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What are the Signs for Market Growth in 2019?

Projections and analysis continue to emerge, offering insights on the business aircraft sales markets in 2019. What are the latest observations suggesting about the potential for market growth next year? Dave Higdon explores...

Dave Higdon   |   23rd November 2018
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Dave Higdon Dave Higdon

Dave Higdon writes about aviation from his base in Wichita Kansas. During three decades in...
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Projections and analysis continue to emerge, offering insights on the business aircraft sales markets in 2019. What are the latest observations suggesting about the potential for market growth next year? Dave Higdon explores…
 
New signs continue to emerge in support of the strong forecasts released at NBAA-BACE over a month ago.
 
Earlier in November Mente Group president and CEO Brian Proctor told attendees at the Corporate Jet Investor (CJI) Miami conference to expect market momentum to continue into 2019, despite an environment presenting “more headwinds than tailwinds”.
 
Mente Group anticipates price growth for new and used business jets as the volume of transactions declines in used business aircraft while new jet sales flatten making 2019 a good year for OEMs to focus on building order backlogs.
 
Proctor believes the tailwinds that are helping the market include tax reform in the US, pricing on both new and used business aircraft, pent-up demand for new aircraft and new aircraft entrants. These, he believes, are all conducive to growth.
 
On the headwinds list, Proctor asserts, is the growing strength of the US dollar (which increases aircraft prices for international transactions); an unusually small inventory of used aircraft; a lack of availability for MRO services; growing infrastructure costs; US political discourse; and increasing interest rates.
 
 
Other Solid Signs: Avionics Sales
 
Earlier this week the Aircraft Electronics Association released its report on Q3 and January-September avionics sales, covering forward-fit and retrofit business. As it has in the past, the AEA report provides a different perspective on the strength of business in General Aviation.
 
Avionics sales in the first nine months of 2018 grew by 15.5% over the same period of 2017. Forward-fit (avionics in new-production aircraft) grew 16.6% over 2017 to $855m. That's in-line with the General Aviation Manufacturers Association (GAMA) Q3 report, which showed new airplane shipment increases in all segments.
 
Retrofit of new avionics into existing aircraft grew 14.7% versus the first nine months of 2017, exceeding $1.15bn.
 
According to AEA president Paula Derks, “We have now seen seven straight quarters of positive Year-over-Year sales growth dating back to the end of 2016, and it's an encouraging sign for the industry that sales are strong in both the forward-fit and retrofit markets.
 
"With robust growth in sales during the first nine months of the year, industry is on pace to produce the largest dollar amount of year-end avionics sales since the reporting process began back in 2012."
 
 
A Dynamic Market on the Grow...

With sales of used business jets growing again, with avionics mandates to satisfy, and with demand challenging supply, all these factors support the outlook for strong business jet sales for the short term, a slight period of market flatness (or a small contraction) in the middle years, and a return to sales growth in the final four years of the period.
 
All these forecasts presume a world with a level of stability that in the current climate can, on occasion, be difficult to envision. But with a new generation of Business Aviation users helping edge the numbers up, it's not difficult to imagine the population of business aircraft users growing enough to drive up sales at all levels.
 
While the newest of the new-generation users reportedly show little interest in owning their aircraft, their heightened interest in using business aircraft all but guarantees continued fleet growth – whether through fractional programs, pre-paid jet cards or membership programs.
 
That's good enough news to at least keep the Business Aviation community smiling broadly through the next couple of years.
 
 
 
Read the latest AvBuyer Digital Edition here
 

Read more about: Avionics Retrofits | Avionics Sales | Used Jets for Sale | New Jet Shipments | Business Aviation Forecasts | Dave Higdon

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