As business aviation continues to be buffeted by economic headwinds nearly five years after the start of the global financial crisis, signs of a turnaround have been stubborn to materialize. But the turnaround is coming, experts insist, and maybe sooner than many of us think.
At the annual JetNet IQ Global Business Aviation Summit in New York yesterday, industry insiders and financial analysts acknowledged the painful impact the economic downturn has had on business aviation, but they said there are strong indications the market is finally turning a corner, thanks in large part to improving conditions in the United States.
“The U.S. economy is about to head off on a really fun trajectory,” said conference keynote speaker Tobias Levkovich, who is the managing director for equity strategy with Citi Research. “Most people don’t believe it because of what we’ve gone through in the last few years. But the truth is, we go through cycles, and we just went through a really bad cycle, but things in the economy are lining up very nicely for the future.”
The next six months, Levkovich said, could see a cooling of the red hot stock market as Europe continues to be a trouble spot, but his research shows there is a high probability that stocks will be higher 12 months from now as the next economic up-cycle begins in earnest. Five years from now, he said, people will have forgotten all about 2008 as the good times return. “As a species,” he said, “we’re blessed with the ability to forget.”
There are some signs the good times are returning already. Rene Banglesdorf, CEO of aircraft sales broker Charlie Bravo Aviation, said demand for pre-owned light jets is finally picking up as inquiries from prospective buyers come in. “We haven’t seen that since the start of the economic downturn,” she said.
Still, there continues to be a large gap between what most sellers think their airplanes should be worth and what buyers are willing to pay. “Aircraft values are still declining,” said Marius Breitenbach of ExecuJet Aircraft Trading. Recently a number of late model Globals, Gulfstreams and Falcons have hit the market, he said, driving down prices even for coveted large-cabin jets.
Despite the market’s stubbornness to rebound, executives for the major aircraft manufacturers at the conference all said they are investing heavily for the future and are excited about their prospects for 2014 and beyond. Of course, they’ve been saying the same thing for the last few years. The difference this time, apparently, is they really mean it — and they have the economic data to back it up.
