulsion, from where we sit with the cards in our hand, we feel there are other places to invest our money, especially since we have what
is beginning to be one of the strongest sellers in business aviation in the HTF7000. Our industry forecast is showing this engine’s segment as having one of the highest growth rates of any size class, which is the mid- and super-midsize aircraft. We feel that’s where we are going to focus, that and other thrust classes in and around that area that make the best business decision for us.
