Hair Force One
NOTE: The below originally appeared as the editorial in our January 8 One Minute Week newsletter. To find out more, and sign up for free, please click here.
Dassault has shown how tough the market is. It delivered 55 Falcons last year. Down from 66 in 2014. Orders halved to 45 aircraft (not including a completely unsurprising NetJets cancellation).
Dassault has always been the most international business jet manufacturer and the fall in sales shows how demand has fallen in emerging markets – particularly China, South America and Asia. Low commodity prices may be good for the global economy but they are bad for many international business jet buyers.
It may be hard to look for positives but there are some. First the manufacturer is effectively being hit because it has been so good at selling to emerging markets. Regions like South America – where it has good market share – will return.
Second, existing owners will be far happier that Dassault delivered less aircraft rather than discounting. It is not easy to do this. Manufacturers have to manage complicated supplier contracts but they should be respected for their discipline when they cut production.
Whilst other OEMs are still to report – and we know Bombardier’s figures are going to be down– the other manufacturers should have had stronger years because of the strength of the US.
It is unclear how it will perform this year.
On the one hand, the US economy is doing pretty well – certainly compared to many other markets. And a 1% growth in the US business jet market is comparable to double digit growth anywhere else.
But markets are nervous and economic indicators mixed. There is also the upcoming presidential election. Many people say that elections are not good for aircraft sales as buyers do not like uncertainty. This was true in 2004 and 2012, but probably not in 2008.
This election may be different. The two leading candidates have both been regular users of business jets for many years. Hillary Clinton has been a regular user of business aviation since the early 1990s (when Kenn Ricci was flying her husband on the campaign trail).
Donald Trump is an experienced owner with a 757, a Citation X and two helicopters. Trump’s 757 has been described as the ultimate private jet in some articles (Presumably this is what the broker who sold it to him said.)
If Trump or Clinton win we will have a president who understands business aviation. One knows Air Force One and the other owns – what has been rather cruelly dubbed – Hair Force One.