Jetcraft Forecast Sees Upward Sales Trend

In its annual 10-year business jet market forecast released October 4, Jetcraft  predicts an upward trend for new business jet sales. Jetcraft acquires, trades, and brokers both new and preowned executive and VIP jets.

The report, presented at the 2017 convention of the National Business Aviation Association in Las Vegas, includes tracking information on manufacturer percentages of the market and splits performance by aircraft type, from very light jet through ultra-widebody business jet. It also includes an analysis of who might be in the market for new aircraft in the next decade, profiling the estimated numbers of ultra-high-wealth individuals in various regions of the world. The report predicts that spending on business jets as tools may increase as corporations close the next round of share buybacks and look for other ways to spend cash on hand.

Jetcraft’s 2017 forecast calls for 8,349 business jet deliveries by 2026, representing $252 billion in revenues (based on 2017 pricing). North America leads the way with 62 percent of deliveries (5,176 aircraft), followed by Europe with 17 percent and Asia with 12 percent (1,420 and 1,002 aircraft, respectively).

Over the past decade, the average aircraft list price increased 56 percent. The forecast sees that number growing an additional 16 percent by 2026. How might that happen? Jetcraft predicts that 98 percent of the forecasted revenues from new programs will be for widebody or large business jets such as the Citation Hemisphere, Global 7000, and Gulfstream G500 and G600.

“Pinpointing the transition into a new business cycle is challenging,” said Jetcraft chairman Jahid Fazal-Karim. “Our forecast indicates we are finally exiting the post-2008 recession period, entering several years of steadier, healthier growth and expanding revenues.”

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Preowned Segment

Jetcraft president Chad Anderson addressed predictions for the preowned jet market, telling BJT sister publication Aviation International News, “We’re seeing extremely positive momentum in the preowned market right now. Preowned inventories are down to recovery-like levels, which is great news for the market. Residual values, however, should be higher,” he cautioned. “Our forecast predicts this is because several models stopped production and the expected or actual entry into service of new models is delayed. Adding to this is the now common requirement from buyers to integrate advanced technology such as ADS-B compliance, Future Air Navigation Systems (FANS), and the latest internet capabilities into virtually every transaction, which is significantly cutting into the return sellers can expect for their aircraft,” he said. Jetcraft’s forecast concludes that residual values will hold over the next several years before they improve.

That said, there is market activity. “The younger aircraft continue to be the most efficient sellers, primarily because there is a nice enough difference in price from a new option. Older aircraft tend to experience a relatively higher rate of depreciation, and there are more variables that come into a deal on an older aircraft that take time and cost money,” said Anderson.

Jetcraft predicts that demand through 2026 will shift more toward widebody models at the expense of narrowbody aircraft. The company forecasts that the large-jet category will end up constituting  31 percent of total unit deliveries with 2,589 units, accounting for 63 percent of total revenue.

Anderson is thinking positively about the short-term outlook for preowned jets. “New programs will affect the market, specifically the widebody models, such as the Citation Hemisphere, Global 7000, Falcon 8X/5X, and Gulfstream G500 and 6G00 as they come online. That said, demand in the preowned market looks very healthy over the next 12 months and we think the five-year outlook is optimistic, given the lessons we’ve all learned in the last downturn, which now seems to be in our rearview mirror.”