Traffic – B

There are two ways of looking at traffic data. US traffic for the year is down 1% on a strong 2023, according to WingX. Compared with the 2022 post-lockdown peak US business aviation is down about 6%. Europe business jet flights are down 2% versus the first half of 2023.

But rather than focusing on this, it is worth comparing with before Covid 19. WingX says that US business jet traffic is up 28.9% compared with the first six months of 2019. The big winners  in the US are super mid-size jets (up 50.3%), turboprops (47.3%), ultra-long range (45.6%) and very-light jets (39.1%).

European business aviation flights are up 7.5% in 2024 compared with the first six months of 2019.

Traffic alone is not a guaranteed sign of a strong industry (it is possible to fly a lot and lose money) but it is an important metric for maintenance providers and OEMs. Who also have a lot to be happy about.

Aircraft and engine manufacturers – A-

Business jet manufacturers are not showing any signs of wanting to suddenly increase  deliveries. Some of this discipline is because supply chains are still catching up. To be fair, this is also because all of the senior managers at manufacturers vividly remember what happened after the global financial crisis when they had an oversupply of aircraft.

As well as building jets, they are also continuing to sell decent numbers at good prices. Demand for new aircraft is down from 2022 but the first-quarter results were very good. It seems likely that book-to-build ratios could fall in the fourth quarter, especially as production ramps up. But it has been a good six months.

Pre-owned market and residual values – C

The state of the pre-owned market is more balanced. The number of business jets for sale has risen significantly, In June 2023 Amstat listed 1,019 business jets for sale. Now it says there are 1,203 on the market. But this is not a massive rise.

The percentage of aircraft for sale is still relatively low. Amstat says that 7.65% of large jets are for sale, 7.22% of medium jets and 6.12% of light jets. This means the market was still balanced at the end of June 2024. Aircraft are not depreciating as you would expect.

Perhaps the biggest worry is that experienced brokers – many of whom have had a good start to the year – are finding it hard to predict what will happen in the next six months, let alone in 2025.

Fractional operators – A+

“Our biggest challenge in 2024 is beating 2023,” says Andrew Collins, co-chair of Flexjet, speaking from Flexjet’s new owner’s lounge in Mayfair, London. Like other fractionals, Flexjet has quietly been investing in new corporate headquarters, buying maintenance and interiors companies, and selling a lot aircraft shares. WingX says that fractional fleets are flying more flight hours than at any time in the  past five years.

Fractional operators are also increasingly important to manufacturers. NetJets has been unveiled as the customer who placed this order in December order for the 12 Challenger 3500 jets. It now has 232 Challenger 3,500 options outstanding. Fractional operators are also set to benefit from owners looking for privacy.

As everyone know, things can change quickly. Looking at the market in June 2007 would have felt very similar (and everyone knows what happened then). The first six months have been pretty good. A sudden economic downturn would, of course, change things very quickly – but worry about that when you are back from holiday. 

The post Rating the business jet market – first half of 2024 report appeared first on Corporate Jet Investor.

AMSTAT understands the challenges facing market researchers working for aircraft brokers when spending hours researching a specific market for a customer and documenting their findings using Premier’s collaboration tools. Asking prices may have been edited based on a conversation with the seller’s broker, for sale status may have been updated for a potential off-market sale and specifications like total time may have been changed based on personal knowledge. 

The firm understands the above challenges and has developed new features to address this.

First, AMSTAT Premier subscribers now have the option to have AMSTAT automatically update their edited values with the latest AMSTAT data as soon as it is available. Customers will always see the latest information when this setting is enabled and can choose to archive their edits whenever this happens so that they can review at any time.

Secondly, AMSTAT allows Premier subscribers to easily identify which of their edits have more recent data from AMSTAT. This allows customers to review their edits along with the new values from AMSTAT and choose whether to use the AMSTAT value and archive their edit or keep their edit as is.

“The combination of these new features will be a significant time saver for the aircraft broker researcher tasked with tracking multiple markets and who may be required to quickly pivot and update their work on any preowned market they previously researched.” said Andrew Young, AMSTAT general manager. “This new functionality will enable researchers to monitor more markets in a much more efficient manner.”

