CJI Miami – What lies beneath
There are two sides to the Fontainebleau where Corporate Jet Investor Miami took place this week. Visitors and most guests see the polished side. But underneath all the main buildings there is a network of tunnels where the real work happens.
If you walk through one of the many unmarked doors and go down a floor, you find a network of kitchens, storerooms, the staff canteen, loading bays and shortcuts. It typically takes staff a week to learn their way around the basement.
It is the same in business aviation. When things go well, customers do not see the grind that goes into making a flight happen or buying a jet. Unfortunately, they are increasingly seeing these problems. Particularly when aircraft are grounded or in pre-purchase inspections. Some 75% of the nearly 500 delegates believe supply chains are better than in 2022.
“For the first time in modern history, it’s all about the supply chain determining how many aircraft can be built. It is not just affecting production, it is affecting MRO and maintenance as well,” said Kevin Michaels, MD, AeroDynamic Advisory, on the supply chain panel.
Nick McBoyle, procurement director at Bombardier explained how the OEM has embedded about 60 interventions specialists into suppliers to help them manage their supply chains.
“There is a whack-a-mole effect where problems suddenly emerge,” said McBoyle. “We’re then into a cycle of operational gymnastics to make sure that we can continue the aircraft build as close to the schedule as possible and obviously get them out the door.”
Despite these efforts, 37% of delegates do not expect supply chains to return to pre-pandemic normality until 2025. (32% believe it will be 2026).
Predicting demand is much harder. Research firm Vertical Partners says that business jet OEMs had an average book to bill of 1.4x in the third quarter. It says that manufacturers had a 1.2x average for 2023. But delegates are worried that high interest rates and political turmoil could make 2024 a difficult year.
Some 69% of attendees were very optimistic about the next 12 months (with 19% fairly optimistic). But not everyone was that bullish. “Is it me or does this feel a lot like the spring of 2008?” said one delegate.
The general consensus from people at the event is that they expect fewer transactions in 2024 (although the first quarter may benefit from delayed fourth quarter deals) and demand for charter to soften.
Andrew Collins, co-CEO, Flexjet said that demand had clearly fallen from 2020: “Demand for jet cards was so strong I could have sold them by knocking on my neighbour’s door.” But he added that Sentient Jet and Flexjet are on track for great years in 2023.
Most believe that many of the richest customers that discovered business aviation will continue using it. “There is a reason why hearses don’t have luggage racks,” said Peder von Harten, president, Nicholas Air.
Every speaker agreed that predicting the market is harder than ever.
Michael Amalfitano, president and CEO of Embraer Executive Jets opened the conference by highlighting how business aviation is leading aviation decarbonisation. He stressed how business aviation is a test-bed for innovation.
Ed Bolen, president and CEO, NBAA also used this argument in his keynote. “Every new business aircraft model being delivered today is 30% more efficient than the aircraft it is replacing,” said Bolen, outlining the new Climbing. Fast. campaign. “Business aviation is an incubator for new technologies.”
Some customers like to see the workings of the industry. Apparently Frank Sinatra, Dean Martin and Sammy Davis Jr (who filmed the original Oceans 11 film at the Fontainebleau) used the underground passages to slip around the hotel without being spotted.
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