Biz jet marketFrom Desjardins Recap of the week (july 9)
This week, we take a closer look at bizjet market conditions now that we are more than halfway through 2024.
According to bizjet data provider WINGX, in 1H24, bizjet utilization tapered slightly vs 2023 but is still well above 2019 levels. At mid-year, global bizjet activity has fallen 2% vs 2023. Specifically, the US market (largest bizjet market in the world) is just 1% weaker than last year but is up 29% vs 1H19. European business aviation flights are up 8% in 2024 vs 1H19.
Moreover, in a positive sign for BBD’s only two segment exposures, super midsize and ultra long-range bizjets are propping up the US market so far in 2024, with departures up 9% and 6%, respectively (but up 50% and 46% vs 2019).
Super midsize fleets have also topped the utilization rankings so far this year, with an average of 147 hours per tail sign, significantly more than the average for all bizjet types of 96 hours per tail sign in January through June (positive leading indicator for future aftermarket work at BBD). Across operator types, aircraft management fleets have flown the most bizjet flight hours year-to-date in the US, closely followed by fractional fleets (more flight hours than in any of the last five years).
While the pre-owned market is now more balanced, according to Corporate Jet Investor, the percentage of aircraft for sale is still relatively low and aircraft are not depreciating as one would expect. AMSTAT states that only 7.7% of large jets were for sale at the end of June, 7.2% of medium jets and 6.1% of light (pre-owned bizjet inventory as a percentage of the total bizjet fleet; JETNET considers 11–14% a normal level). Also, only eight of Gulfstream’s newly certified G700s have reportedly been delivered by mid-year (target of 50 for 2024 now seems overly optimistic), which combined with other industry supply chain issues, suggests that the bizjet market will remain tight for the foreseeable future.
Overall, we would characterize this as a solid start to the year for the bizjet industry, with BBD’s main end markets stealing the show (continuation of post-pandemic flying trends).
More importantly, with the increased usage, the stock market at an all-time high (positive read-through for HNWI and corporate spending as well as wealth creation), the interest rate hiking cycle likely coming to an end, low used inventory, the US House of Representatives passing the extension of 100% bonus depreciation, and the potential for more tax cuts and more lenient environmental regulation if former president Donald Trump returns to office (currently the favourite; see our note), all indicators are pointing in the right direction for BBD and its customer base.