Honeywell CEO Mike Madsen spoke at VBACE, the virtual convention of the NBAA to update Honeywell’s activities in the business aviation market. That market, while significantly impacted earlier in the year, has been recovering faster than the airline market, but he expects will still be down 30% on a worldwide basis year over year.
Personal travel has been recovering faster than business travel, and domestic travel faster than international given the myriad of restrictions in place. Charter has been the lease impacted sector, down about 15%, with fractional down about 23%, aircraft management of private aircraft down about 25% and corporate aircraft down about 40% in activity for the year to date.
Overall, he is optimistic about the market, which was regaining momentum in October, offset slightly be higher pandemic numbers in November, but expected to pick up again as the pandemic ameliorates in the new year with vaccines and herd immunity.
Trends indicate that, especially in the US, the year over year gap is closing and flight activity is back within 10% of last year in October and November. It is notable that there has been some migration from first class airline travelers into charter and fractional programs, and a portion of that business is likely to remain flying privately post-pandemic.
In terms of deliveries, every segment was down, but the large cabin intercontinental jets are the least impacted, followed by the super-midsize that were moderately impacted and the lower end of the market that suffered a heavier impact.
The annual Honeywell forecast, issued in September, looked out at five year purchase plans. Those plans are down in the near term, but have not significantly changed, just moved farther out in the calendar. Four out of five operators indicated that their plans have not been affected by the pandemic, and are awaiting vaccines and international protocols to resume travel. Their research indicates that large cabin and super mid-sized aircraft will show the strongest growth over the forecast horizon, continuing the current trend.
2021 is perceived at Honeywell as an upward trending year, will a full recovery to 2019 levels occurring in 2022 and growth resuming in 2023 assuming the economy remains robust.
Their survey results continue to indicate cabin size and direct operating costs as the top two factors in aircraft decision, and have been detecting a theme that customers will want the range of an ultra-long-range aircraft in a mid or super-mid sized aircraft. Engine efficiency is leading the way in that sector.
With respect to the engine sector, Honeywell is developing a new product that is larger than their current HTF7000 and could be aimed at providing an ultra-long-range super mid-sized jet. That would provide business jet customers with the long-range capabilities they desire in a more economical and smaller package. He also sees a potential future role for hydrogen fuel cells to provide APU-like functionality for smaller airplanes, an area in which Europe, with stricter carbon restrictions than the US, will required as new solutions are developed for efficiency. He sees the industry moving away from pneumatic and bleed-air systems to more electric operations, and believes their recent acquisition of Ballard System will help them address that issue beginning in long-range aircraft.
In avionics, Honeywell is moving to a more open architecture for aircraft OEM and customer-tailored applications, segregating those elements from safety of flight operations. Similar to changing a display in a car, but not being able to reprogram fuel injectors, security will be provided to ensure safety.
New features, such as Garmin’s autoland system, will become more commonplace over the next two-four years, and evolutionary advancements are expected in weather radar as well as more compact fly-by-wire systems for smaller aircraft to reduce weight that can be used in both general aviation and urban air mobility aircraft. UAM and air taxi remains a few years away and while it may displace some helicopter operations, they will augment rather than displace business aircraft.