Business aviation leaders make their predictions for 2023, including the biggest challenges facing the industry.
OUTLOOK
Lynn Fischer, XO chief marketing officerWe saw a major shift in consumer travel preferences throughout the first half of 2022, with more travelers opting to fly XO via our Shared Flight Offerings. In fact, we’ve had a 93% increase in our Shared Flight offerings compared to the first half of 2021. We expect to see a continued rising interest in Shared Flights, with more people turning to private air travel and looking to buy individual seats at a fraction of the usual private flight cost, all through the convenience and transparency of a mobile app.
Eyes are on aircraft OEMs to see what they do with prices, supply chain issues and production rates. Credit: Aviation Week/Brett Schauff
Brian Foley, Foley Associates founderThese will perhaps be some of the best times since 2008 for business aircraft OEMs with rising backlogs sold at or near list price.
Patrick Gallagher, NetJets president of sales, marketing and service We believe that the unprecedented increase in flight demand felt across the industry is tapering off. While that demand is still quite elevated from where we were prior to the pandemic, what we are experiencing now has become much more predictable and manageable. We are proud to say that our nearly 60 years of experience and proven business model helped us to not only weather the storm but thrive. However, many operators who were initially flush with CARES Act money then overexuberant about the prospects of long-term demand growth have heavily leveraged themselves. As interest rates and other costs rise and demand subsides, we expect that there will be continued consolidation as these companies seek strategic alternatives.
Ron Gunnarson, Piper Aircraft vice president of sales, marketing and customer serviceThe big picture for the business aviation industry as a whole, I think, it that resilience and growth will continue to show, despite ongoing economic and political uncertainties. Our population’s “need to travel” appears insatiable.
Janine Iannarelli, Par Avion founder and president Some expect sales to decline in 2023 because 2022 was the final year for 100% depreciation on aircraft for those who have a qualified business use. But what is not often discussed is the fact that one can still get 80% depreciation in 2023. My take on the market is that the first quarter of the year will be just fine and I am fairly confident that we have a good feel for where pricing will be for most of the bizjet models. Q2 is where it gets a bit gray and foggy.
Sheila Kayaoglu, Jefferies equity analystIf demand sustains itself at a steady pace, that that would be the best thing for the industry because everything says it shouldn’t--whether it’s the Fed raising rates, the stock market volatility or just the fact that money supply is decreasing, and IPO volumes are down significantly. It says 2023 should not be a great year for business jet OEMs. But I think some of those supply chain production delays will help.
Marty Kretchman, Signature senior vice president of operations planningWe’re monitoring the impact of macroeconomic factors closely. Industry consensus indicates that the upcoming year could see further stabilization in demand. We saw some of that throughout the industry in the second half of 2022 and broadly expect it to continue into the first half of 2023. Despite being off the peak of the wave created by pent-up demand in late 2021, we’re still in a strong position relative to 2019 and prior years. Customers, including new entrants, are continuing to find tremendous value in general aviation as a reliable, safe and efficient form of transportation, and I believe that broader trend is here to stay.
Richard Aboulafia, AeroDynamic Advisory managing directorThe big story will be how many of the newcomers who’ve dipped their toes in the private aviation market stick around, as the last of the COVID-related airline service cutbacks disappear and as manager or investor willingness to tolerate higher travel costs diminishes too.
Mark Burns, Gulfstream Aerospace presidentSetting the record straight on sustainability and our industry. Business aviation fuels economic growth, job creation and technological advancements, and at Gulfstream, we’re doing so with sustainable practices and products.
Eric Martel, Bombardier Aerospace president and CEOI believe that 2023 will be a story of business aviation manufacturers showcasing the resilience we have built into our respective plans and overall industry. Our industry enjoyed significant boom periods over the last couple of years as more and more people experience and appreciate the advantages of business aviation, particularly in terms of time savings. Now that we have a strong backlog and demand is stabilizing, we remain in a strong position to face uncertainty in varying economic outlooks.
Eric Trappier, Dassault Aviation chairman and CEO As far as I can tell, in the current situation and into the foreseeable future, supply-chain issues are going to be key.
Jack Pelton, Experimental Aircraft Association CEO It would have to be what the new FAA reauthorization bill contains for general aviation. Privatization of ATC has been the hot topic for years in prior reauthorizations. I hope we are done with that. The more important issue will be specifically addressing general aviation as a critical segment by including issues that will provide FAA support for its growth.
Pete Bunce, General Aviation Manufacturers Association (GAMA) president and CEO In 2023, the congressional work to pass an FAA reauthorization bill will be a significant story closely followed throughout the industry and by policymakers. This bill will set the framework for FAA’s operations, policies and priorities over what is likely the next five years.
Ed Bolen, National Business Aviation Association president and CEO A key thing in 2023 will be FAA reauthorization. It’s an opportunity as we move forward to make sure that here in the U.S. specifically, we’ve got a framework that allows our industry to move forward, which means that we are able to have the FAA funded, staffed, move the processes forward, and make the legislative and regulatory changes necessary to fully function.
