Were we too optimistic about the business jet recovery?
Now that we are a third of the way through 2014, our predictions for the business jet market look like they may have been a little too optimistic.
At the start of 2014, many people (including me) predicted that the new business jet market would start to recover this year. We are now one third of the way through the year and some people are saying that this was too optimistic.
It really all depends how involved you are with North America. Although utilisation is only rising slowly – Argus TraqPac says March 2014 flight activity rose 1.1 per cent compared with March 2013 – things are definitely improving in the US.
Sadly, the same is not true everywhere else. Most of Western Europe is still depressed and buyers in many emerging markets are cautious about the US stopping quantitative easing. The situation in Ukraine is not good news for sales to Russia or the CIS (at least one aircraft sale has already fallen though because the buyer is named on a sanctions list).
However, if you are selling to US clients it is a different picture. One major European broker is close to closing six large aircraft sales in the next few weeks – five of the buyers are in the US. The same is true for smaller aircraft. “If you have anything old or small it is going to America,” says another business jet broker.
Although, there are signs that demand for smaller jets is rising. The US large aircraft market is much stronger. Flights for large cabin aircraft have risen by 10.4 per cent since March 2013. The latest Gulfstream G650 is believed to have traded for $73.5 million. The main buyers are large US corporates.
A few weeks ago one major US financier said: “Work is fun again.” And surely that is how you define an upturn.