I’m going to date myself here. When I was a kid, I remember the generation of my older contemporaries — college kids mostly — who would often use the phrase “keep the faith.” Believe and trust in something even when it is difficult to do so. In the 1970’s, that was good advice.
Like many of you, I recently returned from the 2023 NBAA-BACE show. It was yet another fine event for our industry, well attended and rich with sentiments of optimism. With the COVID market boost behind us, these positive sentiments were reassuring. Not long ago we as an industry were much lapsed in our collective confidence — myself included. We were not keeping the faith.
Most would mark March 2020 as the point the world pulled the chain and sounded a global pandemic alarm. On March 13, 2020, the Trump Administration declared a US nationwide emergency. On March 14, the CDC issued a “no sail order” for cruise ships, and on March 15, US states began ordering school shutdowns and other restrictions. In the following weeks, countries across the globe implemented cross-border restrictions, quarantines, and other actions impairing all forms of travel. In respect to business aviation, what followed was a wholesale decline in every measurable respect.
- US annual business jet cycles off by > 1 million (@ 25%) YoY.
- Business jet inventory in March exceeded 2,200 units for sale or 10%
- Large cabin jet listings on JETNET off by > $1,000,000 in ask price value, an approximate 10% decrease from January to July.
- Retail business jet transactions at just 105 in April — the lowest since January 2004.
It was no surprise that sentiment from within our industry — from you, me, and everyone who operates a business aircraft — fell to an unprecedented low in 2020.
By way of JETNET iQ, produced in collaboration with the consultancy Rolland Vincent Associates, we survey thousands of business aircraft owners, operators, and industry leaders on a wide range of topics including their overall sentiment for our industry. In short, we score and index their responses with a value of zero as the delineator between optimistic and pessimistic sentiment. We have done this each quarter dating back to 2012. Over the last ten years our industry has been generally positive with optimists exceeding pessimists on average by about 30%. But in Q2 2020 the JETNET iQ sentiment score was an astoundingly pessimistic -42.6. COVID shook our collective confidence to its very core. Fortunately, this proved to be a short-lived aberration. By July 2020, retail business jet sales recovered to 247. The year would close at 2,575 total sales, 154 more than the year prior.
What followed in 2021 and 2022 was a reset of our industry as we know it. As airlines struggled to get back in the skies, first-time business aircraft consumers revealed themselves as never before through booking of charter, purchase of fractional shares and jet-cards, and acquisition of aircraft new and used. 3,463 pre-owned retail business jets transactions closed in 2021, with an astonishing 582 in December alone. This frantic pace continued into 2022. By March, the inventory of pre-owned business jets for sale recorded by JETNET went as low as 709, just 3% of the in-service fleet. With that came a spike in aircraft values and pressure on buyers to close as fast as possible. OEMs also benefited during this time, as new aircraft book-to-bill ratios began pushing up above 1-to-1 and nearing or even exceeding 2-to-1, as recorded by JETNET iQ.
Getting back to last month’s NBAA-BACE show. As stated earlier, optimism was strong. Granted, pre-owned inventory is up from last year. As of Friday, November 3, there were 1,675 business jets listed for sale on JETNET, 7% of the pre-owned fleet. That is a solid seller’s market and for brokers, it’s nice to finally have some inventory to shop through. As for pricing, it is starting to correct itself, but an experienced aircraft appraiser recently told me that to-date pricing remains relatively firm on many late model, clean aircraft.
To date, JETNET has recorded 1,697 pre-owned retail jet sales for 2023 — about 28% off from last year. If that trajectory holds, the year should close at about 2,100 pre-owned retail jet sales for 2023.
The most recent JETNET iQ industry sentiment score recorded in September was 16.8%. That is well into positive territory albeit down 50% from one year ago. But putting some context around it, 16%–17% seems like a fair assessment of our industry today. We have just come off a two-year high during which some 6,000 pre-owned business jets were transacted and nearly 1,900 new business jets were delivered. That implies a large volume of demand satiated in a short time. Consider too that our industry is notoriously geopolitically sensitive. Today, shooting wars are being prosecuted in Europe and the Middle East, while here in the US, we are about to enter yet another contentious presidential election year.
Correction is in the air, and it will almost certainly be evident in 2024. But our industry fundamentals are sound as we make headway on carbon neutrality, add exciting new products and technologies to the pipeline, and continue to retain and gain so many highly talented people to our industry. At JETNET and JETNET iQ, we are bullish on business aviation and will continue to be — I hope you will be too.
Keep the faith.
Paul Cardarelli
Vice President of Sales, JETNET
JETNET maintains the world’s most comprehensive and granular database of actionable business aviation information. Our ability to collect, analyze and disseminate highly relevant business aviation data is unmatched. Visit us at JETNET.com to learn how we can help you make better business decisions by leveraging the power of world-class data and unbiased market intelligence.
