Written by Chad Anderson, Jetcraft President
With so much focus on the surging North American business aviation market, we should not forget Europe. Even though strict rules on lending practices and continuing currency issues do pose some challenges, Europe continues to show economic resilience. The continent still has buyers and sellers, although fewer than previous years.
Despite such challenges, we continue to see activity in the European business aviation sector as it comfortably remains the second largest market next to North America. The European business aircraft fleet is one of the world’s youngest, with close to half of its aircraft being less than ten years old. In addition, transaction activity remains steady-state for Europe. Our own market analysis points to Europe accounting for 14% of the total worldwide business aircraft deliveries throughout the next decade— not far from its traditional 15%-unit delivery share. Such activity reinforces the fact that Europe remains a healthy place to do business. And we see activity primarily from North America fueling Europe’s business jet engines.
Up until the last 24 months, the big sales of aircraft were flowing into emerging markets. That activity has slowed a bit. In fact, we forecast a leveling off period for Africa and the Middle East (maintaining about 3%) through 2025. Today, we see that same flow of aircraft sales shifting back to the West. Why? Because Europe has quality aircraft that are priced correctly, and the transaction process is easily executed, which attracts the North American buyer—great news for the European seller.
An important driver for the longevity of the continent’s business aviation sector is Europe’s resale market benefiting from a stronger U.S. dollar. Many North American corporate buyers are entering a time of fulfilling their replacement plans. Globally, nearly 2,000 business aircraft retirements are forecast throughout the next ten years and such activity will drive increased replacement demand. This is good news for Europe, as its inventory is of high quality, well maintained and therefore appealing to buyers. Even though current prices may be far from an all-time high, there are plenty of deals to complete—whether you are a buyer or a seller—in Europe. In addition, several new aircraft models are slated to enter service in the coming years, which also will attract new buyers and further stimulate replacement activity.
Europe has a solid, longstanding relationship with business aviation, which is sustained by its high profile destinations and the business aviation traffic that it generates. Due to the state of the economy, and some European Union political turbulence, many initially thought Europe was going to relegate the entire region to the sideline during the course of the business aviation sector’s global recovery. Critics assumed that global transactions did not involve buyers and sellers within Europe. That is not the case. The reality is that aircraft are indeed coming out of Europe and most are landing in the Americas. If Europeans want to sell, it is a good time to look west and sell to the Americas.