Loading please wait....

If you are a registered, please log in. If not, please click here to register.

A Tale Of Two Markets

The current demand for business aircraft relates to size and range- with larger designs selling better than smaller. That scenario- however- belies the fundamental character of Business Aviation- observes Jack Olcott.

Jack Olcott   |   1st September 2013
Back to articles
Jack Olcott Jack Olcott

Possibly the world’s most recognized advocate, if not expert on the value of Business Aviation,...
Read More

A Tale Of Two Markets
Understanding the character of Business Aviation.

The current demand for business aircraft relates to size and range- with larger designs selling better than smaller. That scenario- however- belies the fundamental character of Business Aviation- observes Jack Olcott.

Larger business aircraft with the range to reach distant markets and the cabin size to provide office-like features en-route appear to have dominated manufacturers’ order books lately. Demand for light to medium-sized designs seems lackluster. In essence- the market for Business Aviation looks bifurcated- with large jets selling significantly better than small airplanes.

It was not always so. Traditionally- the Business Aviation community has been dominated by light to medium-size aircraft powered by jet or turboprop engines. Nor should we overlook the many light- to cabin-class aircraft propelled by conventional internal combustion engines turning propellers (piston airplanes).

These machines—jet- turboprop or piston—are indeed workhorses- providing companies with access to regions where either the demand for public transportation by air is insufficient for Airline service or the airports serving the area are too small. For prompt transportation- many locations within the USA are dependent upon business aircraft.

As the domestic economy recovers- so will the demand for traditionally-sized business aircraft- possibly with more activity in the small to medium category than previously seen. Because scheduled Airline service is focused on fewer than 50 locations of over 5-000 airports within the US- business aircraft provide access that companies cannot obtain from other sources.

The frequency of Airline flights even at those 50 major locations has been curtailed. Recent trends known as “capacity discipline” have prompted scheduled air carriers to reduce their service in order to fill airliners to capacity- and departures by scheduled Airlines have decreased by 8.8 percent at the major hubs and by over 21 percent at secondary hubs during the last five-or-so years.

Traditional business aircraft will continue to be required to provide access not met by scheduled air service.

Demand for larger- long-range aircraft is in response to a dynamic global economy searching for new markets. Domestically- the full impact of the U.S. “Great Recession” may not be fully understood or quantified- and Europe’s economic recovery is in its earliest stages. Uncertainty still prevails- as it surely will in the future (since there are very few guarantees in the business world). But the global economy has its bright spots- and the insightful entrepreneur and progressive corporation seek those opportunities- which in today’s economy often are found in far-off lands such as China- Africa and South America. Thus companies are purchasing business aircraft with performance and travel capability to reach distant ports.

Coupled with the demand to travel long distances is the advance in connectivity that accompanies today’s larger business aircraft. In the era before satellites enabled passengers to use their mobile devices and laptops to connect with associates on the ground- business flights from the USA to Europe typically departed home base at night and passengers slept as their aircraft crossed oceans.

Today’s intercontinental mission often is flown during the day. Passengers use the aircraft as a moving office- connecting with colleagues and customers while traveling- and arriving at their overseas destination in time to obtain hotel lodging before embarking on the next day’s business meetings. The demand for larger business aircraft is in response to those market dynamics—exciting opportunities in distant lands and aircraft sufficiently large to support the communications marvels of our new age of connectivity. Thus- we maintain our expectation that as the economy recovers- the demand for more traditionally-sized business aircraft will return.

The population of turbine-powered business airplanes (i.e.- business aircraft- excluding helicopters- powered by one or more jet or turboprop engines) total over 33-000 units operated by over 20-000 companies. Of those airplanes- about 19-000 are business jets and 14-000 are turboprops- and more than 60 per cent are registered in the USA. Only a small percentage is in the category of large-cabin- long-range business aircraft.

Even the assumption that demand today is focused primarily on the so called “heavy iron” business jets is flawed. As reported by the General Aviation Manufacturers Association recently- small to mid-cabin business jets deliveries during the first half of 2013 outnumbered their larger counterparts by more than 10 pe rcent- while turboprop deliveries were nearly twice that of large-cabin activity.

The typical business aircraft is selected to serve a practical mission—placing the right person in the right location at the right time- and as Pete Agur- our esteemed regular Boardroom columnist would add- for the right reason. Business aircraft are tools that enable a company to obtain maximum productivity from a firm’s two most valuable assets: people and time.

Business Aviation’s basic value proposition will propel the demand for classic business aircraft in response to a recovering economy.

Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com

Related Articles

linkedin Print

Other Articles