CJI EBACE DAY 3 – GOOD REPORTS ABOUT BUSINESS AVIATION


Jahid Fazal-Karim - Jetcraft Photo

Visitors to this week’s EBACE may have an extra spring in their step if they read two new reports forecasting growth in the business jet market over the next five years. Both reports – from Jetcraft and Global Jet Capital – acknowledge an undeniable cooling of parts of the market from the heady peaks of last year. But they also forecast sustained growth – driven significantly by the return to the market of corporate and new buyers.

First, Jetcraft’s 5-year Pre-owned Business Jet Market Forecast. Despite what the broker describes as an inevitable market correction in 2023, it remains confident about market prospects – notwithstanding rising interest rates and fears of recession. The reason for Jahid Fazal-Karim, owner and chairman of the board, Jetcraft is clear. “The driving factor is the corporate buyer – who roared back to life in 2022 following the pandemic hiatus. This, combined with a continued flow of new entrants to the market as well as OEM backlogs, took total pre-owned transaction values beyond our expectations,” he wrote in the report’s summary. “And those buyers are flying more than ever.”

Jetcraft research reveals the share of Jetcraft buyers coming from the corporate sector reached 60% last year. This demonstrates the value corporations and the UHNW individuals running them place on jet ownership, he wrote. “The more valuable their time, the more their need for business jets.” It’s a trend that shows no sign of slowing down. Aircraft use among corporate and individual buyers has doubled since 2020. The return of the corporate buyer, growing maturity of markets outside North America and continued investment in larger jets from the OEMs, flying has evened out across all aircraft sizes to an average for Jetcraft buyers of 200 hours per year.

Over the forecast period, the number of pre-owned transactions is predicted to grow steadily again and exceed previous highs by 2027. (That represents an average Compound Annual Growth Rate (CAGR) increase of 4.7% per year. Inflationary times may even help to prompt private jet purchases, according to Chad Anderson, CEO Jetcraft: “When inflation is high, the market is more favourable to cash-rich corporations opting to buy outright.”

Global Jet Capital also sees significant market growth up to 2027. It’s report – New and Pre-owned Business Jet Transaction Forecast – predicts new deliveries this year to rise by 6.3% (up 12.2% in dollar terms) compared with last year. But offset by a 2.6% fall in the number of pre-owned deals, the report predicts a 1% increase in the value of aircraft transactions.

As the market settles from the highs of last year, steady growth is expected to re-emerge over the five-year forecast period. “We forecast total transactions will increase at an average annual rate of 2.9%, while dollar volume will increase at an annualised rate of 3.1%,” according to the Global Jet Capital forecast. “Between 2023 and 2027, we forecast new aircraft will represent 51.5% of the total value of the market, about on par with the last five years.”

Heavy and very light jets are predicted to show the strongest growth, with heavies leading the way. Heavy jet deliveries are forecast to increase at a CAGR of 5.9% between 2022 and 2027, as their range and passenger capacity finds favour with buyers and flyers. It’s a trend that will be fuelled by the introduction of new heavy jets during the forecast period. At the other end of the ramp, very light jets (VLJs) are also expected to demonstrate rapid growth, expanding at an annual rate of 5.6%. “The low price of VLJs makes them appealing to many buyers, especially first-time owners,” according to the report. “Although light and medium jets will grow more slowly than heavy jets and VLJs.” 

Fazal-Karim, from Jetcraft, sums up the (qualified) reasons to be cheerful: A forecast isn’t ever a certainty, but with demand having reached unprecedented levels last year, we can continue to be confident about the health of our industry.”

Meanwhile, Jetcraft’s forecast is available here and Global Jet Capital predictions can be read here. Both make encouraging reading – particularly after a long day touring the EBACE halls and Static display (now the protestors have gone). What better way to relax than with two positive reads to lift the spirits – if not soothe the weary feet? Beverage of choice optional.

  
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