2023 Mid-Year Market Snapshot
After a very strong 2022, the business jet market has begun to normalize in 2023. Flight ops were down compared to 2022 (although still higher than pre-COVID levels), book-to-bill ratios were around 1-to-1, listings approached 2019 levels, transactions were down from highs in 2022, and values have begun to stabilize. The biggest question going forward for the industry is the threat of overall economic recession. Overall, the business jet market remains strong, with demand and OEM backlogs remaining high and inventory relatively low.
A few key market points:
The economy remains resilient thus far in 2023. However, persistent inflation is forcing central banks to continue to raise interest rates, this most recent opportunity notwithstanding, which some analysts expect will slow growth in the short term.
Flight operations declined 4.7 percent year-over-year in Q1 2023 but were 14.1 percent above Q1 2019 levels, demonstrating continued demand.
OEM orders and deliveries remained in-line, and backlogs ended the quarter 14.2 percent higher than Q1 2022 and flat between Q4 2022 and Q1 2023.
Transactions declined in Q1 2023 due to slower-than-expected new deliveries, attributable to nagging supply chain issues and a slowdown in the pre-owned market as buyers and sellers adjust to fluid market conditions.
Business jet inventory levels increased in Q1 2023 as more sellers publicly listed their aircraft, although levels remain well below those pre-pandemic.
Increases in aircraft values have begun to stabilize, normalizing from highs in Q3 2022.
Overall, we believe the market, while softening, remains strong. We also believe it’s good for everyone if the market softens from its historic highs last year. With such tight inventory and high prices, it was exceedingly challenging to get deals across the finish line.
With more inventory coming online and prices adjusting accordingly, we see this as a great time for clients who might be standing on the sidelines to start their search in earnest and close on an aircraft in the second half of the year.