Global Jet Capital: “The business jet market has never been in a better place”

“The business jet market has never been in a better place.” Vivek Kaushal, CEO, Global Jet Capital is not someone who exagerates. An aircraft financier for 30 years – including many years as chief risk officer for GE Capital Aircraft Finance – he and his team have spent many hours studying the business jet market (including for their recent forecast). So his confidence means something.

The finance company is predicting transactions of new and pre-owned aircraft to rise 5.7% in number of deals and 10.7% in dollar value. This reflects increased deliveries of large cabin aircraft – including Gulfstream G700s.

Global Jet Capital says that transactions fell by 14.8% in 2023. But there were still more than 3,000 deals which is in line with pre-COVID levels.

It expects manufacturers to increase new aircraft deliveries to 777 in 2024, up 9.4% from 710 in 2023. Global Jet Capital expects them to keep rising until 862 deliveries in 2027 and then drop to 831.

“It is a confluence of things that happened post-pandemic,” says Kaushal. “You had this long period of supply overhang that went away because of the production slowdowns that happened and they you have replacement upgrades and new growth driven by wealth creation that just never stopped.”

 As a risk specialist, Kaushal accepts that an external shock could change the market. “We are all students of the market and you can look back to those historical periods where these things happened – and things can change quickly,” he says. “But you just have to realize that the industry is in a very different place today. It just has an installed base that is head and shoulders above what it was back in the 1980s where it was still a very nascent industry. It was still an industry that was kind of just coming into its own.”

Global Jet Capital expects North America to continue to be the largest market for both new and pre-owned business jets, making up 76.3% of the total market. Large fleet orders from NetJets and Flexjet are one reason for this. It also expects 77.3% of all pre-owned aircraft to be North American.

Their forecasts expects that Europe will be the second largest deal market with 9% of transactions. Latin America is next – although it will have a larger 9.8% share of pre-owned deals.

It uses a top-down linear regression model to create its forecast. In 2023 it forecast that the new aircraft market would be worth $18.5bn and that the pre-owned market would be worth $17.9bn. Supply chain difficulties meant that new aircraft were worth $16bn. Global Jet Capital says that pre-owned deals only accounted for $16.3bn.

“The tone in the market is very positive. When you look at this market, you feel like it’s just people doing what they do. People are planning ahead, placing orders. Demand for good high quality aircraft is still very much there. People want to get into those planes,” says Kaushal. “Yes, there’s been inventory built up but you would expect that coming off of the post Covid days, but the market’s stabilized. We are just not seeing anything that would suggest a serious sea state change here.”

You can download the report here.