Industry Watcher: Bizjet Shipments To Climb 10% in 2019

 - January 14, 2019, 12:18 PM

Business jet deliveries this could see more than a 10 percent jump over 2018, primarily driven by several new models simultaneously coming to market, according to industry analyst Brian Foley of Brian Foley Associates. That would amount to some 705 jets this year, if 2018 shipments remained flat at 641 units, as many forecasters expected.

However, he warned, “The duration of the upturn will be challenged as the novelty of the new aircraft wears off and economic reality sets in.” And the increase would still be a far cry from the 1,300 jets delivered in 2008, though Foley said that high point was unsustainable. But, he added, “Anything to the upside after nearly a decade of flat deliveries would be more than welcome.”

New models stimulating the market this year include the Gulfstream G500 and G600, Bombardier Global 7500, and Cessna Citation Longitude from Cessna. “I feel 2019 will be a better year than last as these additional jets move the needle upwards on overall industry delivery values and units,” he noted.

But, Foley cautioned, several factors question the sustainability of this increase. This includes emerging markets, which once accounted for 40 percent of all business jet deliveries and are struggling to take 15 percent today. “That leaves the North American powerhouse, principally the U.S., to drive the market,” he said, adding that consumer sentiment and other metrics are sliding in the U.S., along with “increased talk of a recession looming somewhere around the corner.”

Another is depreciation, where the new reality is that owners should anticipate that their new business jet will lose about 50 percent of its value over five years. “This has taken the market some getting used to since just 10 years ago it wasn’t unheard of for a plane to appreciate in value after five years due to simple supply and demand economics.” Today’s active fleet of close to 22,000 business jets worldwide provides more than ample supply, “which now causes private jets to depreciate just like other capital goods,” he concluded.