The business-jet fractional-ownership fleet continues to grow at a phenomenal rate and now accounts for more than 60 percent of total industry backlog, reflecting falling orders from traditional customers. The situation leaves major U.S. manufacturers heavily exposed; indeed, so important have fractional sales become that Bombardier, Gulfstream, Cessna and Raytheon are all involved in such programs. Cessna, Gulfstream and Raytheon each rely on frax operators for more than 75 percent of their current backlog.

Aircraft scheduled for delivery to fractional providers in the next three years number more than the entire fractional fleet did just two years ago. If all orders are fulfilled, the top four fractional operators–NetJets, Flight Options, Flexjet and CitationShares–will receive 455 aircraft in the next two years, compared with 452 units in fractional service at the beginning of 2001, according to London consultancy Airclaims (see box). NetJets alone is slated to receive 225 aircraft in this period (about two a week throughout 2005), a sum equivalent to its whole fleet just four years ago.

With manufacturers continuing to feel the chill of recession, outstanding fractional orders now represent 61 percent of overall business-jet requirements. Fractional  operators have steadily increased their acquisitions while new deliveries of all types have continued to outstrip orders, resulting in a second consecutive year of declining industry backlog. Airclaims said that of 1,227 business jets on order at the beginning of this year, no fewer than 751 are for fractional providers (with combined options on almost 350 more).

Figures for the past five years show a peak backlog of more than 2,000 business jets at the end of 2000, when fractional orders accounted for 23 percent–a typical proportion for the three preceding years. With the backlog falling to 1,635 at the start of last year, the 600 or so slated for fractional operators represented 36 percent. Despite their having taken delivery of almost 300 aircraft in the past two years, the fractional providers’ new-order backlog has jumped 60 percent (from 471) and their held options have more than doubled to almost 350.

Among all these soaring numbers one element of stability may have emerged, insofar as fractional operators’ voracious appetites appear to have become slightly sated. As a proportion of their current fleets, Airclaims statistics show, annual orders from the fractional segment have in fact been declining–outstanding requirements at the beginning of 1999 and 2000 had been much more than 100 percent of the contemporary fleet, but in the past three years have become much more equable, with new orders essentially matching numbers of existing aircraft in service.

Despite that apparent trend, however, it looks as if nothing can stop NetJets’ steady march, with a further 200 aircraft to be added between 2006 and 2010 (excluding options held on more than 300). Outstanding orders well outnumber the operator’s current 377-strong fleet. By comparison, number-two Flight Options (before its probable takeover by Raytheon Co.) expected to essentially double its current fleet of 186 aircraft over the next eight years.

Bombardier’s Flexjet (which buys and flies only in-house products) is set to expand by almost 50 percent when it adds 52 new airplanes in the next three years. The Flexjet fleet currently numbers 124. CitationShares, jointly owned by Cessna and TAG Aviation, plans to add 74 aircraft over the coming four years to its current fleet of 31 business jets, according to Airclaims.

Raytheon and Cessna are the main beneficiaries of outstanding  fractional business, each company logging orders for more than 250 airplanes and options for an additional 100. Gulfstream has orders from fractional providers for nearly 140 aircraft, and options for 100 more. Bombardier and Dassault each have fractional orders for around 50 aircraft, and unspecified options.

If fractional operators put into service all the aircraft ordered and optioned, and retain their existing fleets, the industry segment will have some 1,850 aircraft in service by 2010, Airclaims said, even if no further orders are placed.

Considering the entire business-jet industry backlog, Airclaims figures show both Cessna and Raytheon with more than 300-strong order books, and with fractional proportions of 76 and 86.5 percent, respectively. Including Israel Aircraft Industries designs (the G100, G150 and G200), some 77 percent of Gulfstream’s order book of 179 aircraft is from fractional operators.

French manufacturer Dassault is less exposed, with 69 percent of its 62-aircraft backlog destined for fractional providers. Canada’s Bombardier is the only major airframer with fewer than half of its outstanding orders (52 out of 107) coming from fractional companies. However, Bombardier is still relying on its in-house fractional operation for almost 50 percent of its current order book.

Airclaims shows a total of 1,227 business-jet orders held by manufacturers at the beginning of this year, many of which are for new designs that may still be years from certification. The total includes 116 Sino Swearingen SJ30-2s (certification is expected by year-end); 112 Eclipse 500s (expected certification is now 2004 or later); 13 VisionAire Vantage VA-10s (no expected certification date is available; the company is still seeking development funding); and one Century Jet (which also needs funding before further development can take place). Airclaims pointed out that its database includes only aircraft for which it can identify a customer.