BBD aircraft continues to outperform Update On Q3/23 Biz Jet Flight Activity -- CIBC Transportation & Aerospace Weekly
Key Points
With Q3/23 coming to an end, we update our biz jet flight activity tracker. Below are some key observations:
- Looking at global business aviation flight activity, it was down 2% Y/Y in Q3/23 but up very modestly Q/Q. Business aviation totaled 994,672 flights according to Radarbox in the third quarter, down from 1,015,180 flights in Q2/23 but versus 777,556 in Q3/19. We continue to see traffic trend above pre-pandemic levels.
- Looking at September traffic, this came in at 321,808 flights, up 3% Y/Y and up 6% M/M. This is the first time flight activity has been up Y/Y since January/February of 2023.
- Flight activity on BBD aircraft continues to outperform the broader industry trends. In the third quarter, BBD aircraft flew 4% more Y/Y while in September, activity was up 5% Y/Y. The RadarBox data supports our view that BBD's service revenue should continue to perform well. Looking at BBD's business aircraft flight activity versus its Service revenue going back to 2019, there is a 78% correlation. BBD's target is to hit US$2B of Service revenue by 2025 with expectations of generating US$1.6B – US$1.7B in 2023 through 1) an increase in market share related to servicing BBD aircraft (targeting 50% from 35% back in 2020) and 2) an increase in service capacity.
Net-net, the Radarbox data is an incremental positive datapoint for the business aviation industry. The September traffic trends may be a sign that business aviation traffic is stabilizing as it comes off the highs during the pandemic. For BBD, the growth in its Service revenue helps diversify BBD’s earnings while also being higher margin.