Is business aviation in a bubble?
Is the business aviation industry in a bubble that could pop or in the midst of sustainable, vibrant growth? These polar-opposite possibilities mean the answer could lie in the somewhere middle, but many pundits pronounce that business aviation’s growth is underpinned by factors that mean the current cycle is more than a short uptick. If they are to be believed, we’ll finish this year strong and 2023 looks good, too.
For starters, aircraft manufacturers are sitting on healthy backlogs. They amount to about a 1.8 book-to-bill ratio of orders received to airframes shipped—which means an almost two-year backlog exists across the industry.
The used aircraft inventory is still low, although don’t expect the spike in transactions the industry experienced in December 2021. “Last December, there were twice as many transactions on average, by segment, than all the previous months in 2021,” says Phil Winters, International Aircraft Dealers Association vice chairman.
While there still will be a push for aircraft transactions before yearend, partly due to changes in depreciation allowances (see Kent Jackson’s Point of Law column for details), don’t rush the closing and skip the visual aircraft inspection.
The market may be brisk but prices are more stable than last year at this time, which is a positive. New entrants buoyed the business aviation industry and are not expected to depart, so the population using private aviation has expanded. “We’re seeing the average age of a new entrant 20 years earlier,” which means if these travelers continue to use private aviation, they could be customers for two additional decades, says Kenn Ricci, principal for Directional Aviation, speaking at the Corporate Jet Investor Miami 2022 conference.
Ricci says new customers are also starting with larger, usually midsized jets, “and there seems to be less move up. They tend to start with the airplane they ultimately want.”
Despite some economic headwinds, the industry’s growth and stability assure that 2022 will go into the books as a good one for business aviation.
Lee Ann ShayEditor In Chief, BCA
