NBAA-BACE always serves as a good annual reminder to check the pulse of the business aviation market. According to the latest data provided by JetNet, of the 21,870 business aircraft worldwide, 2,285 are currently on the market. This is the equivalent of 10.5% – a level unheard of since November 2007. In other words, pre-owned inventories are back to pre-recession levels.
As the preowned business jet market is a good leading indicator of the new business jet market, this is great news for our industry. Residual values of aircraft are still lower than desired, however, buyers and sellers have seemed to acquiesce to common ground fueling the activity we see today.
From Pause to Fast-Forward
According to JetNet IQ’s third-quarter industry survey, confidence is back up. Nearly half of the respondents indicated that they believe the business aviation market is past the low point of the current economic cycle. The survey goes on to state that overall optimism has rebounded since NBAA-BACE 2016, which took place during the height of a contentious US presidential election.
During last year’s show, I remember industry leaders discussing a “pause” in the market, with many buyers opting to wait until after the election for purchase decisions. Regardless of whether or not this pause actually happened, the market has since gone fast-forward. In North America alone, pre-owned inventory levels are down and good aircraft are being quickly bought up. Whereas Jetcraft became accustomed to carrying 80 to 90 listings over the last 5 years, today we have a level of inventory that suggests a much more fluid market – with 17 sales pending.
Because aircraft are selling at an incredible rate in North America, we’re seeing buyers look to Europe and Asia for more pre-owned inventory options. If inventory levels remain steady, and as long as the aircraft are priced right, the incentive will remain for North American buyers to look outside of the continent. As a result, I expect to see continued improvement in Europe and Asia.
A Solid North American Front
While other regions (especially Asia) are gaining momentum, North America should keep its position as business aviation’s top region for the foreseeable future. Not only is the US pre-owned market extremely strong, but both Canada and Mexico are also on the upswing and Canada is busier than ever. Despite a weak Canadian dollar, companies there are utilizing their aircraft more than ever and transactions/sales are at peak levels. Even Mexico, which has been a challenging market as of late given the obvious geopolitical concerns in the region, is showing signs of life. We’re starting to see a lot of purchase requests coming from Mexico, and I expect the country to have a good Q4 and a strong 2018.
Excitement in Vegas
I’m feeling more excitement going into NBAA-BACE this year, than I’ve felt in a long time. All this gives us solid momentum to build on for the remainder of 2017 and going into 2018. Although you’ll have to wait until NBAA-BACE to read Jetcraft’s 10-year market forecast, it’s safe to say that business aviation is well into a long-overdue comeback, fueled in large part by solid supply levels in the pre-owned market.