The company has also released a new widget, known as the “My Market Changes Tool”, which is also available to Premier subscribers and allows brokers and researchers to come back to previously researched markets and quickly review changes that have occurred since they were last in the respective model market. The widget will show a running tally of updates, including what is newly listed for sale, what has sold and which edited records have more recent AMSTAT information.

Kit Tankhiwale, AMSTAT Senior Product Innovator added: “AMSTAT knows how important it is for our customers to have the best data possible, whether it’s from AMSTAT or from their market research based on their own personal network. With these new features, our customers will be able to quickly reconcile updates in an ever-changing market and service their clients with the best information possible.”

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To be successful they realised they needed a business jet charter marketplace to drive demand. So they decided to launch that as well. One of their professors suggested they focus on the marketplace and park the air taxi idea. The Avinode charter marketplace launched in 2002.

CAMP Systems this week agreed to buy Avinode and two smaller FBO software businesses – FBO One and Total FBO –  for $200m. The professor was right.

It is a good deal for World Kinect (the energy company formally known as World Fuel) which acquired Avinode in 2014. World Kinect will use the cash to pay down debt and focus on its core fuelling business. It has clearly made a good return on its investment. World Kinect took control in 2019 just before its main business was hit with grounded airlines.

“We are excited about the possibilities the partnership between our companies will bring to our customers,” said Oliver King, chief executive officer, Avinode Group.

The acquisition also makes a lot of sense for CAMP Systems, the aircraft maintenance tracking business. CAMP Systems is itself owned by Hearst, a 136-year-old private company. Hearst is best known for publishing regional newspapers like the San Francisco Chronicle (which it launched in 1887) and magazines like Cosmopolitan, Good Housekeeping and Harper’s Bazaar. But along with newspapers, TV and magazines it has three significant business-to-business data divisions: Fitch Ratings, healthcare and transportation.

The transportation division includes data that helps mechanics fix trucks and cars. This includes MOTOR, a magazine that Hearst has owned for more than 120 years. MOTOR has evolved from a print consumer magazine into a data business for car repair, parts and insurance. Aviation is just as significant to Hearst.

Hearst acquired CAMP Systems in 2016 from private equity firm GTCR. (GTCR is now an investor in JSSI and has supported it buying two aircraft maintenance tracking companies that are rivals to CAMP.)

CAMP Systems then bought Inventory Locator Systems, the spares marketplace, from Boeing in 2019. In 2021 it bought a majority stake in FlightBridge, a workflow system that connects business jet operators with FBO, car handlers, hotels, airlines and catering companies.

When the deal closes in May, Avinode will fit into CAMP’s Marketplaces Group along with ILS, FlightBridge and Amstat – the aircraft listing marketplace.

“This represents a complementary extension of our business and platform to bring exciting new opportunities to the market and better serve our expanding customer base,” said Sean Lanagan, president and chief executive Officer, CAMP Systems.

World Kinetic did not run a formal sales process, instead it contacted companies that had already approached it in the past. The business could have fitted well with Directional Aviation’s spin-off Tuvoli (which has FlyEasy, a rival marketplace and a payment system competitor). It might also have been of interest to Portside, the flight department software company which raised $50m in private equity from investor Insight Partners (and recently acquired the rights to Wheels Up’s AVIANIS software). The founders of Wheels Up had also tried to buy Avinode several times.

King and the senior management team have no plans to leave. This includes Per Marthinsson, one of the three founders, who is Avinode’s chief revenue office.

The other two founders are backing a European car charging start-up. It was branded before they joined, but is genuinely called ChargeNode.

The post CAMP Systems buys Avinode appeared first on Corporate Jet Investor.

You can expect at least one significant announcement from a manufacturer, at least one visit from protestors and at least one discussion about how expensive Geneva is. And a lot of talk about the cooling business aviation market.

This time last year, EBACE took place when there were real concerns about an upcoming global recession. This has not arrived. But it has not gone away either. As well as the US government debt ceiling approaching fast, many European countries are just managing to avoid technical recessions.

This economic uncertainty is hitting demand for business.

WINGX data shows that all business jet flights are down 8% so far this year compared with 2022. In North America flights are down 9% for the past four weeks. European flights were down 6% compared with the same week last year.

AMSTAT says that the proportion of aircraft for sale is rising. In May 2022, 4.31% of light jets were for sale. Now it is 6.23%. The number of midsize aircraft has also risen – 3.08% in 2022 versus 5.49% today – and large jets – 3.13% last year to 6.12%.

