“It’s an impossibly high base year, with production having more than doubled in half a decade. The industry is running the risk of creating a bubble, and a balance needs to be struck,” said Richard Aboulafia, vice president of analysis at Teal Group Corp., Fairfax, Va. “The industry could be building for a colossal burp after watching costs and rates rise as new planes are produced.”  There also is increased competition from composites, particularly with Boeing’s 787 Dreamliner.  Aboulafia said the battle  of raw material suppliers is a back-and-forth process, with aggressive marketing from competing sectors.  “The Rolls Royce receivership in the 1970s was due to its use of composites in its engine. It became the watchword for overreach,” he said.  Composites have been used on business jets, but all except one failed, Aboulafia noted. The jury is still out on the latest release, which will be Montreal-based Bombardier Inc.’s  Learjet 85.  “Companies are naturally drawn to the innovation story, but it is easy to oversell technology. This is the oversold nature of the composite revolution,” Aboulafia said.

Aviation analyst Richard Aboulafia said airports like Santa Monica  are a draw for business jets for the same reason they’re an annoyance to neighbors. “They’re centrally located. That’s valuable land, and it tends to be in the middle of expensive housing, too. Inevitably you’re going to see more conflict like these arise,” Aboulafia told KPCC.

Amid continuing public anger about corporate "fat cat" lifestyles, a fresh recognition of the industry's usefulness would bring welcome relief, said Richard Aboulafia, an aviation analyst at the Teal Group in Fairfax, Virginia. "Business aircraft have been hit harder by the economic crisis than any other aerospace market," Mr. Aboulafia said. "After unprecedented growth, the market fell by 24.3 percent in value of deliveries" from 2008 to 2009. "The good news is that the market has stopped falling," he said in a Teal Group market review. "The bad news is that this is a three-year downturn. We're halfway through a very difficult bust cycle."

Teal foresees no resumption of growth in deliveries until 2012, he said, after which it expects a six-year recovery period of growth averaging 10 percent per year. At that rate, the peak 2008 delivery levels would not be reached again until 2016-17. Last year, Teal's forecast for 2009 to 2018 was for delivery of 9,300 business jets valued at $153.7 billion. This year, it is projecting 10,285 business jet deliveries in the 10 years to 2019, at a current dollar value of $184.1 billion. To that total should be added 649 large business jetliners — corporate versions of regional jets or of the Boeing 737 and Airbus A320 families, worth $36.4 billion; and 3,041 turboprops valued at $13.2 billion. That compares with 7,889 business jets worth $143.4 billion in 2010 dollar values that were delivered in the 10 years ending in 2009.

In contrast with previous cycles, Mr. Aboulafia pointed to an "unprecedented bifurcation" in the market, with 2009 deliveries of jets that cost $25 million or more — the top half of the market in value terms — falling 4.1 percent from 2008, while demand for less expensive planes dropped 42.8 percent. The slump at the less expensive end of the market reflected a sharp drop in demand for fractional ownership — a form of time-share program — and probably also the effect of the credit freeze on all but the wealthiest buyers, he said.