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Jetcraft has released its latest 5-Year Pre-Owned Business Aviation Market Forecast, predicting pre-owned aircraft transaction volume and value will maintain their current healthy growth rates.
Pre-owned transaction volume to see 4% CAGR through 2025
Ultimately by 2025, pre-owned transaction volume will reach 2,647 transactions, with a combined annual growth rate of 4% across all jet categories. However, it will be the midsize and large jet segments that will lead the way.
Pre-owned bizav transaction values predicted to exceed those in 2018
Between 2021 and 2025, pre-owned transaction values are forecasted at $57.2 billion, with large jets spearheading the drive forward. In fact, by 2023, values are expected to exceed those in 2018, which was the industry's last peak.
When looking at the average values for the next five years, the overall picture is rational. Between 2004 and 2008, pre-owned transaction values spiked 11%, but that isn't predicted to occur any time soon.
The average transaction value is expected to begin leveling off as we begin to enter a post-pandemic era, with growth sitting at 2% through 2024. This can be explained by two things: first, a tighter supply and demand environment helping to sustain prices, and second, the number of higher priced large jets transactions will increase, elevating the average value over the next few years.
Chad Anderson, president of the aircraft sales and acquisitions company, presented the forecast through a detailed YouTube video on Wednesday, examining the impact of post-pandemic global trends and how a rise in high-net-worth individuals is influencing business aviation ownership.
"At the beginning of COVID-19, few could have seen how quickly first-time business aviation users would lead us to recovery," said Anderson. "The post-pandemic momentum for business aircraft sales is going to be shaped by ambition and management growth."
Business aviation flight levels are up, but a new variant could throw a wrench into the recovery
Unsurprisingly, business aviation flight levels are at an all-time high, particularly in the United States. Over the last 12 months, business aviation has seen a faster recovery than commercial airlines, due in part to COVID-19.
The pandemic highlighted business aviation as a means of getting to your destination without the hassle of TSA and, most importantly, not coming in contact with those outside of your immediate circle who may carry viruses.
Large jet movements are up 12% as international borders have continued reopening. But a new curveball could change the trajectory of this report.
New variant Omicron could halt international traffic. The Centers for Disease Control said that it plans to strengthen its coronavirus testing requirements and screening of international fliers headed to the United States, reported The Washington Post. While the CDC has not officially announced any changes, the prospect could have major tolls on the December travel season, if not reaching into 2022.
Omicron is a highly mutated form of the virus, first documented in southern Africa and since detected in dozens of countries around the world.
"Since the pandemic, the true benefits of business aviation have been realized, particularly by new entrants who have had the means to fly privately but never previously the inclination, and we have seen our industry thrive," said Jahid Fazal-Karim, Owner and Chairman of the Board at Jetcraft.
Untapped post-pandemic market opportunities
Someone with at least $1 million in liquid financial assets is considered a high-net-worth individual (HNWI). This segment of people is relatively untapped, with only 12% utilizing private aviation through the means of charter, jet card, and fractional ownership. But of that 12%, only 18% are owners. This segment has clear room for growth in both private aviation users and owners.
Looking at HNWI, 76% of wealthy individuals reported that their wealth has increased or remained unchanged during the pandemic. This population group is growing at a faster rate than has been seen in the last 5 years. In fact, the number of HNWI is expected to rise by 7% CAGR between 2020 and 2025, according to Jetcraft.
With business aviation users on the rise, it is up to aircraft manufacturers to meet the demand. The average wait time for a new business jet is 1.5-1.75 years, but many are turning towards pre-owned aircraft to fill the demand now as global health concerns rise again.
Breaking down HNWI that are owners of business aircraft, North America currently maintains the lead with 4% of 112,000, while Asia Pacific and Europe fall just behind with 1% of 91,000 owning and 2% of 75,000 owning, respectively.
"Our forecast finds that regional drivers, such as wealth levels and flying hours, represent the main reasons behind ownership in North America, Asia Pacific and Europe, and these continents also retain the highest UHNWI populations," noted Fazal-Karim. "So, with the projected growth in wealth converging with increased use in business jet solutions, we expect to see the road to ownership accelerate among many users, which is an exciting prospect."