Jetcraft calls recovery and backs bigger aircraft for next ten years
Jetcraft, one of the world’s largest buyer and seller of business aircraft, is calling the end of the business jet downturn. The company forecasts that 8,349 aircraft will be delivered between now and 2026. Larger cabin aircraft will account for almost a third of units, raising the total value of deliveries to $252 billion. Jetcraft expects the total business jet fleet to reach 28,000 by 2026, up from 21,000 now, net retirements.
Jetcraft’s forecast labels 2016 the last year in what it is dubbing “the post 2008 recession period”. It believes that we are now entering a new business cycle where units will be less but OEMs will have higher sales.
“I am going to call from here on a New Beginning. We are out of the recession period. We are back into activity anchored by the return to confidence of the North American market,” says Chad Anderson, Jetcraft president.
The forecast predicts deliveries to peak at $31.4 billion in 2025, with buyers increasingly choosing larger aircraft. It forecasts that 2,589 large aircraft will be delivered, accounting for 63% of the total value despite accounting for just 31% of the total deliveries.
“Our clients need more and more globally capable aircraft,” says Anderson. “Their flight requirements have meaningfully increased in terms of size and range. The OEMs are seeing the same thing, which is why they are putting hundreds of millions into R&D to build aircraft that are globally capable. They are doing a good job of working out what clients need.”
“As an organisation, Jetcraft has been around for over 55 years and we have grown with our clients. We are very proud that a lot of our clients have been repeat customers and have grown out of smaller aircraft. We have followed our clients.”
Jetcraft is forecasting that Bombardier will deliver the most aircraft by value, followed by Gulfstream. The forecast predicts that Cessna will deliver the most aircraft by units.
Jetcraft expects aircraft buyers to continue to be split between corporates and individuals. It is also confident that large US corporates are back.
“US corporates are definitely re-fleeting. We are seeing that on a regular basis,” says Anderson. “There were corporations that put re-fleeting on hold. But now it is OK to go back to the Board and submit a re-fleet plan. In some cases, we are seeing re-fleeting equating to getting out of whole aircraft and going into fractional but we are seeing a lot of US corporates willing and able to get new aircraft.”
Anderson acknowledges that its forecast could be impacted by geopolitical events and will change next year. This is the company’s third forecast and it is up 470 aircraft and $3 billion from last year’s forecast.
“New aircraft manufacturers or avionics companies or engine manufacturers have to take a five- to ten-year view for their R&D or to plan production,” says Anderson. “Thankfully we don’t have to. We can be much closer to the pulse and know when things are changing. We can see it, feel it and know it, based on real-life experience. That is the nice thing about being truly objective and our forecast will change every year. It ought to. If it doesn’t, are we doing a good job analysing the market?”
He says that Jetcraft gets different insight. “Pre-owned aircraft sales is a closer beat to the heartbeat of the market. Because if we see airplanes five years or younger trading more, we are going to know about that first. As I talk to our counterparts around the world, everyone is seeing more activity – regardless of new aircraft sales – there is a lot more activity and a lot more predictability – thanks to the North American market in particular, followed by Europe.”
More optimism in the pre-owned market
While Jetcraft’s forecast does not predict pre-owned values to rise quickly, Anderson sees that the pre-owned market is also changing. The company has created a proprietary model within this year’s forecast to specifically predict the pace of the pre-owned market, which they say will improve over the next decade.
“For the first time in a long while we have a market where there is more than one buyer for one airplane,” Anderson says. “More and more frequently we are running into situations where we have multiple buyers for one aircraft and it’s been a long time since we have enjoyed that. It is always a difficult balance and not always good as you never want to leave somebody unhappy or unable to buy what they want to buy. But the important point is aircraft that are professionally marketed, positioned and priced will sell in a relatively efficient amount of time. A year ago or two ago, people were saying: ‘I will wait a quarter for the price to come down.’ If they do that now, that airplane will be gone. If you wait the aircraft that you have fallen in love with could be gone.”