JetNet Sees Mixed Signals for Bizjet Market
While OEM backlogs are up for the first time in years, there are dark clouds on the horizon, according to JetNet.

Industry data provider JetNet issued its latest 10-year forecast calling for deliveries of 7,050 business jets (excluding personal jets and bizliners) worth an approximate $241 billion. However, the Utica, New York-based company, which presented its annual JetNet iQ State of the Market Briefing on Tuesday at NBAA-BACE, sees a mixed bag when it looks at the current business aviation landscape.


Paul Cardarelli, the family-owned company’s v-p of sales, said OEMs have healthy book-to-bill ratios with a backlog of $32 billion, a 7 percent increase from 2018 and the first increase in several years, but added many post-recession challenges still remain. Among them, residual aircraft values for many models are still down by as much as 40 percent five years after delivery, a paradigm that has existed for the past several years. “That is a new normal that I think confronts our industry,” he stated.


Another area of note is utilization, with the current number of cycles equivalent to the levels seen in 2011 when the fleet, particularly in the U.S., was a third less than the present. â€śWe simply don’t operate our business aircraft like we used to," Cardarelli commented.


Those concerns are still tied to the oversupply spawned in the late 2000s. In that span, the industry went from an average of 600 to 700 aircraft deliveries a year to more than 1,000 in the ramp-up to the global recession. “I think what we are seeing today is a transformational time,” explained Cardarelli. “It’s an industry that perhaps is maturing.”


The global fleet remains geographically concentrated, with 62 percent based in North America—a total similar to the 60 percent when JetNet began back in the late 1980s. Meanwhile, the average age of the private business jet owner is 63.6 years “The fact is that owner is not going to be buying a lot more aircraft, so this industry [needs] to be out there looking for more concept buyers and I think that’s the transformation that we see today,” Cardarelli told the audience.


In terms of used aircraft sales, the percentage available is still under 10 percent, at 9.6 percent nominally indicating a seller’s market. Preowned sales, which peaked last year with 2,900 transactions, have declined as much of the young inventory has been purchased. Current transaction rates are 19 percent lower than a year ago.


Survey Results


JetNet has conducted its iQ user surveys since 2011 and has received more than 18,000 responses over that time. One of its key indicators is market sentiment—responses to questions about how respondents feel about the health of the market. For this year only 51 percent indicated they believed it was on an upswing, compared with 69 percent a year ago.


The delta of 18 points demonstrates a growing pessimism and the sharpest drop recorded in the past seven years. The less than 18 percent worldwide net optimism score represents the lowest score since late 2016 when the industry was roiled by the announcement of Brexit and the highly-contentious U.S. presidential election.


While industry confidence rallied in the following years, the current downturn is expected to persist. “The mood is still kind of dark,” observed Rolland Vincent, JetNet iQ’s director and president of industry consultancy Rolland Vincent Associates. “Whether its trade tensions, China slowdowns, another election year, or Brexit, which is still uncertain, Germany grappling with recession, or Italy in recession, there’s a lot of things going on that are causing investors and stakeholders to say, 'I’m just going to wait.'”


Over the past five quarters, the survey results point to a systematic drop in all geographic areas and across all jet size segments.


The survey also asked operators about their intended purchases over the next 12 months, with medium jets leading at 45.2 percent of the mentions, led by the Bombardier Challenger 350, followed by light jets at 40.5 percent and large-cabin jets, which garnered only 14.3 percent of the mentions. Looking ahead to five-year plans, medium jets still lead with 47.5 percent, while large-cabin rose to 28.3 percent, leaving light jets with the remainder at 24.2 percent. Among the inhibitors to buying a new jet, no need for additional aircraft remains the top reason.


The latest survey queried respondents on whether they believe industry leaders and OEMs need to come together to improve the general public’s perception of business aviation. A commanding 86 percent somewhat or strongly agreed with that statement.