While anticipating that new and preowned aircraft deliveries will soften this year, business aviation financier Global Jet Capital (GJC) is forecasting that the market will combine for $186.8 billion in total transaction volume between 2022 and 2026, averaging a 5.1 percent annual growth rate over that time. That marked a significant jump from the forecast it first publicly released in June of last year and called for a $162.1 billion market through 2025.
Releasing its five-year Business Jet Market Forecast during EBACE this year, GJC (Booth U67) sees a healthy industry that is poised to have sustained growth over the next several years. In 2022, combined new and preowned transaction volume is expected to dip by 8 percent, taking “a step back from all-time high volume seen in 2021,” according to the forecast. But dollar volume, led by demand for larger aircraft, will edge up by 3 percent.
This decline in transactions is led by the preowned market, in which transactions are forecast to slide by 11 percent and dollar volume by 10 percent. Offsetting that, new deliveries are forecast to increase by 7 percent and dollar volume by 16 percent this year.
GJC sees many manufacturers boosting production over the next few years with new deliveries staged for a compound annual growth rate of just over 4 percent and associated dollar volume coming in at a compound annual gross rate of just under 8 percent over the forecast period.
“Manufacturers report that order flow remains solid and backlogs are increasing. They also indicated that their sales pipelines remain strong, suggesting these levels will continue,” the forecast stated.
Preowned deliveries are anticipated to come in line with historical trends this year but strong and growing demand will increase the number of transactions over the forecast period, according to the forecast.
GJC CEO Vivek Kaushal noted that the company has spent a “whole lot of time evaluating what this market is going to look like in the future,” leading to the development of the forecast.
Despite “some pretty interesting conditions,” he said the forecasting models have been pretty stable. However, he caveated that a number of events could shift the forecasts such as renewed lockdowns, similar to what has occurred in Shanghai, or the ongoing conflict in Ukraine. “Those are things that no model can capture.”
Even so, Kaushal maintained that the utility and value proposition continues to steer business aviation through the uncertainties, adding that this has been proven by Covid driving people into the industry. “Just the state of the airline industry continues to feed demand. If you’re wealthy, you want the certainty of takeoff and landing and you want to get from point A to point B efficiently. The airline industry does not deliver that way and it probably won’t for a while.”
Historically, some 90 percent of people who could use business aviation haven’t, but “we’re seeing a small portion of that population migrate. We think it’s going to be sticky. Those folks are not going to back [away from business aviation],” he said adding, “What that says to us is that you're not going see a large shift in demand and supply dynamic anytime soon.”