MarketIndicators FEB17.qxp_Layout 1 24/01/2017 12:25 Page 1
BIZAV INTELLIGENCE T MARKET INDICATORS
Business Aviation Market Summary A Scan of the Market at the Start of 2017
The outlook for business aircraft sales in 2017 looks quite similar to 2016, with a few remarkable differences, notes Rollie Vincent, Editor, Market Indicators... he world’s business jet fleet continued to grow in 2016, expanding by 2.5% to more than 21,000 aircraft. Although growth in the fleet would seem to be a good-health indicator, there are some important qualifiers that should be considered. Importantly, and addressed in the reports that follow from ARGUS and WingX Advance, overall utilization levels are not growing at a similar 2.5% rate, suggesting that more aircraft are either being idled or are operating less frequently than before. Based on an analysis of the latest available information, the growth in the worldwide business jet fleet did not keep up with the expansion of the global economy (as measured by global real GDP of about 3.1%) in 2016. For comparative purposes, fleet growth has averaged about 3.8% CAGR over the past 10 years (approximately 1.5 times faster than GDP). Although assessments of the effect of economic expansion, corporate profits and other demand-enablers traditionally include a lag period (to account for the fact that companies typically make profits before they order airplanes, and then have to wait to take delivery), shorter wait times are the norm today as OEM backlogs have been reduced. Practically speaking, this implies that a slowdown in GDP growth could be evident more quickly in business jet fleet growth rates.
T
International Fleet
As usual, the details on a country-by-country basis provide more useful and actionable insights. Importantly, the US business jet fleet continues to expand, growing at about 3% in 2016, well ahead of US GDP. With most economists forecasting an even higher rate of growth for the US in 2017, barring any major geo-political and trade disruptions that could occur in the uncertain policy environment we expect that US business jet sales will continue to outpace US GDP and the overall market. This is important, as despite more than 50 years of production, the business jet market remains highly concentrated in the United States, with more than 61% of the fleet based there at the end of 2016. Just seven countries account for almost 79% of the world fleet, including four in the Americas, two in Europe, and one in Asia. Within this business jet ‘club’, China has come off its double-digit GDP and fleet expansion rates, and other key markets have been hard hit by lower commodity prices and weak currencies (Brazil and Canada) and political upheaval (Brazil). With the many interconnections between these seven large economies, the outlook for international trade is particularly
Table A: Business Jet Fleet and GDP Growth
Business Jet Fleet Rank
Year-End Business Jet Fleet (Units) 2016
Cumulative Fleet as % of World 2016
Business Jet Fleet Growth 2016
Real GDP Growth 2016
Fleet-to-GDP Growth Multiple 2016
US
1
13,017
61.5%
3.0%
1.6%
1.9
Mexico
2
966
66.0%
6.3%
2.1%
3.0
Brazil
3
778
69.7%
-4.8%
-3.4%
1.4
Canada
4
535
72.2%
0.8%
1.2%
0.6
UK
5
501
74.6%
-3.5%
2.0%
-1.7
Germany
6
434
76.6%
7.2%
1.8%
4.0
China
7
416
78.6%
4.8%
6.7%
0.7
21,182
100%
2.5%
3.1%
0.8
Country
World 18
AVBUYER MAGAZINE – February 2017
www.AVBUYER.com
Aircraft Index see Page 145