Foley: Bizjet Pricing Finally Appears To Be on the Rise
After more than a decade when OEMs had little leverage to firm up aircraft pricing, market conditions are ripe for increases.
Smaller preowned inventories, longer lead times, and inflation are all positioning the business jet market for increased prices. (Photo: Textron Aviation)

After more than a decade in which OEMs had little leverage to shore up pricing for business jets, the market is finally starting to turn and prices appear to be in the early stages of increasing, according to industry analyst Brian Foley, founder of Brian Foley Associates. “Add one more item to the growing list of prices on the rise—private jets,” Foley said, noting that even a small percentage increase on business jets can raise purchase prices by millions.


This marks a turn from the trend that came after worldwide business jet deliveries peaked in 2008 at 1,300 units. Deliveries have since plummeted, averaging about 700 units per year and leaving “the five principal builders—Bombardier, Embraer, Textron Aviation (Cessna and Beechcraft), Dassault Falcon Jet, and General Dynamics’ unit Gulfstream—fighting for sales from a diminished pool of buyers,” dampening prices, he said.


In 2019, the market appeared to strengthen but those gains were stricken by the pandemic, which led to deliveries dropping by 20 percent. But, according to Foley, “That’s all changing.”


He called the “2020 blowout sales year” for preowned business jets an early harbinger for the new jet market this year. “The number of used aircraft transactions have recently set all-time records, and the inventory to choose from has shrunk to just a third of typical levels. With few cream puffs remaining, buyers have nowhere left to go except to the new-plane showroom,” he said.


That trend was on display in the latest round of quarterly reports from the manufacturers, which posted book-to-bill ratios that hovered around 2:1, meaning twice as many units were sold than delivered. Backlogs have increased accordingly.


“While some pricing pressures still remain, this has all of the hallmarks of morphing into a seller’s market,” he said. Adding to the lower available inventories and longer lead times for aircraft, inflationary pressures are also anticipated to push up pricing.


“Before raising list prices, manufacturers will first discount less, an amount that varies by make, model, and customer but is typically in the single-digit percentages,” Foley noted. Even so, he said pricing seems to have risen for certain models.


“It’s believed that this is just a first leg up in longer-term, steadily increasing jet prices as more buyers chase a limited airplane supply, all while being fanned by systemic inflation throughout the economy and supply chain,” he said. “The industry is embarking on its first opportunity for firming up prices in well over a decade, pointing towards a long-overdue clear runway towards improved margins and prosperity.”