Global Jet Capital sees dip in 2023 deals, but bullish for next five years
Global Jet Capital, the business jet financier, is forecasting a fall in transactions in 2023, but sees the market growing up to 2027.
It is expecting 2023 new deliveries to increase by 6.3% (up 12.2% in dollar terms) compared with 2022, but the number of pre-owned deals to fall by 2.6%. Combined, this works out as a 1% increase in the value of aircraft transactions.
“Anybody who’s is plugged into the marketplace understands that last year was a bit of a peak for pre-owned transactions and we’re obviously cooling off of those highs, but OEMs are starting to steadily increase deliveries,” says Vivek Kaushal, CEO, Global Jet Capital. “I don’t want to use the words ramping up because OEMs are being very measured and it’s very much supported by all the trends that we’re seeing.”
Over the next five years, new deliveries are forecast to grow at a compound annual growth rate (CAGR) of 4.6% and dollar volume should grow at a CAGR of 6.4%.
Pre-owned transactions are expected to continue declining in 2023 as they did in 2022. Unit volume is forecast to decline 4.8% while dollar volume is forecast to decline 8.5%. Continued market demand, however, should lead to more pre-owned deliveries over the next five years. Pre-owned transactions are expected to increase at a CAGR of 2.5%, with dollar volume remaining stable over that time.
Global Jet Capital expects North America to continue to be the dominant business jet market for the next five years – making up 77% of the total market. “Demand in Europe is very strong – we are seeing a lot of activity from our Zurich office,” says Kaushal. “I was in Asia last month and there is definitely pent up-demand and you can see the market coming back.”
He says that high profile bank failures have not yet hit aircraft finance. “Availability of credit is still OK for somebody who wants to finance an aircraft,” says Kaushal. “But as cash continues to drain out of the banking system, as rates continue to stay elevated, you’re going to see some tightening in market conditions. That’s only to be expected.”
Kaushal has not seen a sudden fall in demand. “We are seeing that customers still have intent to acquire. They are still going ahead with fleet planning upgrades – where a client of ours that’s been in a G550 for the last 10 years would like to move up into a G650,” says Kaushal. “They’re in the market looking for something. At the same time, the urgency to act is less. People see a market in which there are choices and where there will continue to be choices. They are OK waiting a little bit for prices to find a new level. But nothing that we’re seeing tells us anything other than a very natural pullback from a cyclical peak.”
See full market forecast here.