But this is nothing to panic about.

Flights are still above 2019 – pre-pandemic levels – and the proportion of aircraft for sale is still well under recent averages. We are just getting to a rational market. Of course it will not stay like this forever. But it is too early to be depressed.

One depressing thing that you can forecast is that the show is going to be targeted by environmental protestors. In one pre-EBACE press release an environmental group criticises the organisers for encouraging attendees to use refillable water bottles and reuse hotel towels. (If you are lucky enough to be in a hotel which provides towels.)

The protestors are asking people to bike to Palexpo on Tuesday at 1645. Of course, they may appear at other times. 

EBAA and NBAA are taking security seriously so bring ID and allow extra time for bag checks. This is especially important if you are coming to see the stars of Netflix’s Drive to Survive (and Formula One principals) Toto and Susie Wolf who open the show.

Jet Aviation and TotalEnergies are providing a 30% blend of Sustainable Aviation Fuel (SAF) for all jets flying into EBACE. In their release, the protestors complain that SAF is just 0.1% of all jet fuel (in 2022 it was actually 1% and it will be a lot more this year). They then argue that everyone should just stop flying.

You can expect an important announcement on how business aviation is committing to stopping the illegal wildlife trade by signing the Buckingham Palace Declaration.

These are all great discussion points if you end up sitting next to a protestor on your flight over. Just don’t let them see your refillable water bottle.

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The post It is going to be a noisy EBACE appeared first on Corporate Jet Investor.

There is a tragedy in every bank run. Silicon Valley Bank, which was building a strong aircraft finance team, supported tech start-ups through tough markets just as Bailey Building & Loan did in Bedford Falls, Upstate New York. 

Some think bank runs are a clear sign that a US recession is on its way. In a research note, Dhaval Joshi of BCA Research, an independent economic consultancy, listed the three signs that a US recession is coming: banks failing, falling housing prices and unemployment rising. We have seen the first two.

Whatever is happening to the US economy, demand for business aviation is falling from last year’s record high. WINGX says that business jet flights are 8% behind 2022 for the past month. AMSTAT data shows that 3.5% of the total business jet fleet is for sale compared with 1.3% this time last year. This is nothing to worry about – and still below average. But that can change. In the second quarter of 2007, AMSTAT said that 1,613 business jets were for sale. One year later there were 2,034. In the second quarter of 2009 the number peaked at 3,166 aircraft.

Business aviation is in a very different place than 2007. Manufacturers have not over-produced and banks have not overfinanced. But everyone is watching closely. “We are not panicking but things are definitely slowing down,” says one European banker. “We are concerned that many of the new US buyers in the last two years are about to be hit with their first real maintenance bills just as things get tight and may need to sell. But who knows?”

Aircraft finance is still available, but bank credit officers (who are paid to worry) are getting more cautious. “Things are definitely a bit calmer today than they were at the start of the week. But our credit guys are nervous,” says one US banker (speaking before bank stocks fell again today). “They also remember what happened to business jets in 2009.” His bank had a record lending year in 2022. He forecasts that this year could be the worst for new deals.

Spare a thought for regulators trying to deal with the turmoil. The governors of the Federal Reserve have impressive credentials, but no academic study tells you what to do when Robinhood or Twitter is driving markets. Jerome Powell, chair of the Fed, is 70.  Which means he is probably only on Facebook

This is from Corporate Jet Investor’s One Minute Week email – you can sign up for free here

The post The money’s not in the bank appeared first on Corporate Jet Investor.

• 419 Light jets for sale – 4.67% of total fleet with a 3.26 month absorption rate –6 added in last week
• 291 Medium jets for sale or 3.67% of the fleet with a 3.11 month absorption rate – five jets added in last week
• 229 Heavy jets for sale or 3.66% of the fleet with a 3.07 month absorption rate – eight jets less than last week

Source: AMSTAT

Flights

• Global: First 27 days of June 2022 up 16% on June 2019. Business jets up 20%. Europe on track for record summer. US ahead of 2019 but could be similar to 2021.
• North America: Business jet flights up 7% compared to June 2021 – up 20% compared to 2019. But signs of cooling: Part 135 and 91K sectors flown in the US in June are down 3% on 2021. Florida departures down 4% on June 2021.
• Europe seeing hottest ever summer for business aviation activity. Week 25, saw 16,000 business jet flights, 16% more activity in 2021. June 2022 has seen a growth of 19% in business jet departures vs 2019 (was 20% for May).
• Rest of World Flights in Asia, Africa and Oceania this month are up 22% compared to 2021. Business jet flights in South America up 8% this year compared to 2021, up by 80% compared to June 2019. China down 47% in business jet departures in June compared to 2019.

