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BUSINESS AVIaTION
MARKET BRIEF

OVERVIEW

In Q2 2024, the business jet market continued to normalize following record high utilization and demand in the post COVID-19 pandemic period.

Flight operations declined and inventory levels increased year-over-year. The economy also faced a variety of factors impacting growth. Despite these challenges, the business jet market remained resilient. Transactions stabilized after declines in Q1, OEMs reported strong order intake and modest backlog growth, flight operations remained above pre-COVID-19 levels, and inventory remained low—especially for younger, more desirable aircraft. As things stand, the industry is well positioned to weather any future economic downturn.

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Q2 2024 HIGHLIGHTS

  • The global economy continues to grow, and central banks have begun to discuss interest rate cuts.
  • Flight operations declined 2 percent year-over-year in Q2 2024 but were 6 percent higher than Q1 and 14 percent above Q2 2019 pre-COVID-19 levels, reflecting an enduring expansion in the user base for business aviation.
  • OEM book-to-bill ratios were 1:1 in Q2 and there was a 28 percent year-over-year increase in revenue.
  • Transactions were stable through the end of Q2 2024 as OEMs continued to work towards resolving supply chain and labor constraints and activity began to pick up in the pre-owned market.
  • Total aircraft inventory increased in Q2, driven by older aircraft. Younger aircraft remained in demand; therefore inventory of younger aircraft was more stable.
  • Most aircraft models continued to experience depreciation in line with historical norms during Q2 2024. However, younger aircraft were more stable than older aircraft.

GLOBAL ECONOMY

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Economic growth is expected to slow slightly from a surprisingly strong 2023.ii Many of the headwinds that affected the economy in 2023 remain, including the conflicts in Ukraine and Israel/Gaza, as well as high interest rates. Other factors that may negatively affect economic growth in 2024 include continued de-globalization, trade conflicts, major elections in countries making up 38.1 percent of global GDP, and structural growth challenges in China. iii

Most economists do not expect a recession in 2024 and point to several strong points in the global economy. Central banks are now comfortable with inflation levels and have begun to discuss lowering interest rates. The European Central Bank lowered rates in Q2 and othersiv, including the U.S. Federal Reservev, are expected to lower rates this year. Other notable tailwinds include strengthening economies in East Asia, South Asia, and Central America, recovery in the Eurozone from slow growth at the end of 2023, and resilience in China despite the challenges mentioned above.vi As such, the global economy is expected to remain stable for the remainder of 2024.vii

FLIGHT OPERATIONS

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In Q2 2024, flight operations declined 2.3 percent from a year earlier, with declines evenly spread around the world. In the U.S. and Europe, continued normalization of usage drove declines while geopolitical threats drove declines in Europe, the Middle East, and Africa. Fractional operators remained the strongest segment in the market and continued to demonstrate modest growth and sustained demand.

Even as departures declined year-over-year, flights increased 6.4 percent from Q1 and demand remained above pre-COVID-19 levels. Q2 2024 departures were 14 percent higher than in Q2 2019, continuing a trend that began in 2023 when departures were 15.1 percent higher than in 2019. In 2023 and early 2024, some passengers who utilized business jets in the post-COVID-19 recovery period returned to commercial airlines—a trend that was widely anticipated.ix However, due to the industry’s inherent value proposition – including personal safety, flexibility, productivity, and comfort – there has been a systemic expansion of the user base with a substantial proportion of these new users continuing to utilize business aviation in 2024. As such, flight operations were lower than the peak witnessed in 2022, but higher than pre-pandemic levels with steady and sustainable growth expected going forward.

OEM BACKLOGS

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OEM backlogs increased 1.7 percent year-over-year in Q2 2024 to $51.2 billion. While industry-wide orders in Q2 were lower than the highest levels of 2022, they were 6 percent above Q2 2023. Strong orders were driven by high demand for business jets and continued low inventory of young pre-owned aircraft. At the same time, revenues (largely driven by deliveries) increased 27.9 percent year-over-year. After years of slow increases, OEMs experienced strong revenue growth in Q2 2024 due to increased deliveries and strong service revenue. To be sure, OEMs still have work to do to fully resolve supply chain and labor constraints, but Q2 2024 results indicated that they were finally making progress toward increasing production rates. With revenue increasing at a faster rate than deliveries, the industry-wide book-to-bill ratio declined from 1.3:1 in Q1 to 1:1 in Q2. Going forward, OEMs expect book-to-bill ratios to remain around 1-to-1 in 2024.

