Global Jet Capital (GJC) saw a continued normalization in the business aircraft market in the first quarter with flight operations and transaction volumes declining year over year, available inventory levels increasing but still low, and OEM backlogs growing.
“As things stand, the industry is well positioned to weather any future economic downturn,” GJC said in its latest Business Aviation Market Brief.
While flight operations were down 2% year over year in the first quarter, they were still 16% above 2019 levels, the industry financier pointed out, “reflecting an enduring expansion of the user base for business aviation.” Fractional was the strongest segment with sustained growth in operations. GJC also noted that new users are continuing to fly privately.
Supply chain and labor issues still hampered new aircraft deliveries, which were slower than expected and caused a decline in transactions. But demand remained high with OEMs reporting a book-to-bill of 1.3:1 in the quarter and backlogs swelling by 4.8% year over year to $46.4 billion (not including Dassault). Orders in the quarter were below the high levels in 2022 but still were 32.4% higher than in the first quarter of 2023.
On the preowned side, available inventory increased in the first quarter, but GJC noted a split between older and younger aircraft. Inventory for older aircraft is growing while remaining relatively stable for three quarters for younger aircraft. The same is holding true with pricing, with older aircraft depreciating “in line with historical norms” in the first quarter, but younger aircraft have been more stable on that front as well.
Underpinning the strength of the market is the global economy. GJC noted that many economists have raised their forecast for growth. But at the same time, the company notes that it is expected to still slow from last year’s “surprising growth,” and headwinds such as the wars involving Ukraine and Israel remain. Other factors could include trade conflicts, elections, and growth challenges in China.
However, other areas of Asia and Central America are experiencing strong growth, and the Eurozone is picking back up.