The plentiful market for used business jets may finally be ready to turn, according to JetNet iQ director Rolland Vincent.
“Eleven percent of business jets are for sale, and the pricing is soft,” Vincent told the 170 attendees at this month’s NBAA Business Aviation Finance, Registration and Legal conference. “But just 8.3 percent of all business turboprops are for sale, which, to us, means that market has fully recovered from the recession,” he continued.
On the book-to-bill ratio Textron is 0.99, and all the other business jet manufacturers are lower, Vincent’s data showed. “All of them are below 1, which means manufacturers are slowing the production lines, and that is good for business in this soft market,” he said. A slower conga line of new jets means the demand for used aircraft may rise in the next three years, clearing out inventory and helping pricing across the board.
Time for Optimism…and Patience
Vincent’s most optimistic note came near the end of his presentation, where he showed that JetNet iQ’s measures of market sentiment, a survey of what decision makers are thinking, are beginning to trend positive for the market.
“It looks like midsize jets are about to undergo a surge in purchases…and interest in the next 12 months in light jets has gone up, which could be an early indication of strength in this market for the first time in six years,” said Vincent. Light jet interest is coming from primarily U.S.-based private corporations.
When asked by attendees at the conference what accounted for the redistribution from interest in large jets to small jets between the third and fourth quarters of last year, Vincent smiled and replied, “This is the first time in 24 quarters that we’ve seen this shift. We honestly don’t know if this is a trend, but we are watching it closely.”
He then went on to temper the optimism in the room, stating, “From analyzing this data we predict a lull at the factory production level, but in 2019 we expect manufacturing volume to pick up. With new aircraft coming, there is money in the ultra-long-range market, but that’s a couple of years away. We think charter and leasing are areas of growth in this market right now.”