September 6, 2012
By Jim Moore
Business jets will lead the rebound, and there are signs it is already under way, analysts report.
The optimism fueled by a recent shipment report from the General Aviation Manufacturers Association (GAMA) is backed up by data gathered by analyst Brian Foley, who issued a press release Sept. 5 trumpeting fresh reasons for optimism. While demand spikes from the developing world helped soften the blow of the economic collapse of 2008 that left America reeling, that demand has begun to recede.
“The industry must once again rely on its traditional primary market, the United States, as the mainstay of its recovery. Fortunately for both jet makers and their supply chains, that seems to be exactly what's happening--right on cue,” Foley reported. “As evidence, AMSTAT reports North American new business jet deliveries in the first half of 2012 rose 20 percent over the same period last year. An even bigger surprise is the apparent resurgence of sales in economically torn Western Europe which surged 34 percent in the same time frame, albeit from a smaller unit base.”
Another analyst, Rolland Vincent, cautioned that such data can be misleading.
“The North American market rebound is certainly under way, albeit we must be careful about year-over-year comparisons that look large but [are] from a small base (hence, the nice percentages),” Vincent said in an email.
Positive signs include a large number of cash-flush corporations, which are only just beginning to open wallets clamped shut during the recession.
“Our recent research on behalf of JETNET iQ suggests that 36 percent of worldwide turbine owners and operators have deferred new aircraft orders since 2008, some by 3 years or more,” Vincent wrote. “Other indicators: slowly declining available-for-sale turbine inventory is a stabilizing sign, although pricing remains a little too mixed for us to say we are in full recovery as an industry.”
Vincent said a reluctance to spend will be balanced by a desire to remain competitive, and the return on investment provided by aircraft declines as they age. Business leaders will not wait forever to get a leg up on the competition with new aircraft.
Vincent noted that the business jet market dropped 47 percent from a 2008 peak in terms of 2011 units delivered, though 2011 was still the fourth-best year ever recorded in terms of dollar value sales. For business turboprops, the drop in units sold was more modest, at 33 percent. Piston shipments, generally the most vulnerable to economic swings, declined 68 percent in 2011 from a 2006 peak, according to GAMA data.
AOPA Online Associate Editor Jim Moore joined AOPA in 2011 and is an instrument-rated private pilot who enjoys competition aerobatics.
General Aviation Manufacturers Association,
Aircraft Power and Fuel,
The Aircraft Owners and Pilots Association (AOPA) welcomed a Sept. 18 Federal Aviation Administration (FAA) announcement that it would host a “call to action summit” to address the barriers and potential challenges associated with equipping tens of thousands of aircraft for Automatic Dependent Surveillance-Broadcast (ADS-B) by the Jan. 1, 2020 deadline. ADS-B is a critical component of the NextGen air traffic modernization program.
The FAA announced Sept. 18 that it would host a “call to action summit” to address the barriers and potential challenges associated with equipping tens of thousands of aircraft for ADS-B, a move welcomed by AOPA.
The Aircraft Owners and Pilots Association (AOPA) is pressing the Federal Aviation Administration (FAA) to offer pilots and aircraft owners more flexibility when it comes to the use of hangars at airports that have received federal funding.
VOLUNTEER AT AN AOPA FLY-IN NEAR YOU!
SHARE YOUR PASSION. VOLUNTEER AT AN AOPA FLY-IN. CLICK TO LEARN MORE >>>
VOLUNTEER LOCALLY AT AOPA FLY-IN! CLICK TO LEARN MORE >>>
BE A PART OF THE FLY-IN VOLUNTEER CREW! CLICK TO LEARN MORE >>>