This year’s early round of business aviation market forecasts–from Bombardier, Embraer and Honeywell–present a mixed picture where a moderately optimistic outlook for the U.S. still fails to outweigh economic uncertainty in Europe and slowing growth in Asia.

Bombardier expects Europe’s economy to remain fragile, although “major decisions in [the region] at the beginning of 2012 improved the outlook, reduced the risk of catastrophe and moderated the severity of the recession.” In its 2012-31 market forecast, the manufacturer cites perceptions from the Organization for Economic Cooperation and Development (OECD) that substantial risks remain in the Eurozone: “High unemployment, low confidence and weak lending activity prevent the economy from growing,” the OECD states.

Against this backdrop, business aviation accounted for a slightly reduced share of IFR traffic in Europe last year as aircraft use continued to reflect economic recession. According to Eurocontrol’s network operations report, such activity represented 7.2 percent of traffic (about one flight in 14), a decrease of 0.1 percentage points on 2011; overall, there were 4 to 5 percent fewer flights by such aircraft than in the preceding year. This followed an April 2011 Eurocontrol warning that, given the relative weakness of the region’s economies, European business aircraft use would not return to pre-crisis growth rates in the medium-term.

While Bombardier sees leading business aviation indicators as having gradually improved at the beginning of this decade, it warns that industry fortunes are not the same in all geographic regions. “The disparity in economic recovery is becoming more apparent, with North America set for growth while Europe remains under strong pressure and Asia slows its expansion,” the manufacturer said.

However, the company remains confident in the industry’s strong long-term potential, even though Europe is still in economic difficulty. “The sovereign debt crisis weighs heavily on consumer and business confidence across the region,” it states. Nevertheless, Bombardier is encouraged that Europe’s news is at least, like the curate’s egg­–good in parts–noting, “Growth differs significantly between the relatively healthy northern countries, led by Germany, and struggling southern countries. The German economy is performing well and the strength of its exports has made it the economic engine of Europe.”

And Europe’s principal business aviation airports remain among the world’s busiest, providing an indication of the region’s overall health. “Paris Le Bourget, Geneva, Nice, London Luton, London Farnborough, and Moscow Vnukovo are among the most significant business jet airports,” notes Bombardier.

The region’s growing fleet of light, medium and large business jets (the limit of Bombardier’s analysis) will create a significant 20-year replacement market, with the installed base increasing from 447 to 1,147 units per 100 million population by 2031. This is equivalent to 3,920 aircraft deliveries–1,700 between 2012 and 2021, and 2,220 during 2022-31–as the fleet grows by 5 percent per year from 1,890 aircraft in 2011 to 5,125 in 2031.

Globally, Bombardier expects some 24,000 light, medium and large business aircraft valued at $648 billion to be shipped during 2012-31. “Our forecast anticipates demand for 9,800 [units worth] $266 billion during 2012-2021,” which compares with 6,300 deliveries valued at $139 billion in 2002-2011. During 2022-2031, the manufacturer forecasts shipment of 14,200 aircraft worth $382 billion, with annual business aircraft deliveries by all manufacturers expected to run at about 1,500 units.

For its part, Brazilian manufacturer Embraer has projected a worldwide 2012-22 market for 9,300 business jets worth $246 billion, a sum that factors such as market volatility in Europe could dilute to 7,870 deliveries, valued at $205 billion. Together, the Europe, Middle East and Africa markets are predicted to represent 29 percent of all deliveries: up to 2,700 units, worth up to $82 billion.

Trend Toward Larger Models

U.S. engine- and equipment-manufacturer Honeywell, which does not break down its forecast by region, predicts that nearly 10,000 new business jets valued at $250 billion will be shipped during 2012-22, with a trend toward larger models expected to continue. This year, it expects deliveries “of similar magnitude” to the 680 to 720 total the company had predicted for 2012 that, in turn, had represented a less than 10-percent increase over Honeywell’s 10-year forecast 12 months earlier.

The numbers reflect the “protracted nature of the global economic recovery,” according to Honeywell business and general aviation president Rob Wilson. “Over the medium term, a return to historical growth conditions supported by globalization, wealth creation in developing nations and new aircraft development should boost orders and support accelerated growth, beginning mid-decade.”

With developed markets straining under economic sluggishness and cyclical business trends, the Honeywell forecast for Europe’s share of estimated global five-year demand has risen by one percentage point to 18 percent. The manufacturer’s definition of Europe includes “Russia, with strong local purchasing ambitions, [and] central and eastern European states, which are generally more economically robust”–factors seen as accounting for “much of the [region’s] apparent resilience in the face of eroding economic conditions.” In Western Europe, an environment of “slowing activity and demand [is] strongly influenced by. . .higher unemployment, high government debt and negligible growth.”

According to Honeywell’s predictions, which are based on a survey of operators’ future purchase plans, regional requirements reflect each market’s “maturity, economic environment and other characteristics.” With a greater preference for large aircraft, markets in developing countries have been “shaping the industry’s growth, backlog and portfolio mix,” adds Honeywell.

Flight Activity Still Weak

Moving across from new-aircraft purchases to flight activity, Honeywell’s analysis says that much of the ground lost during the 2009 recession remains to be recaptured. “A full recovery remains several years away at current and near-term projected rates of flight activity,” the company believes.

European flight activity (excluding that in Russia) is seen as falling by about 3 percent in both 2012 and 2013, driven by weak economic prospects in Western Europe and a smaller fleet. “Renewed recovery in flight volumes is not anticipated until 2014,” concludes Honeywell, which is encouraged by Russian Business Aircraft Association figures reporting flight activity “expanding at mid-single-digit levels.”

Positive Trend Overall

Bombardier is confident of the factors driving industry long-term market growth, including “wealth creation, increasing business-jet penetration in high-growth economies, globalization of trade, replacement demand, and market accessibility.” Accordingly, it expects the global light, medium and large business aircraft fleet to grow at 3.7 percent per year net, from 15,200 aircraft in 2011 to 31,500 units by 2031.

Delivery trends likely will lag order intake as manufacturers seek acceptable backlog levels, suggests Bombardier, which predicts increased shipments this year and expects 2008’s “delivery peak [to be overtaken] as early as 2016.” The company estimates that, globally, more than 800 orders were cancelled in 2009, forcing manufacturers to “juggle order deferrals and cancellations, and decrease production rates and deliveries.”

From a lowest level of demand in the first half of 2009, “the market has made progress on many fronts: credit availability is less problematic, business jet usage is rising, gross orders are up [and] cancellations are back to relatively low levels,” says its forecast, which was published in mid-2012.

Bombardier concludes that the market is continuing to recover from the “significant downturn” of 2009-10. “While market leading indicators are mixed, the overall trend is positive. As confidence returns to world markets, aircraft orders and backlogs will expand and deliveries will accelerate.”

It also believes that the industry will face new challenges. “As fuel prices and environmental awareness rise, manufacturers will have to help develop the infrastructure to support the expected rapid adoption of business aviation in growth markets. As market confidence returns, so will the demand for business jets. The long-term prospects for business aviation are solid.”