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What to Make of 2016's Aircraft Sales Stats

How to temper the new aircraft sales numbers against flight activity and used jet sales...

Dave Higdon   |   3rd March 2017
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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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With fewer new aircraft shipped but higher flight activity for North America, Dave Higdon puzzles out what the trends suggest of the Business Aviation industry during 2016...

New business jet deliveries for 2016 dropped 7.9%, while piston deliveries declined 9.7%. Somehow turboprops delivered some growth numbers with deliveries up 4.5% over their 2015 results. In contrast, ARGUS' TRAQPak 2016 report identified last year as “another banner year for Business Aviation” with North American flight activity showing a gain over 11 months of 2015 (only April defied the growth trend). Overall, ARGUS reported 2016 flight activity grew 3.2%, and flight hours rose 3.8% over 2015.

Finally, a recent report from Rockwell Collins conceded that recent years' forecasts of avionics sales growth proved incorrect. The avionics OEM sees sales declining further this year and next, in parallel with further declines in business turbine sales.

So overall, the trends show that operators flew more but bought fewer new aircraft.

How does that work...?

Shifting Norms, Shifting Ownership Patterns...

Back in 1986 when NetJets first emerged, the aviation experts gave little chance for the survival of the new Fractional Ownership concept. Thirty years later, Fractional Ownership has become an accepted customer base. It also helped ‘democratize’ private jet ownership, attracting new participants. In 2016, Fractional Ownership registered growth in flight activity in nine of the 12 months of 2016 versus 2015, according to ARGUS.

Indeed, since the emergence of Fractional Ownership, we’ve seen many other revolutionary ownership options emerging, such as Wheels Up, Marquis Jet Card, Jump Jet and others, all of which contribute to Part 135 Charter flight activity growing in 11 of the 12 months last year.

Many a Business Aviation professional says that anything bringing new people to business flying is a plus. Alternative entry options such as membership operators seem to both attract new users and contribute to increased flight activity and flight hours.

Indeed, while these ‘alternative’ operators help keep aircraft sales numbers from falling further, there are only so many aircraft they can buy.

Used Aircraft Sales Cutting the Deepest

It's the used aircraft sales market that analysts say cuts most heavily into new airplane sales these days. In that area, sales also generally declined in 2016 while used aircraft available ‘For Sale’ increased, with prices hovering in the seller's market range.

As one broker explained, “The good news is the continued sales and deliveries of new aircraft without a parallel level of aircraft retirements. That means the total fleet continues to grow and more people are flying”.

With the uncertainty of a fledgling administration in the White House replacing uncertainty from the election campaign, no one is predicting a repeat of the 2008 economic plunge. In contrast with those days, we’re seeing increased consumer confidence, strong Q4 economic-growth numbers capping years of growth and higher stock prices, generally rising unrelentingly since 2009.

Taken together, don't expect a return to the days of 1,000+ jet deliveries experienced prior to the Great Recession anytime soon. But don't expect the bottom to fall out of the market, either.

Slower, but steady aircraft sales activity looks to be the rule for the next several years.

Read more about: Aircraft Sales Trends | Used Aircraft Sales Trends | Avionics | BizAv Flight Activity

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