TRANSACTIONS ($ VOLUME)

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Note that Q2 2024 figures reflect preliminary data and may increase as more transactions are reported to the FAA and data providers.

After declining in 2023 and early 2024, total transactions stabilized in Q2 2024 and increased when measured by dollar volume. Over the past few years, new deliveries were held back by supply chain and labor constraints following disruptions caused by the COVID-19 pandemic. New deliveries were also held back by delays in new aircraft certification. While OEMs continued to work towards resolving these issues, they were able to increase deliveries in Q2. With certification achieved for several new aircraft models, deliveries should continue to increase throughout 2024.

The total number of pre-owned transactions was down year-over-year through the end of Q2. Transaction volume was hampered by economic uncertainty (despite stronger than expected GDP growth) as well as inertia between sellers looking to maintain post-pandemic value gains and buyers waiting for values to return closer to historical levels. However, the market began to show signs of picking up. There was a high degree of activity early in the year that began to translate into sales as the market returned to its historical level of liquidity. Newly certified models making their way into service later this year may result in incremental supply of desirable aircraft, driving up transactions through the remainder of the year.

FOR SALE INVENTORY

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Continuing a trend that started in the latter half of 2022, aircraft listings increased in Q2 2024. Although the trend has remained consistent, its underlying causes have shifted over time. During the post-pandemic period of rapid growth, many transactions involved unlisted aircraft which artificially lowered public listings and inventory. As the market normalized in late 2022 and 2023, listings increased. In 2024, the increase in aircraft listings has been driven by listings of older aircraft. Through the end of Q2, listings of 13-year-old and older aircraft rose 11.9 percent, compared to 5.1 percent for 12-year-old and younger aircraft. With the increase, aircraft 13 years old and older represented 71 percent of all listings.

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Inventory levels ended Q2 2024 at 7.7 percent of the total fleet. Inventory levels were higher than historical lows reached in 2022 but still below average levels of approximately 10 percent over the last decade. As with aircraft listings, the increase in inventory was largely driven by older aircraft. Inventory of 12-year-old and newer aircraft increased 5.3 percent YTD and ended Q2 at 5.2 percent of the fleet, while inventory of older aircraft increased 14.6 percent YTD and ended the quarter at 9 percent of the fleet.

Inventory is expected to continue to increase for the balance of 2024 due to additional listings of older aircraft. However, continued demand for newer, high-quality aircraft should keep overall inventory numbers relatively consistent in the near term.

RESIDUAL VALUE

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The above chart compares the year-over-year percentage change in the bluebook value of like-aged aircraft over time (e.g., the difference between the value of an eight-year-old aircraft from one year to the next). Global Jet Capital analyzes a basket of aircraft as a proxy for the overall market. Values vary on a model-by-model basis and observed increases or decreases in value are not necessarily applicable to any specific aircraft make/model. For the value of a specific aircraft, please contact a licensed aircraft appraiser.

As inventory increased in 2023 and 2024, price negotiations between buyers and sellers became more balanced than in the post-COVID-19 recovery period. As a result, average business jet bluebook values declined 0.6 percent in Q2 2024 compared to Q2 2023.

The changes in value varied across the installed base. As mentioned above, inventory of 12-year-old and younger aircraft increased at a slower rate than older aircraft in 2024. As a result, values for these younger aircraft remained stable in Q2 2024, rising 0.5 percent compared to Q2 2023. On the other hand, the supply of 13-year-old and older aircraft increased at a much faster rate, causing values to decline 3.5 percent year-over-year.

The relatively strong values of younger aircraft compared to older aircraft are a return to pre-COVID-19 trends. In the earlier post-pandemic period, values of older aircraft outperformed younger aircraft as many buyers chose to acquire older aircraft during the peak of the market in the absence of alternatives. As the market normalized in 2023 and 2024, values of younger aircraft performed better.

It is worth noting that business jets are depreciating assets and a steady decline in the price of an aircraft over its lifespan is to be expected. The consensus among industry players is that supply and demand are well-balanced now and should support stable aircraft values in the near future.

\ CONCLUSION

In Q2 2024, the business jet market continued to normalize from a period of rapid growth following the COVID-19 pandemic.

