World Business and Personal Jets Avionics Market to Recede Through 2011, With Recovery Anticipated Around 2012

The 48-page research note AB081 presents business jets and avionics market analysis, including a detailed avionics market and systems forecast from 2008 to 2020.

Business jets are essential, efficient and productive tools of the modern global economy, but the current economic and financial crisis places increasing cost pressures on owners and users alike. Major losses in the US and European economies will impact the immediate market outlook which could take five years to recover. Additionally, recent media mischaracterization about business jets has further affected the immediate outlook.

The new generation of aircraft introduced since the late nineties has been a productivity multiplier, enabling executives to reach customers and suppliers globally. At the core of this revolution, integrated avionics systems have grown dramatically in terms of their capabilities and reliability, providing unique operating reach to users while significantly improving safety. This nearly $2 billion annual market is witnessing rapid technology changes that few companies can master entirely.

“While we have seen Garmin (NASDAQ:GRMN) emerging as a strong player in the general aviation segment and personal jets markets, Rockwell Collins (NYSE:COL) and Honeywell (NYSE:HON) will maintain their control over the larger business jets categories. The only potential threat to these two companies may come from an established avionics player such as Thales (EPA:HO),” said Michel Merluzeau, G2 Solutions’ Managing Partner.

While Honeywell and Rockwell Collins control well over 80% of the forward-fit market, Thales might capture 5-10% of this segment by 2020. Universal Avionics, Esterline CMC Electronics (NYSE:ESL) , L-3 (NYSE:LLL) and Chelton Flight Systems have respective technological and market strengths, but will find it difficult to migrate upmarket as technology evolution and OEM cost pressures will continue to increase.

“Universal Avionics will thrive in the aftermarket, but long-term viability is questionable based on its current structure and product offering,” says Merluzeau. In the current environment, acquisitions could accelerate especially among those companies hurt by the Eclipse program collapse such as Avidyne and Innovative Solutions & Support (NASDAQ:ISSC). The report confirms that industry should brace for two to three very difficult years with deliveries expected to drop at least 30 percent.