Source: WINGX

Manufacturer backlogs

• Bombardier Q1 2022: $13.5bn up 9.6% from Q4 2021, book-to-bill 2.5
• Embraer Q1 2022: executive book-to-bill 2.5
• Gulfstream Q1 2022: $17.6bn – up 8.1% from Q4 2021
• Textron Q1 2022: $5.1bn, up 19.6% from Q4 2021

Source: Corporate Jet Investor, Financial results

The post Aircraft for sale, flights and OEM dashboard – 1 July 2022 appeared first on Corporate Jet Investor.

“I’m excited to broaden my role here at Duncan Aviation, as well as serving our customers on a different level,” said Foersch. “Coming from the engine side of Duncan Aviation, I believe my knowledge of multiple engine platforms will benefit our customer by either fielding questions or providing them with the information they need to create an accurate proposal.”

Duncan Aviation Airframe Services sales manager Troy Nail said: “Foersch’s experience and customer services will play a vital role with clientele interactions and negotiations during his sales role.”

Foersch served five years in the United States Marine Corps before joining Duncan Aviation. He started as an engine technician and over the past seven years has held positions of engine lead tech and engine line team leader for Rolls Royce, Pratt & Whitney, and Williams Engines. Foersch has a Bachelor’s Degree in Project Management from Bellevue University and an Associate Degree in Aviation Maintenance from Embry Riddle Aeronautical University.

Elsewhere, Jim Morford has left AMSTAT to pursue a new opportunity at Aero Asset. Morford has been a customer account manager at AMSTAT for the past 14 years. Andrew Young, general manager, AMSTAT said: “As a valued member of the AMSTAT family, we are saddened to say goodbye but excited to see him fulfil his dream of transitioning into aircraft sales. We hope you join us in wishing Jim success in his new endeavour.”

The post Industry on the move: Duncan Aviation and Aero Asset make appointments appeared first on Corporate Jet Investor.

Andrew Young, AMSTAT general l manager said: “It remains to be seen whether the trends of the last few months will continue long‐term. However, whether the result of a Covid-19-driven reduction in travel or the logistical issues surrounding getting deals done under quarantine, or both, there was a year‐over‐year reduction in resale transactions in March and April this year. Further, the analytics clearly show a reduction in estimated aircraft values.”

The continuation of an existing trend can also be seen within aircraft inventories. The inventory of business jets was up 1.6% between January and March and then up 4.2% since mid‐March. The

inventory of business turboprops was largely unchanged between January and March and up 2.8% from March to May. However, AMSTAT said inventory levels remain below 2016 levels and significantly below those of 2009.

Furthermore, the report indicates that resale retail transactions for business jets were ahead of 2019 levels in January and February but, as the world entered lockdown, fell 23% in March year-on-year (YoY) and 40% in April YoY. Resale retail transactions for turboprops were at or ahead of 2019 levels in January and February but were down 27% in March and down 40% in April compared with the previous year.

Young continued: “What is also interesting is that inventories, while up, are not indicating a panic to sell and levels remain below recent highs seen in 2017. If inventory levels remain relatively low and interest in business aviation materialises as an alternative to commercial travel in parallel

with an economic recovery, then we might expect to see a significant uptick in transaction activity leading to a recovery in aircraft values in the coming months.”

For a full copy of the report click here.

The post Pre-owned business aircraft values dive 15% due to Covid-19 appeared first on Corporate Jet Investor.

The epicenter of business aviation is the United States, where 63% of the worldwide fleet, or 14,163 active jets, currently reside according to AMSTAT. Before the turn of events, U.S. stock markets had been at all-time highs that were 67% above 2007 levels, with quarterly corporate profits around a third higher. The most recent quarterly GDP growth figure was 2.1%, compared to 1.9% in 2007. Manufacturing was improving, job growth strong, consumer strength was meaningful and business investment healthy. The unemployment level hovered at historic lows. The most important economy to the industry was clearly in better shape before this downturn than it was in the last.