Flight operations slowed from all-time highs but remained above pre-COVID-19 levels. Transactions stabilized in the quarter after a period of declines. Inventory and values have experienced a shift over the past few quarters. During the post-COVID expansion, older aircraft became very popular due to their wide availability. However, as the market normalized, demand for these aircraft declined. As a result, aircraft listings and inventory for aircraft older than 12 years increased, while values for this segment declined. At the same time, inventories for 12-year-old and younger aircraft increased at a much slower rate and values were stable. OEMs continued to report strong order intake and modestly rising backlogs. As a result, the business jet market remained resilient and is expected to remain active in the second half of 2024.

 

DID YOU KNOW AN OPERATING LEASE PROVIDES AN OWNERSHIP EXPERIENCE WITHOUT BEING IN THE FULL BUSINESS OF OWNING AN AIRCRAFT?

GLOBAL JET CAPITAL RECENT TRANSACTIONS

Global Jet Capital is a leader in the business jet financing market, providing leases and loans for both new and used aircraft. Our clients are diverse but all value flexible financing solutions for their aircraft. Below is a brief overview of a few recent transactions that Global Jet Capital has facilitated.

RECENT TRANSACTIONS

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RECENT TRANSACTIONS

Demonstrating the flexibility of an operating lease and Global Jet Capital’s expertise in designing client-oriented solutions, we worked closely with our client to modify the terms of an existing transaction to meet their evolving business context.

In this case, our client wished to extend an existing operating lease to be coterminous with a contract with one of their major customers. With their new buying concept in mind, we designed a solution that met all their needs including closing within 4 weeks. We also kept payments within our client’s budget despite rising interest rates and changing aircraft residual values. This deal clearly demonstrates how Global Jet Capital can help clients effectively manage their aircraft assets while meeting their profitability goals.

AIRCRAFT CLASS
Ultra-Long Range

NEW/PRE-OWNED
Pre-Owned

REGION
North America

FINANCIAL PRODUCT(S)
Operating Lease Extension



RECENT TRANSACTIONS

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RECENT TRANSACTIONS

Global Jet Capital leveraged its breadth of financial solutions, flexibility, and expertise in the business jet market to secure this recent deal.

Listening intently to the client led us to understand their key—conserving capital during a long lead time for their desired aircraft. With this in mind, we tailored a solution that began with pre-delivery payment financing and will seamlessly roll into a finance lease that will initiate once the aircraft is delivered. The solution also includes a term length and competitive rates that suit the client’s requirements along with the ability to register the aircraft in their jurisdiction. A dedication to understanding client’s needs, expertise in financing business jets around the world, and extensive experience coordinating PDP payment programs with OEMs allowed us to deliver on the client’s buying concept and secure this transaction.

AIRCRAFT CLASS
Ultra-Long Range

NEW/PRE-OWNED
New

REGION
APAC

FINANCIAL PRODUCT(S)
PDP W/ Finance Lease



RECENT TRANSACTIONS

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RECENT TRANSACTIONS

This recent transaction highlights the options and flexibility available to clients when entering into an operating lease agreement with Global Jet Capital.

This client had originally leased the aircraft out of our inventory of high-quality, off-lease aircraft with the intention of upgrading at the end of 3 years. However, at the end of the 3 years, the client was still not sure about an upgrade. Global Jet Capital worked with the client and quickly established terms for a lease extension that, despite changes in the broader capital markets, allowed them to stay within their existing budgetary constraints. We will continue to work with this client as they maintain their search for an upgrade and leverage the flexibility of working with Global Jet Capital and our tailored financial solutions.

AIRCRAFT CLASS
Super-Mid

NEW/PRE-OWNED
Pre-Owned

REGION
North America

FINANCIAL PRODUCT(S)
Operating Lease Extension

Notes

iOxford Economics,  iiWells Fargo,  iiiWells Fargo,  ivWells Fargo,  vWells Fargo,  viWells Fargo,  viiWells Fargo,  viiiWingX and Global Jet Capital Analysis  ixAIN,  xCompany financial reports ,  xiJetNet and Global Jet Capital Analysis. Units are in parentheses.,  xiiAmstat and Global Jet Capital Analysis, xiiiJetNet and Global Jet Capital Analysis,  xivAircraft Bluebook and Global Jet Capital Analysis

PREVIOUS MARKET BRIEFS

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