Where do we go from here? The Aircraft Market and its Future
As 2012 comes to an end, there are still many questions facing the aviation industry particularly in regards to our current economic health and policies. �As an aircraft salesman, I see this daily as companies and individuals evaluate their options and opportunities regarding aircraft ownership. �Whether you are looking to purchase or hoping to sell or simply wondering if you should hang on to that 350 knot asset, the economic questions are near the top of the list.
The fact is no one can accurately read the proverbial tea leaves of the aviation industry. �However, we all do our best to read the signs, watch the reports, and inform one another of what we are seeing from our corner of the playing field.
I was intrigued by a report in the latest issue (December 2012) of Business and Commercial Aviation. �Honeywell has completed its annual Business Aviation Outlook and, as you might imagine, the news is mixed.
Deliveries of new aircraft from the major manufacturers remains flat, an estimated 680-720 for 2012. �That’s only slightly better than the 681 that delivered in 2011. �For 2013, the forecast is for similar numbers. �Even though Cessna and Embraer will be releasing new models (The Ten, M-2 and Legacy 500 respectively) their effect won’t likely be felt since they are due to hit a runway near you late in the year.
One interesting note is that Honeywell believes that the low-point for the GA market was 2011. �Perhaps�even the flat recovery beats the alternative. �I hope they are right.
Honeywell’s report had another interesting observation regarding aircraft size and sales. �Large-cabin jets account for over 40% of the current orders with the manufacturers. �That is an increase of 9% from the 2011 levels. �In their survey of over 1500 BizJet operators the number one criteria for choosing one plane over another was range- people want to go further, faster. �It is expected that aircraft in this class will account for over 70% of the value of new bizjet deliveries.
The mid and light-jet markets were flat this year, while sales of tubroprop aircraft were up over 10%.
As to used aircraft, the news is also mixed. �Pricing strengthened for used jets and turboprops which is good news for sellers. �There was also a slight increase in inventory.
So there you are, a mixed-bag of good news, bad news, �and lots of “no change” news. � It seems certain that all aircraft markets are in a phase of transition and many of us are hopeful that we have seen the bottom. �B&CA notes, “Business Aviation leaders believe uncertainties in the market and in Washington kept buyers at bay in the third quarter.” (Business and Commercial Aviation, December 2012, p14)
As we move into 2013, we do so with a degree of realistic optimism. �From CFM’s corner of the playing field, sales have been good (but of course we hope to have an even better 2013!) �Even with the uncertainty in the market, we�regularly�have individuals and companies looking to lease, buy and sell aircraft. �Much of our experience mirrors the�observations�of the Honeywell report. �But “experience” refers to the past, not the future.
In the end only time, not tea leaves or surveys, will reveal what the future holds.
Source Material, “Business and Commercial Aviation”, December 2012, Intelligence, James E. Swickard, Ed.
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