As the industry prepares to gather for the annual National Business Aviation Association convention in Orlando, the US economy is seven years into a post-2008 upswing – but facing the uncertainty of a presidential election in which there is a chance that the most maverick and unpredictable candidate of modern times could emerge as Commander in Chief. At the same time, in the wider global economy, the BRICS engines of growth are backfiring.
For business aviation manufacturers, this has meant a sharp fall in orders and deliveries of large-cabin business jets, including the airliner-derived offerings from Airbus and Boeing. Much of the demand for these top-end types had come from newly-bullish billionaires in Brazil, China and Russia, many of whom are feeling less confident about their fortunes than two years ago. That means they are less prepared to invest in assets they may not need and which – unlike many of their other discretionary acquisitions – are not guaranteed to appreciate. This has, in turn, put severe downward pressure on values, with reports of recently-minted long-range aircraft being offered on the used market at a fraction of their list prices.
Better news comes from segments that looked beleaguered in the years after the financial crisis – the super-light to super midsize workhorses of business aviation – and from an ownership model that also looked to have had its day: fractionals. The reason is that – after many years of hoarding cash, during which travel on private jets was often tainted by undertones of executive excess – corporate America is turning again to corporate aircraft, embracing the “no plane no gain” message of NBAA.
The fractional ownership sector has had a clear out. Survivors have scale and are able to offer owners a viable way of accessing guaranteed flight hours in known aircraft without committing to an entire multi-million dollar asset on the balance sheet. The USA – a vast territory with thousands of time-poor business leaders who need to travel across it securely and quickly – is fractional ownership’s natural home.
Shortly after the NBAA convention finishes in early November, the world will know the next occupant of the White House. While there is no guarantee, this should calm markets and restore boardroom confidence at a time when the US economy is faltering.
Business aviation – in North America at least – should benefit, as firms with outposts in far-flung corners of the continent remember why flying private works.