The fortunes of general aviation are expected to noticeably improve next year, Brian Foley, an aviation consultant with Brian Foley Associates, said.
“I have a deep conviction that 2015 will be the indisputable pivot point when the industry, including its laggard segments, turns meaningfully upward,” Foley said.
The 2009 downturn in the economy resulted in a nosedive in the general aviation industry. Wichita planemakers cut thousands of jobs as backlogs collapsed.
For the past seven years, the market has had a split personality with deliveries of the largest business jets relatively unscathed by the recession, Foley noted. Sales of small and medium-size jets dropped by two-thirds and have yet to fully recover.
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“After many fits and starts, there are several key elements falling into place that suggest ... that a measurable improvement is imminent across the board,” Foley wrote.
First, used business jet inventories are at their lowest levels since 2008; takeoff and landing activity is the busiest it’s been in six years; and business jet executives have been more upbeat lately, Foley said.
The U.S. has always been the largest market for private aircraft. It’s five times the size of the next largest market, he said.
Foley also said the U.S. economic situation has continued to improve, and stock market indexes have hit records. That’s helped consumer confidence ratings reach a seven-year high, he said.
“Add to that the lowest oil prices in four years, which reduces plane operating costs, and historically low interest rates from which aircraft loan and lease rates are derived, and you’ve painted a great scenario for an all-encompassing rebound,” he said in a statement.
In addition, a number of new jet models have been introduced. New products stimulate the market by giving customers a reason to buy.
From 2014 to 2019, 18 new and derivative business jets are entering the market, he said.
Foley expects deliveries to be on the upswing until 2019. That’s when Foley expects the next cyclical downturn to occur.
“The industry’s improved outlook will manifest itself next year as markedly higher manufacturer backlogs, increasing book-to-bill ratios and a jump in unit deliveries in double-digit percentages,” Foley said.