The business jet market remained strong on many metrics in 2022, but questions remain about whether 2023 may bring a tougher environment for the industry, Global Jet Capital (GJC) said in its latest Market Brief.
The 2022 fourth-quarter GJC report noted flight operations improved year-over-year; orders for new aircraft came in at high levels; transactions, while down, were still above pre-Covid levels; and pricing remained stable and overall available inventories remained low, even as aircraft listings increased.
“The biggest question going forward is the health of the global economy, with many economists expecting a recession in 2023,” GJC said. “Due to business aviation’s unique value proposition, the business jet market has remained resilient but will likely be tested this year.”
Flight operations “were a bright spot” for business aviation in 2022, GJC said, with activity 12 percent above 2021 and 19.1 percent higher than in 2019. GJC credited the return of existing customers along with new entrants to the results. Operations softened in the fourth quarter but still remained 17.8 percent above 2019 levels, GJC noted, “demonstrating that the broadening of the business aviation user base has endured.”
Combined backlogs for Gulfstream, Bombardier, and Cessna topped $40 billion by the end of the year, up by $8 billion from a year earlier. While orders dampened by the end of the year, they still remained at historical norms, and industry-wide book-to-bill remained above 1:1.
New deliveries and preowned transactions combined declined 15.1 percent in 2022 compared with 2021. But GJC called the pace of transactions in 2021 “not sustainable” given the decline in inventory that year and supply-chain disruptions. At the same time, though, demand continued and dollar volume was up 5.5 percent thanks to increased pricing.
Aircraft sellers returned in 2022 and inventory crept up to 5 percent of the aircraft fleet by the end of the year, up from 3.1 percent at the beginning of the year. However, young aircraft availability hovered around 3.5 percent at year-end.
GJC noted the rising interest rates in 2022 that stemmed from inflation and supply chain disruption. Further, the war in Ukraine, energy instability, and Zero-Covid policies in China created uncertainties.
“Heading into 2023, economists expect economic headwinds to persist,” GJC said. “While many economists forecast the global economy to experience a recession in 2023, Q4 2022 data indicates that the contraction may be less severe than originally expected.” This will test the industry dynamics, the company added.
