If you can keep ahead


“If you can keep your head, when all around are losing their’s” is not just the start of Rudyard Kipling’s famous poem. It is also a binary situation. You may be right to stay calm or you may have missed what is happening.

Markets around the world are falling fast. The S&P 500 is down 21% since the start of the year (the worst first six-month performance since 1970). Six months ago, a single Bitcoin would cost you $50,733, today it is $20,704. US annual inflation hit 8.6% in May. The IMF says global growth will slow from 6.1% in 2021 to 3.6% in 2022 and 2023.

But few business aviation professionals are panicking. At an upbeat NBAA regional forum last Wednesday, Ed Bolen, president of NBAA made a speech saying: “The future of business aviation has never looked brighter. We’re emerging from the pandemic stronger than we have been. We’re bigger, we’re focused and we have incredible opportunities ahead of us.”

It is not just Bolen. Gulfstream ran an investor day in Savannah last week. Jefferies says that it was positive. Vertical Research – whose analyst was delayed by a late commercial flight and had to be briefed by phone – made General Dynamics a top pick.

They are all watching the bigger economic news, but the consensus is that business aviation can afford to lose some customers.

During Covid, in May 2020 we said that the formula for the business jet recovery (or R) was: R = N – LPC

Business aviation market recovery (R) = Money from new customers (N); minus Money lost from past customers (LPC) who can no longer afford to fly.

We did not expect the astonishing rise in new customers. But the formula still works.

In fact, the rate of new customer growth in the US over the past two years has not been sustainable. There are a limited number of pilots, maintenance facilities and FBOs. Markets can only absorb so many aircraft. There is very little room for growth and slight slowdown would be good news. Operators selling charter and aircraft brokers have seen so many buyers that they can afford to lose some.

“There will definitely be opportunities if demand cools a little,” Greg Raiff, CEO, Elevate Holdings tells CJI. “Some customers have not been getting a fantastic product for the last few years – you hear horror stories about aircraft with technical issues on busy days – and this will be an advantage for companies focused on truly great customer service.”

The total number of aircraft for sale is still very low (see below) but AMSTAT data shows that it has been rising for the past three months. “It will be fascinating to see how dedicated virgin buyers are to their aircraft,” says Bob Zuskin, founder of appraiser Jet Perspectives. “I do not see this market staying so strong. High inflation and oil prices will make a difference. We are a month or two away from a high inflation world and we could see a sudden drop in demand similar to 2008 – we just don’t know.”

If there is a 2008-sized global economic crash, the industry will have to adapt again. To paraphrase Kipling: “If you can meet with Triumph and Disaster, and treat those two impostors just the same. You are in business aviation.”

Market sunrise or sunset? Pictured is an Elevate Holdings’s Bombardier Challenger 650.

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