Business aviation has grown up, according to Rolls-Royce. "The
market is large enough to be driven by macroeconomic trends,"
says market planning director Mike Miller, author of the company's
current market forecast that was released here on Monday. Miller
suggests that the industry in future will track major market indicators
and won't be suppressed by transient effects, like the luxury
taxes that depressed sales in the late 1980s.
Rolls-Royce sees re-adjustments in the fractional business as
operators seek profits. Aircraft manufacturers "will have
to decide whether fractional programs are a core activity,"
Miller says. Rolls-Royce is "watching carefully" for
trends in the size of the fractional backlog, because a shift
in the fortunes of fractionals could have a major effect on the
business.
Another sign of a maturing business, Miller points out, is retirements:
"Only 7% of all the jets ever delivered have been retired,"
says Miller, but RVSM, age and noise will conspire to accelerate
the pasturing of worn-out nags-and provide a relatively stable
replacement market.
Like Honeywell, Rolls-Royce steers clear of any attempt to gauge
the size of the market for new, smaller and cheaper airplanes. Miller
notes, though, that the small jets contain three of the classic
ingredients for disruptive technology: "New markets, new investment
sources and new technology. They could disrupt the lower tier of
today's market, sending a ripple through the rest of the business."
