UBS Investment Research’s Business Jet Survey that was released today is a sobering account of the recession’s toll on the U.S. bizjet market. The firm’s “business jet market index” came in at 14 this month, slightly higher than last month’s all-time low of 13 but still well below 50, which is the dividing line between market growth (above 50) and contraction (below 50).
According to a UBS Investment Research report issued yesterday, the business jet market “is deteriorating at an accelerating rate” as pre-owned inventory continued to rise, flight activity fell and sales slowed last month. Worse yet, business jet financing appears to be drying up, threatening backlogs.
Last year demand for pre-owned business jets and turboprops remained strong. High oil prices and financial turmoil, however, have applied the brakes and inventories are reaching new highs. Buyers are waiting for the deals to come to them, leaving airplanes languishing on the market longer and sellers accepting less just to get out of the market.
UBS Investment Research’s business jet report–released yesterday–shows that business jet flight activity was 13 percent lower last month compared with the same period last year, although the data was slightly better than the 18-percent year-over-year decline in August. Year-to-date, flight activity is down 9 percent.
Business aircraft buyers can expect loans to be harder to find and more costly, according to Adam Warner, president of Key Equipment Finance, Downers Grove, Ill. “There are fewer players in the finance market because some banks simply don’t have capital to lend,” he said. Those that have money are more selective and now less willing to finance 100 percent of an aircraft’s value.
Wichita-based PIM Aviation Insurance, an insurance broker serving the business and commercial aviation market since 1982, recently added life insurance for pilots to its portfolio. Pilots interested in obtaining a free quote can stop by Booth No. 5111. PIM partnered with several insurance companies willing to provide competitively priced life insurance for pilots when they are operating aircraft, the company said.
While most companies here at NBAA’08 are showcasing airplanes and aircraft parts, Jet Support Services–JSSI (Booth No. 2229)–is displaying a different form of transportation: a 2009 Saturn Sky convertible, the grand prize for the lucky winner of the company’s “Sky’s the Limit” sweepstakes. The randomly selected winner will be announced this afternoon at 3 p.m. at the company’s booth.
Get ready for a bumpy ride. The sputtering global economy is sending the pre-owned aircraft market into a steeper dive and is likely to slow new aircraft sales and new aircraft development programs, according to leading industry analysts and observers. Prices for pre-owned business aircraft have been trending down for the last five quarters and the number of new jet buyers looking to unload their delivery positions is increasing.
According to UBS Investment Research’s business jet update issued on Friday, U.S. and international bizjet flight activity was “sharply lower” in August. However, about 86 percent of the flights UBS tracked were domestic flights within the U.S., meaning the international sampling is somewhat under-represented.
It’s true, the price of jet-A has risen steeper than a max-power climb gradient. But the cost of many other business aviation staples has remained relatively stable, and in some cases nosed over in the past five years. Even fuel prices have come down somewhat in recent weeks. These are among the findings of a comparative survey of business aviation costs and operational data compiled by NBAA Convention News.