JetNet’s latest quarterly survey shows growing uncertainty and pessimism in the business aviation industry. Speaking this afternoon at the company’s annual iQ Summit, Rolland Vincent, iQ survey founder and the head of Rolland Vincent Associates, noted that in the company’s Q3 survey, almost 60% of the 400 respondents indicated that they felt the industry had not yet reached the low point in the current business cycle, outnumbering those who believe the economy was on an upswing nearly 2-to-1.
In the U.S.—the world’s largest business aviation market—industry net optimism has reached its lowest point since the initial Covid surge in 2020, with little variance among the aircraft operator segments. “We’re in a bit of a strange place,” said Vincent. “Part of it is geopolitical tensions, presidential election uncertainties for sure, changes in interest rates, inflation, all these sorts of things, and just general tensions around wealth. I think it has to do with the haves and have-nots challenges that we are seeing in our society again.”
Yet despite this short-term pessimism, the survey respondents indicated that over the next 5 to 10 years, half expected to increase the utilization of their aircraft, while 46% anticipated enlarging their current business aircraft fleet.
Though the U.S. gross domestic product continues to rise, the number of U.S. business jet operations has declined from a peak of 5.4 million in 2022 to a plateau of little more than 5 million for the past two years, while the U.S. business jet fleet has hovered above 15,000 units for the past three years.
The preowned inventory for nearly all industry segments continues to rise with the exception of large ultra-long-range jets, which have stabilized at approximately 6.4% of the fleet on the market, and personal jets, which declined to 7.2% availability in August.
Vincent noted continued stabilization in the pre-owned jet market as some young aircraft have begun to appear on the market for the first time in several years. “The market is moving and it’s normalizing back up to seven to eight percent of the fleet,” he told the audience. “We want to start seeing numbers like that because with two-year backlogs, [pre-owned] is another way to get people into the industry.”
While the airframers have been good about keeping their prices in check in the face of cost inflation, such as for materials and labor, Vincent expects to see increases. “We’re going to have to watch that because we can only go just so high before we see demand dropping off.”
Currently, the business aircraft market maintains a $51 billion backlog. The book-to-bill ratios have been declining from their post-Covid highs to a more normal 1-to-1. “We’ve been in a really good position from a factory point of view the last couple of years, taking more orders and filling that backlog," explained Vincent. "Now we have to deliver; turning that into cash is a challenge.”
JetNet predicts that 2024 will finish with 808 business jet deliveries, and in its latest industry forecast, the company calls for deliveries of 8,644 new business jets over the next decade with a value of $262 billion. That represents a net decrease of 40 jets from last year’s forecast. Of that total, the light and large ultra-long-range jet segments make up the largest portions, at 22.6% and 22.2% respectively. The forecast also anticipates the retirement of nearly 4,000 jets over the next 10 years.
For the turboprop market, the 10-year forecast calls for the delivery of 4,332 turboprops—nearly 10% of them twin engines—worth $25 billion, weighed against the retirement of almost 3,500 aircraft.