Forecast demand for executive charter flights over the next 30 days is slightly down from a month ago, according to the latest data from online charter portal Avinode. As of November 1, the forward-looking demand index produced by the Sweden-based group was 92.83, about 2 points below where it stood on October 1. However, this month’s demand index is still about 32 points ahead of where it was 12 months ago.
Price index data from online charter portal Avinode reinforces the impression reported by operators and brokers that the market has been making a slow and gradual recovery during the course of this year. Analysis of the company's price index since Jan. 1, 2009, shows a marked decline in expected rates for worldwide charter, as well as specifically within Europe and the U.S., followed by a slow recovery.
In the wake of the economic downturn, business boomed for aircraft repo specialists, who seized aircraft from owners delinquent on their loans. Yet repos have had no effect on the charter market, which depends on privately owned aircraft for the majority of its lift. Why no ripple effect?
The business jet market index from UBS Investment Research last month fell a further 8 percent, to 37, the second consecutive decrease and below the threshold of 50–the median above which a growing market is indicated and below which deterioration is seen. This follows a stable first half, in which the index held at 50–meaning stabilized conditions–for three consecutive surveys.
Despite teetering over the abyss of economic collapse and having to overcome negative public perception surrounding corporate jet ownership, the used aircraft market has battled back, slowly and perhaps surprisingly consistently, chipping away at a glutted market. Month after month since late 2008, buyers have stepped into the market and pared back the numbers to arrive at the lowest inventory level in a year-and-a-half.
While a year ago it seemed as if buyers were beginning to emerge from harsh winter hibernation, in fact inventory was still a few months away from reaching its all-time peak. At the same juncture this year, we find inventory a couple of hundred aircraft below its 12-month moving average, yet still a couple of hundred above the pre-Lehman collapse figure.
Surveyors of used aircraft entered the year with little else to do but cross fingers and hope that the market plunge brought to the doorstep of the New Year would abate. Buyers slowly began to perceive value as prices fell 30 to 50 percent from their previous lofty perches. It seemed that the press–which had for several months filleted business jet ownership–had run out of negative things to say.
Used aircraft prices have gone parabolic since last year, first launching to lofty heights only to arc back down to earth. While the drop began just before last year’s NBAA Convention, at the show aircraft purveyors had that deer-in-the-headlights look as they shook their heads in disbelief as the Dow Jones Industrial Average plunged 1,000 points during the three-day event, punctuating the beginning of a year-long correction in pricing.
Despite some modest improvement last month, demand in the North American executive charter market is still relatively soft, according to the latest data from Web-based portal Avinode.
As used aircraft values got pummeled over the last few quarters, it seemed that the buyers had all but disappeared. They hadn’t. Now that the inventory of most model types is at unprecedented highs and prices are at unprecedented lows, buyers are reemerging in more noticeable numbers and scoring big time on CJs to G550s, often executing a trade some 30- to 50-percent below the prices accepted at this time last year.