Congressional reforms to the financial system have required more reserves by banks and tighter lending standards, providing added liquidity and reduced credit risk. For those who need to finance or lease a jet, rates are significantly lower than they were back then.

While the backlogs of business jet manufacturers are smaller than in the late ‘00s, they aren’t stacked with as many speculators. Some manufacturers put added teeth in their contracts since the last downturn, aimed to keep airplane flippers out of their books. While there will inevitably be some cancellations and deferrals, the current order books are stickier.

Business jet deliveries ticked up a solid 15% in 2019 after being essentially flat over the past decade. Much of the increase was from a bevy of recently introduced new planes, which tend to stir up sales, and will do so into the future.

There are admittedly some weaknesses in 2020 compared to before. International markets are weak and will not provide the safety net they once did back when emerging markets were vibrant. Whereas the Federal Reserve had room to cut interest rates back then, today we’re already essentially at zero, meaning fewer accommodative tools. As it was in 2007, the new jet market is still oversupplied with too many models chasing a finite number of buyers.

Few in business aviation will escape the impending downdraft. New and pre-owned sales will all be impacted as buyers wait for some semblance of normality. Reduced business jet utilization will ultimately impact fuel sales (FBO) and maintenance (MRO) activity. While there has been a recent spike in charter activity due to one-time Carlos Ghosn-style overseas escape plans, that too will taper as fewer onsite meetings occur. Preemptive layoffs at smaller firms have already occurred with more public announcements to surely follow.

The industry will undeniably be impacted after 10 years of relatively clear sailing. It’s a cyclical business but the speed and intensity of the change caught many off guard.  Although there will be casualties, the majority of players have been here before and are survivors, having adapted their businesses to swings in the past.

It’s said that the second half of 2020 may be more forgiving, but the wait will admittedly be excruciating. While there’s always a worst-case scenario, it’s possible that the positives going into this downturn will at least help to soften the inevitable blow.

About Brian Foley Associates (BRiFO)

Since 2006 Brian Foley Associates (BRiFO) has helped aerospace firms and investors with strategic research and guidance.  www.BRiFO.com  Its sister company AvStrategies helps match aviation investors with great companies www.AvStrategies.com

The post Business Aviation May Be Better Prepared For The COVID-19 downturn Than It Was For The 2007 Financial Crisis appeared first on Corporate Jet Investor.

AMSTAT for Salesforce will enable users of Salesforce to:

* View AMSTAT contact and fleet data from within Salesforce and significantly reduce the need to jump back and forth between the two applications;

* Link current AMSTAT data to Salesforce Accounts, Contacts and Leads, so the latest AMSTAT data is always displayed within the CRM;

* Receive alerts for linked records from within Salesforce, giving users a heads up on sales opportunities and changes in their territory;

* Use AMSTAT data to create Salesforce Accounts, Contacts and Leads and fuel the sales processes.

Andrew Young, AMSTAT General Manager said, “Our investment in this solution will enable users to more fully utilize AMSTAT data within Salesforce and reinforces our commitment to helping business aviation sales and marketing professionals achieve their goals.”

In addition to AMSTAT for Salesforce the company will be offering an API that enables users of other CRM and third party applications to integrate AMSTAT data.

AMSTAT will also use NBAA-BACE 2018 to demonstrate several upgraded collaboration tools within their services. Chris Skurat, AMSTAT Director of Sales & Customer Service said, “AMSTAT subscribers have always been able to share proprietary notes, edits and report formats between users under the same subscription.” He added, “AMSTAT has now added powerful notes management and search functionality and also the ability for users to store and share associated materials, such as contracts and pictures within the AMSTAT service making these materials accessible wherever they can login to AMSTAT.”

AMSTAT will also be holding 2 breakout sessions at NBAA-BACE, on Wednesday, October 17, 2018 at the Orange County Convention Center, Orlando, FL – Room N320C. The first session, at 10-11am, will be an introduction to the new AMSTAT for Salesforce app. The second, at 3-4pm, will be a tutorial on using the AMSTAT Aircraft Valuation Tool, the cutting edge real-time aircraft values calculator released at last year’s NBAA-BACE convention.

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