Global Jet Capital: ‘Market will stay strong next year’

The business aviation market will stay strong over the next 12 months despite macroeconomic conditions, Global Jet Capital (GJC) has told Corporate Jet Investor (CJI).

“Over the next six to 12 months, continued demand for business aviation services, high OEM backlogs and low pre-owned inventory will keep the industry on a strong footing,” Bill Ostrove, manager of Market Intelligence and Analysis, GJC told CJI. “While OEMs continue to deal with supply chain challenges, new deliveries should gradually increase to meet demand.”

Ostrove (pictured) said even with low inventory, the industry has been “efficient in connecting buyers with sellers and conducting pre-owned transactions” which he expects to continue.

Rising flight operations, increased OEM orders and backlogs and a high volume of pre-owned transactions demonstrate strong demand, Ostrove said. With flight operations up 17.4% through the first half of 2022 compared with last year (US FAA data) and an industry-wide OEM backlog up 49.1% in the second quarter (Q2) compared with Q2 2021, Ostrove said the sector is “well positioned to remain resilient”.

The influx of new buyers is also expected to remain strong.  Rather than see a drop-off as commercial airlines have resumed regular flights, private jet operations have continued to increase at steady rates, he said. This is due to the productivity, safety and flexibility of business aircraft. “Historically, this industry has been extremely ‘sticky’. Once someone uses a business aircraft, they realise the value proposition of the industry,” said Ostrove. “Surveys have shown that the majority of people who started using business aviation during the pandemic intend to continue utilising the industry at least some of the time.”

With business aircraft use steadily increasing even before the pandemic, Ostrove said a softening market will still be stronger than pre-2020. “While usage increased substantially immediately following Covid-19, we expect the industry to return to more normal growth rates of 2-3% per year,” he said. “However, it will be from a new higher starting point, with many of the new users remaining in the market.”

Ostrove’s comments followed GJC’s recent Q2 Market Brief, which found that OEMs would be cushioned against any potential economic downturn due to their backlog of work.