After a period of rough going, the market for business jets is taking off again – China is the market of the future
Munich, July 26, 2011
- Overall market for turbojet business aircraft will grow by nearly 7% a year starting in 2011
- Highest growth rates are expected in the super midsize and large segments
- North America and Europe will remain the most important markets, although China will be growing by more than 20% per year
- Strong demand for environmentally friendly aircraft is driving the market
The market for business jets is recovering after the heavy blow dealt by the economic crisis: Starting in 2011, experts are expecting annual growth of 6.9%. The best growth rates will most likely be experienced by aircraft in the super midsize and large segments. North America and Europe will remain the biggest markets, although China expects annual growth of over 20%. These are the findings of a new study by international strategy consultancy Roland Berger, entitled: "On the runway to recovery – Business aviation study 2020".
"The global economic crisis hit the business jet industry hard," says Manfred Hader, Partner in Roland Berger's Engineered Products & High Tech Competence Center. "In 2009, the market for turbojet business aircraft shrank by 23%; in 2010, it lost another 9%, dipping down to USD 15.7 billion. But things are looking up." According to the new business aviation study by Roland Berger, annual growth of about 7% is expected starting in 2011. By 2020, the market could reach a volume of USD 30.7 billion.
Highest growth rates in the super midsize and large segments
The highest growth rates will be seen for aircraft from the super midsize and large segments, with 8.7% and 9.4% per year respectively. By contrast, experts predict that aircraft from the very light segment will see annual growth of just 5.2%. Overall, demand for quieter and more environmentally friendly aircraft is on the rise. Although business jets are responsible for only 0.4% of global carbon emissions, the industry is aiming to halve its carbon emmissions by 2050.
Chinese market to experience major expansion
The market for business jets is growing the fastest in China – by 2020, the industry will be growing by over 20% each year. The biggest markets will remain North America and Europe, with a market volume of over USD 22 billion in 2020. This represents 72% of the overall market. But even in Russia and the Commonwealth of Independent States (CIS), Roland Berger experts forecast growth of more than 11%. "Overall, the industry can breathe again," says Jörg Wahler, Principal at Roland Berger. "New markets such as China offer excellent opportunities for growth that companies should seize without hesitation."
Given this positive market development, business jet providers should align their business model to the new market requirements to tap further potential: "The established model of 'fractional ownership', in which many owners hold shares in a business jet, will be edged out by the more flexible 'jet card membership' model," explains Holger Lipowsky, Senior Consultant at Roland Berger. In the latter, business people and companies book a pre-determined number of hours on a certain type of aircraft. The provider of the business model ensures availability. The customer also usually benefits from a set price.
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