The current market for new business jets is worth $9bn each year. Although the market is at around 60% of its peak in 2001, it remains relatively strong in historical terms, and is recovering. Only one year prior to 1998 saw higher deliveries than are expected this year, in contrast to the airline market which had a sustained peak around 1989.
The market share held by each of the business jet manufacturers has been in continual flux, as the rate of new product introduction underlines the demand for innovation and differentiated products.
At least ten new business jet types are being introduced in 2004. In the airline market the typical life cycle of an aircraft model in production is 15 to 20 years, whereas for a business jet, the production run of any particular model will be around 7 to 10 years, following which a major upgrade, re-branding or derivative will usually be introduced.
New types introduced in 2004:
By far the largest share of business jets is manufactured by Cessna, with 31% of the fleet in service today, and 38% of new deliveries in 2003 - although this is likely to dip to 31% in 2004, as the company recovers more slowly than its competitors, some of whom had a larger decline in 2003. The strength of Cessna's numbers arises from its concentration on entry level to medium sized aircraft, its customer base in smaller aircraft which provides a trade-up market, and its regular introduction of updated products.
Gulfstream clearly leads the current market in terms of the value of business jets delivered, with a 27% share of the value of new deliveries in 2003. Falconjet (Dassault) is second, being equal to Cessna at 19%. Despite the undisputed success of Falconjet and the almost guaranteed success of the revolutionary Falcon 7X, their near term market share will fall before the impact of these new products is felt.
The Bombardier market share will recover substantially in 2004, following resumption of full production after stoppages in 2003. This will take Bombardier's share of aircraft deliveries up to 24% following a 13% share in 2003. However, for the future Gulfstream is likely to overtake Bombardier, as Gulfstream introduces the G150 (with announced orders for 100 from NetJets) whilst Bombardier faces a tough challenge in maintaining the breadth of its product line. The likely success of the Challenger 300 and the longer term development of a replacement for the Challenger 604 is unlikely to sufficiently counter the more difficult medium term market for Learjet products and the growth in product lines of competing manufacturers.
Raytheon is the only company that saw deliveries increase in 2003, up to 100 aircraft compared to 95 the year before. The company's strength derives from its well established types, including the Beechjet 400XP which late in 2003 and early 2004 secured orders for 70 for NetJets. However these will not carry the company for ever and the composite Premier 1 and Horizon will continue to take time to become fully accepted in the market. Hence the Raytheon share is likely to decline back to 16% in 2004 from 19% in 2003. In time, Raytheon is also likely to introduce a new medium sized product to replace the Hawker 800.
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