U.S. on Path for Bizjet Fleet Cleanup, Analyst Says

 - November 7, 2019, 10:50 AM

The business jet market is headed toward a “big fleet cleanup” with the looming ADS-B Out installation deadline and other changes ahead, industry analyst Rolland Vincent said yesterday at the 2019 NATA Aviation Leadership Conference in Washington, D.C. Vincent, JetNet iQ director and president of industry consultancy Rolland Vincent Associates, told attendees that 25 percent of the fleet is on a path to miss the Jan. 1, 2020 ADS-B deadline in the U.S., and some might just be retired.

Further playing into such a cleanup is the potential overcapacity of as many as 3,900 business jets in the U.S. Cycles have not quite returned to the nearly 5 million logged a decade ago when the business jet fleet was at 8,000 aircraft. Now it numbers 14,000. “We are flying quite a bit less than we were,” he said.

Even with retirements, however, Vincent sees a pendulum swing back to a strengthening of the U.S. market, forecasting gains in the world share. “That’s a very different perspective than we had a few years ago,” he said, pointing to geopolitical changes that are causing people to think more nationally. The demands for the super-long-haul aircraft might still be there, but “the requirement to fly very far maybe not so much.”

This is leading to demand growth in the “middle of market” class of business jets—those that can fly corner to corner in the U.S.—he said. Vincent predicts orders in this segment will account for nearly half of all business jet sales over the next five years.

Solid order intake has pushed book-to-bill at the five largest business jet manufacturers above a 1:1 ratio, but Vincent cautioned about ramping up production given the uncertain market indicators, including shaky business confidence.

The preowned market had enjoyed a contraction in the available fleet for sale to 9 percent, but Vincent said he doesn’t believe the market will see that level again for some time. Part of that, he said, is the “cleanup” that he believes might be coming, reducing the overall size of the fleet. Preowned transactions already have dipped this year, in part because most of the younger aircraft have already been sold off, leaving fewer desirable aircraft available.