Business aviation sales are predicted to reach just short of $30 billion per annum by 2023, according to U.S.-based aircraft broker Jetcraft's latest five-year industry forecast for new and preowned aircraft that it released this week at EBACE. This is up from the more than $26 billion in new delivery and preowned aircraft sales last year, said company owner and chairman Jahid Fazal-Karim.
Its forecast, which covers the 2019 to 2023 period, also concluded that preowned transactions are growing at a proportionately higher rate than new deliveries and that “more accessible and less costly refurbishment options” are allowing growth in the preowned “value proposition” and even created increased demand for out-of-production aircraft. The forecast also found that the average retirement age of a business aircraft is now 32 years—“something that really surprises me,” professed Jetcraft president Chad Anderson.
This year, Jetcraft decided to “leverage” some of its proprietary data and “past transactional databases” to produce “the first [forecast] of its kind to take such a precise, comparative and quantified look” at both pre-owned and new transactions—which has led, despite more conservative delivery predictions, to a picture of a dynamic pre-owned market, “poised for continued and significant growth,” adding that, “Key among this year’s changes is our shift from a ten-year to a five-year outlook, more in line with the current aircraft ownership experience.”
In terms of aircraft size, the shift towards larger continues, but overall new deliveries are forecast to “flatten out as the result of an upcoming economic downturn,” although preowned transitions “will continue to grow.” The analysis predicts the business aircraft fleet will grow by 12.1 percent over the next five years, but estimates that some 1,050 aircraft will be retired over the same period.
The forecast involved an evaluation of 168 business aircraft models in four categories: light, midsize, large, and commercial aircraft. Over the years, Jetcraft said it has amassed a vast amount of data “on customer buying preferences, loyalty rates, and trade even versus trade up patterns." With 9,389 recorded preowned transactions over the past five years, Jetcraft said that over the next half-decade this will increase to 11,765, representing a revenue increase from $53.6 billion to $61 billion.
New aircraft value will grow from $82.1 billion to $90.5 billion over the forecast period. Interestingly, the number of aircraft these figures represent remain essentially similar: 3,444 new aircraft versus 3,442 previously. The report's graphs show that transaction volume and value have grown significantly, despite the 2008 downturn. By 2023, pre-owned transactions will be four times the number of new deliveries, strengthening a trend that has become gradually more noticeable since 2008 as OEMs have been more measured about raising production rates.
Average transaction size for new deliveries increased gradually until around 2013 then reduced from around $26 million to just more than $22 million, but since then it has increased again, and Jetcraft believes that it will continue this upward trend to reach more than $27 million by 2022 or 2023. However, the value of average preowned transactions has reduced steadily since 2007, from a peak of $8.4 million to $5.5 million last year, and is expected to reduce further to $4.7 million by 2023. This is despite “declining interest in light jets [and] growth in preference for large jets.”
In terms of aircraft for sale, 9.1 percent of the 19,818 aircraft in the active fleet were on the market; by 2023, Jetcraft said this could reach 13.1 percent of a fleet that will have reached 22,211 aircraft. For in-production aircraft, the fleet in 2018 was 1,812 aircraft, with 14.3 percent being for sale; in 2023, the fleet could reach 2,902, with 15.5 percent for sale, based on Jetcraft projections.
2008 saw a step-change of in-production aircraft for sale, and while such numbers are not likely to be reached again by 2023, they will have increased significantly. “The number of preowned aircraft for sale decreased 27.5 percent between FY2009 and FY2018” but this is “projected to increase during the forecast period as light jet owners trade up and owners of new large aircraft transition within this category.”
