In its annual 10-year business jet market forecast released October 4, Jetcraft (SD01) predicted an upward trend for new business jet sales. Jetcraft acquires, trades and brokers both new and preowned executive and VIP jets.
The report, presented to NBAA 2017 attendees in Las Vegas, Nevada, this week, included tracking information on OEM percentages of the market and split performance by aircraft type, from very light jet through ultra-widebody business jet. It also included an analysis of who might be in the market for new aircraft in the next decade, profiling the estimated numbers of ultra-high-wealth individuals in different regions of the world. The report also tracked corporate spending, and predicts that spending on business jets as tools may increase as corporations close the next round of share buybacks and look for other outlets for spending cash on hand.
Jetcraft’s 2017 forecast calls for 8,349 business jet deliveries by 2026, representing $252 billion in revenues (based on 2017 pricing). North America leads the way with 62 percent of deliveries (5,176 aircraft), followed by Europe with 17 percent and Asia with 12 percent (1,420 and 1,002 aircraft, respectively).
Over the past decade the average aircraft list price increased by 56 percent. The forecast sees that number growing by an additional 16 percent by 2026. How might that happen? Jetcraft predicts that 98 percent of the forecasted revenues from new programs will be for widebody or large business jets such as the Citation Hemisphere, Global 7000 and Gulfstream G500 and G600.
“Pinpointing the transition into a new business cycle is challenging,” said Jetcraft chairman Jahid Fazal-Karim. “Our forecast indicates we are finally exiting the post-2008 recession period, entering several years of steadier, healthier growth and expanding revenues.”
Preowned Segment
Jetcraft president Chad Anderson addressed predictions for the preowned jet aircraft market, telling AIN, “We’re seeing extremely positive momentum in the preowned market right now. Preowned inventories are down to recovery-like levels, which is great news for the market. Residual values, however, should be higher,” he cautioned. “Our forecast predicts this is because several models stopped production and the expected or actual entry into service of new models is delayed. Adding to this is the now common requirement from buyers to integrate advanced technology such as ADS-B compliance, FANS and the latest Internet capabilities into virtually every transaction, which is significantly cutting into the return sellers can expect for their aircraft,” he said. Jetcraft’s forecast concludes that residual values will hold over the next several years before they improve.
That said, there is market activity. “The younger aircraft continue to be the most efficient sellers, primarily because there is a nice enough difference in price from a new option. Older aircraft tend to experience a relatively higher rate of depreciation, and there are more variables that come into a deal on an older aircraft that take time and cost money,” said Anderson.
Through 2026, Jetcraft predicts demand shifting more toward widebody models at the expense of narrowbody aircraft. The large-jet category should end up constituting a forecasted 31 percent of total unit deliveries with 2,589 units, accounting for more than 63 percent of total revenue.
Anderson is thinking positively about the short-term outlook for the preowned jet market. “New programs will affect the market, specifically the widebody models, such as the Citation Hemisphere, Global 7000, Falcon 8X/5X and Gulfstream G500 and 6G00 as they come online. That said, demand in the preowned market looks very healthy over the next 12 months and we think the five-year outlook is optimistic, given the lessons we’ve all learned in the last downturn, which now seems to be in our rear-view mirror.”
