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The 2009 Market Is Still Experiencing Turbulance ...

But is the Ultra-Long Range/Large Cabin Jet Market finding smoother skies?
by Michael Chase & Marj DeLong

In this month’s JETNET >>KNOW MORE analysis- we will dissect the good news and the bad news of these turbulent times within our industry. There may be a few bright spots we can identify in the market - or at least- there may be a 60 watt bulb at the end of the dark tunnel that we may refer to as 2009.

MARKET UPDATE – NEW AND PRE-OWNED
The General Aviation Manufacturers Association (GAMA) NEW aircraft shipment results for the first three quarters of 2009 are shown in Table A (top right). This 3Q 2009 report was not a surprise to most of us- and when compared to 2008 we are reminded of the record-setting year that it was. 2008 may remain the high-point for most OEMs for years to come.

As displayed in Table A- General Aviation Aircraft shipments and total billings for 2009 are down -46.8% and -23.5%- respectively over 2008. The Piston segment shows the largest decline.

Yet- as we looked deeper into the NEW Business Jet Market- we discovered some interesting trends. Table B (right) - for example- shows the Ultra-Long Range & Large Cabin Business Jet segment has declined in shipments by only -2.2% over the first nine months of 2009 compared to the same period for 2008. This is a big difference compared to the rest of the New Business Jet market that is down by -37.8%.

THE PRE-OWNED BUSINESS JETS
JETNET has reported that the October 2009 Business Jet Inventory as a percentage ‘For Sale’ (at 16.7%) has seen a decline from the July high at 17.7% - a 1% percent drop (see Chart A- left).

August 2009 marked the first time in 22 months that the inventory of bizjets for sale went down compared to the previous month. Clearly- the high inventory levels for sale that we have seen throughout 2009 are headed to lower numbers. This is good news for the pre-owned market and as history has shown us- it should help spark some new aircraft sales too.

While the Business Jet Inventory has been declining- there is yet more good news with JETNET reporting ‘Full Retail Sales Transactions’ have been increasing for September and October. These transactions are well above the 24 month average- as shown in Chart B- left.

Since August 2009- JETNET has been reporting Ultra-Long Range & Large Cabin Pre-Owned Business Jets transactions have been on an increase (see Chart C- bottom left)- setting high levels of transactions not bettered over the past 20 months.

PRE-OWNED TURBOPROPS
While the pre-owned Business Turboprop market saw a steady decline in 2008- it is also showing some signs of improving and appears to have been relatively flat for most of 2009 as shown in the Chart D (top right)- and reported by JETNET.

TRANSACTIONS BY CLASS
The ‘Full Retail Business Jet Sales Transactions’ by weight class (VLJ- light- medium- heavy) for the past several quarters continue to show improving trends also (Chart E- center right). The light aircraft category makes up the largest percentage of transactions (39% as at 3Q 2009) according to JETNET- but the heavy and medium segment are showing strength over the last two quarters in particular.

Chart F (bottom right)- compiled from information from the FAA - ETMSC- shows U.S. Business Jet flight operations had declined from February-April 2008 by -3.7%- and from to February 2008 - February 2009 by -30.5%. The decline now appears to be improving at -17% from February 2008 - August 2009. This may well indicate a rebound is near.

SUMMARY
The heavy long-range jet market has not been totally immune to the economic downturn- but it does seem to have experienced a lighter impact than the other segments. The new Gulfstream G650 roll-out and Embraer’s new 650 long-range jet announced at the NBAA Convention this year are two programs forging ahead as if these weren’t turbulent times at all.

The reason for the progress with these programs and other positive numbers from this heavy-jet segment could just be the obvious economic delta between these buyers and owners- verses light jet owners simply not able to afford to purchase jets without financing. In addition- most long-range aircraft owners started out in smaller aircraft and worked up to a larger jet over many years- so they are experienced at justifying the cost benefits of having such a priceless business tool.

CONCLUSION
Revised forecasts from all the major firms came out just in time for NBAA and many have been adjusted with the new aircraft production recovery coming in 2012.

We know historically that the pre-owned market will lead this turn-around with its inventory of aircraft ready and willing to move the industry to higher ground.

We are seeing many positive signs develop- as we have looked to show you in this report. The long-range heavy jet market may just continue to fly smoothly into 2010 while the remaining segments begin their slow climb out of the trough.

We will continue to monitor business aircraft activity into 2010 and keep you informed. As the year comes to an end- we both want to wish you Happy Holidays and a very safe and prosperous New Year!

For more information: •
Michael Chase is president of Chase & Associates- and can be contacted at 1628 Snowmass Place- Lewisville- TX 75077; Tel: 214-226-9882; Web: www.mdchase.aero.  

• Marj DeLong is president of MarketLift- Inc. and can be contacted at P.O. Box 595036 Dallas- TX 75359; Mob: 214-862-8992- Web: www.market-lift.com.

• JETNET can be contacted at 101 First Street- Utica- NY 13501; Tel: 800-400-2298; Web: www.jetnet.com or www.avdatainc.com

 

 

 

 

 


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