As the Great Recession moves into its sixth year, the market for used business aircraft remains something of a quagmire, with some models still searching for a price bottom. But there are bright spots where values have stabilized, and inventory overall is headed in the right direction.
Until this most recent, long and painful recession, the rule of thumb followed by those who analyze the business aviation market is that aircraft sales, new and used, follow an increase in corporate profits by about 18 to 24 months. Assuming this to be true, then business aviation should already be showing healthy growth and the completion and refurbishment segment should be close behind. But it hasn’t happened yet.
This year’s early round of business aviation market forecasts–from Bombardier, Embraer and Honeywell–present a mixed picture where a moderately optimistic outlook for the U.S. still fails to outweigh economic uncertainty in Europe and slowing growth in Asia.
NBAA released a new study today showing that even during the worst economic times since the Great Depression, companies that relied on business aviation outperformed those that did not. According to NBAA, the companies that use business aircraft have better shareholder value and recovered from the recession more quickly than their peers.
In September 2010, the National Bureau of Economic Research declared that the recession had ended in June 2009 and a recovery was under way.
Once again monthly International Air Transport Association (IATA) airline traffic statistics reflected “positive distortion” caused by geopolitical and other factors, resulting in somewhat inflated data for March.
Uncertainty. It’s a word that packs a lot of fear and indecision into four syllables, and one that has continued to burden not only the U.S. economy but that of the world as well.
It has been two years since the economy went south, dragging business aviation right behind, and a year-and-a-half since a panel of “top economists” formed by the non-profit National Bureau of Economic Research (NBER) declared the recession over as of June 2009.
The charter segment has been hit particularly hard during this downturn, as the number of flights dropped drastically from year-ago levels. Flight activity has recently begun to show minor increases, but in many cases the downturn has shone a light on other challenges with which the industry must contend.
Just as the reduced size of this week’s NBAA show is a sign of the harsh economic times in which the business of business aviation is being conducted, next year’s European Business Aviation Convention & Exhibition (EBACE) in Geneva seems likely to be on a diminished scale as Europe’s economies deal with the downturn.
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