Having released its Five-Year New &
Pre-Owned Business Aviation Market
Forecast recently, Jetcraft’s Chad
Anderson provided a further breakdown
of the findings...
The findings within the Five-Year New &
Pre-Owned Business Aviation Market
Forecast showed that our industry will
continue to grow in size, scale and
strength over the next five years, hitting
nearly $30bn in revenue annually by
2023.
“This is the first time a value like this
has ever been assigned to the industry,”
Anderson notes. “We also expect to see
the Business Aviation fleet grow by
12.1% in that timeframe.”
The forecast also predicted continued
and significant growth in the pre-owned
industry, with an expected 11,765
transactions over the next five years,
totalling $61bn in value. “By 2023, we
forecast four times as many pre-owned
transactions vs. new deliveries,”
Anderson elaborates, “primarily due to
the growing value proposition of these
aircraft.
“Maintenance capabilities are
increasing, and we’re seeing greater
accessibility, rapidity and cost-efficiency
of high-quality refurbishment. This is
resulting in higher demand for older or
out-of-production aircraft, including
amongst buyers who previously
exclusively bought new models.
“Our forecast reveals that the average
aircraft retirement age is now 32 years –
nearly a decade older than previously
thought.”
A continued shift towards large aircraft
types in both new and pre-owned
markets worldwide has also been seen.
“Buyers are looking for larger andlonger-range models and as a result of
this, manufacturers are focusing on
producing aircraft almost entirely in the
Mid-size segment and above,” Anderson
notes.
New unit deliveries are predicted to
stay flat throughout the forecast period
whilst generating higher revenues, due
to the increase in large aircraft
transactions. “Over the next five years,
we’ll see many more customers turn
towards Large Jets rather than Light Jets,
as the needs of business travellers evolve
on a more global scale,” Anderson
projects.MI http://www.jetcraft.com/knowledge/
market-forecast22 Vol 23 Issue 8 2019 AVBUYERMAGAZINE http://www.AVBUYER.comMARKET INDICATORS AVBUYER.com
page 24Cirium shared the perspectives of senior
analyst Daniel Hall recently about
business jet values. Following are his key
observations...- Business jets are depreciating assets
- but there is far from an accepted
approach on how to deal with
residual value forecasting.
- but there is far from an accepted
- Value retention is dynamic. Cirium’s
analysis using actual market values
(rather than list prices) tells us that
five-year-old business jets have
averaged at 61% value retention from
their original value when new. Since
2012, this has translated to 9.4%
depreciation per annum in years 0-5;
preliminary 2019 data shows a
marked improvement in Small and
Medium category aircraft. - The overall health of the business jet
market has improved by some
metrics, one of which pertains to
values. A strong 2018 resulted in just
a 3.5% YoY decline in Current Market
Values from 2018 to 2019. However,
the volatile past five years cannot be
ignored when projecting residual
values in absence of other methods. - The concept of Base Value is an
important tool for financiers and
lessors to manage their future asset
risk. It has been stated that “residual
values are flattening out now as a
result of the market pickup”. This is
an extremely risky approach to take.
This analysis illustrates examples of
this and discusses the concept of a
balanced market. - The analysis further substantiates the
need to use external and impartial
sources to validate the internal
analytics being conducted to support
investment decisions. Aircraft value
forecasts are a cornerstone of any
asset risk strategy. A prudent investor
would be wise to take a range of
opinions from more than one source.
MI http://www.cirium.com
Observations
on Business
Jet Values
Jetcraft Expands
on Market Forecast
Chad AndersonInterpreting the
Business Aviation Market
with AvBuyer
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