Richard Aboulafia, AeroDynamic Advisory managing director The big challenge will be keeping the supply/demand balance right. We will start to see some of the supply chain challenges loosen, right as the market softens. Will OEMs maintain production discipline, or will pricing suffer?
Ed Bolen, National Business Aviation Association president and CEOIt’s constantly getting the message out about who we are and the kind of enormous benefits generated by business aviation in the U.S. and around the world, and working with governments, policy makers and opinion leaders to make sure that business aviation is recognized, understood and has an opportunity to provide these societal benefits.
Pete Bunce, General Aviation Manufacturers Association (GAMA) president and CEO: The biggest challenge in 2023 will be addressing and navigating workforce issues within the FAA and industry. The work being done by FAA leadership is immense and commendable but as you branch out within the agency you see significant reductions in average experience level.
Mark Burns, Gulfstream Aerospace presidentGulfstream has made significant investments over the years, resulting in the introduction of five new aircraft since 2014 and the most formidable, highest-technology fleet in the industry. As a result, we’re moving at an unprecedented pace, which poses an industry-wide challenge to deliver greater efficiency in our certification environment. The current environment is ripe for innovation, and we are excited to continue to partner with the FAA and the ODA on driving further efficiencies that keep safety paramount and our industry competitive.
Curt Castagna, National Air Transportation Association president and CEOThe escalating cost of doing business is causing companies to reexamine their pricing strategy, determine which products and/or services truly add value, reassign financial and employee resources to areas that will help them grow, and focus on addressing operational inefficiencies.
Lynn Fischer, XO chief marketing officerThroughout 2022 we have seen that the overall industry is lacking aircraft availability and reliability. At XO, we’ve anticipated and responded to this industry-wide challenge by looking at demand data and have expanded not only our fleet and network but our shared charter routes, to best service our client’s needs at an accessible price point. For example, we’ve recently announced the expansion of our New York to South Florida route, which is our most requested route for our members. This expansion gives flyers more travel options to South Florida at one-tenth of the cost of a full charter, with access to up to four daily Shared Flights, seven days a week, all bookable through the XO mobile app.
Brian Foley, Foley Associates Getting into the mindset that recent years were extraordinary and having more modest expectations for 2023. Recognizing what is a more normalized business environment may be difficult for some.
Sheila Kayaoglu, Jefferies equity analyst When we look at the OEM net price increases on a net basis, they’ve been low single-digits at best. What pricing does in 2023 I think is going to be a challenge or big watch item.
Eric Martel, Bombardier Aerospace president and CEOThe answer that immediately comes to mind is workforce. This is a widespread challenge affecting many industries, and I think the particular challenge for business aviation is to convince young people to pursue a career in this fascinating industry. We have openings now, for a variety of positions around the world, but we also must prepare to replace a workforce that is facing significant retirements in the next few years.
Jack Pelton, Experimental Aircraft Association CEO As the integration of manned and unmanned UAS/UAM into the national air space gets closer and closer, it will be critical to get the regulatory policy right. 2023 will be a big year for much of that work to go out of comment.
Jim Segrave, flyExclusive founder and CEOPrivate aviation has chronically been undersupplied for customers who do not own their own aircraft, and this is likely to continue into 2023. The recent surge in demand, driven in part by the pandemic and obstacles faced by commercial carriers, has only widened the opportunity to address the issue. The real opportunity is less about supply and demand and more about our expertise and superior track record as an operator with a scaled model that drives profitability. Our vertical integration platform is key for us as we think about current and future challenges within private aviation. It is not an easy thing to do and for the most part our industry is dominated by those that have aggregated demand but have not solved for the rest of the equation. We intend to build the most vertically integrated private jet operation in the world, controlling our cost, execution, growth and profitability.
Eric Trappier, Dassault Aviation chairman and CEO Our biggest challenges for 2023 are going to be the ramp-up in production of both our Falcon jets and Rafale fighters and the entry into service of the Falcon 6X.
David Best, Jet Aviation senior vice president regional operations & general manager AmericasWe are seeing a large number of customers increasing the size of their aircraft. This requires larger infrastructure and proactive planning for larger wingspans. We are committed to growing our network and facilities to continue to provide a seamless service for our customers as their needs evolve. We recently broke ground on an 18,000-sq.-ft. hangar in Scottsdale, Arizona, and a 40,000-sq.-ft.-hangar in Bozeman, Montana, along with executing other projects within our FBO network.
Marty Kretchman, Signature senior vice president of operations planningAs aircraft become larger and operational volumes grow, we’ve put increased emphasis on our ability to safely optimize our ramp and hangar spaces, starting with our most physically constrained markets. The ability to efficiently move and store our customers’ aircraft is critical to our ability to meet the growing demand in our industry. At Signature, we’re working hard to innovate and improve through updated processes, technology and innovative training that’s never been deployed in our space.
—Molly McMillin, a 25-year aviation journalist, is managing editor of business aviation for the Aviation Week Network and editor-in-chief of The Weekly of Business Aviation, an Aviation Week market intelligence report.
