In its Q3 Business Aviation Market Brief, GJC finds that year-on-year (yoy) there has been a decrease in flight operations, an increase in inventory levels, and a decline in OEM order intake. Despite this shift, the market continues to show strength and resilience. Driven by strong new deliveries, transactions levelled off following declines in 2023; OEMs reported strong backlogs; flight operations stayed above pre-pandemic levels; and business jet availability - particularly for newer, more desirable aircraft - remained low. Additionally, the macroeconomic environment experienced steady growth and declining inflation levels despite ongoing headwinds. Overall, the industry is well-prepared to handle any potential market disruptions.

Global economic growth continued through Q3 2024, and central banks are now lowering interest rates. Flight operations declined one per cent yoy, but were one per cent higher than Q2 and 15 per cent above Q3 2019 pre-COVID levels, reflecting an enduring expansion in the user base for business aviation. OEM revenue increased 15.3 per cent while backlogs remained high at $45.6 billion. Transactions were stable as OEMs continued to work towards resolving supply chain and labour constraints, and activity began to pick up in the pre-owned market. As more aircraft were listed for sale, inventory increased. Most aircraft models continued to experience depreciation in line with historical norms, but younger aircraft experienced less depreciation than older aircraft.

Many of the headwinds that affected the global economy in 2023 persisted in Q324, including the conflicts in Ukraine and Israel/Gaza and high interest rates. Other factors that may negatively affect economic growth in the next quarter include continued de-globalisation, trade conflicts, major elections in countries making up 38 per cent of global GDP, and slower-than-expected growth in China.

Despite these headwinds, global GDP growth was remarkably stable at around 2.7 per cent over the first three quarters of this year. Central banks were comfortable with inflation levels and began lowering interest rates. The US Federal Reserve is expected to continue to lower rates until mid-2025 while European central banks are expected to lower rates throughout 2025. Other notable tailwinds include strengthening economies in East Asia, South Asia and Central America, and recovery in the Eurozone from slow growth at the end of 2023. In addition, the US labour market has remained more resilient than many economists expected, assuaging concerns of a near-term economic slowdown. As such, the global economy is expected to remain stable for the remainder of 2024.

In Q3 2024, flight operations declined 1.3 per cent from a year earlier, with declines evenly spread around the world. In the US, large storms in the southeast at the end of the quarter drove down flight operations. The US, along with Europe, also experienced continued normalisation of usage following post-COVID peaks. Geopolitical threats drove further declines in Europe as well as in the Middle East and Africa. Fractional operators remained the strongest segment in the market and continued to demonstrate modest growth.

Even as departures declined yoy, flights increased nearly one per cent from Q2 (which itself experienced a 6.4 per cent quarter-over-quarter growth rate) and demand remained above pre-COVID levels. Q324 departures were 14.6 per cent higher than in Q319, demonstrating a systemic expansion of the user base. Due to the industry’s inherent value proposition, a substantial proportion of new users continued to utilise business aviation. 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 decreased 1.1 per cent yoy to a still-high $45.6 billion. While industry-wide orders in Q3 declined from the high levels of 2022, they were 20.4 per cent above Q319, with demand remaining strong by historical standards. Orders reflect continuing high demand for business jets at a time of relatively low inventory of young pre-owned aircraft. OEMs experienced strong revenue growth, up 15.3 per cent in Q324 yoy due to increased deliveries and strong service revenue. OEMs still have work to do to fully resolve supply chain and labour constraints (illustrated by labour disputes at major OEMs in 2024). Deliveries increased, however, reflecting OEM progress with these issues. With revenue increasing at a faster rate than orders, the industry-wide book-to-bill ratio declined from 1:1 in Q2 to 0.9:1 in Q3. In their public statements, OEMs forecast book-to-bill ratios to remain around 1-to-1 through the end of 2024 and into 2025.

Q3 year-to-date total transactions stabilised in 2024 following declines in 2023, while volume increased when measured in dollars. Over the past few years, new deliveries were held back by supply chain and labour constraints following disruptions caused by the COVID pandemic, and now by delays in new aircraft certification. OEMs continued to work towards fully resolving these issues, resulting in a 5.5 per cent increase in deliveries in Q3 (dollar volume increased by an even larger 17.3 per cent due to strong deliveries in the heavy jet segment). With certification achieved for several new aircraft models, OEMs plan to increase deliveries through the remainder of 2024.

The total number of pre-owned transactions was down yoy through the end of Q3, although dollar volume was up slightly as buyers continued to favour heavy jets. 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 showed signs of picking up, with stronger than usual activity levels over the summer. Newly certified models making their way into service later this year may result in incremental supply of desirable aircraft, improving liquidity and driving up transactions through the remainder of the year.

Aircraft listings began to increase in the latter half of 2022, a trend that continued into Q324. During the post-pandemic period of rapid growth in 2021, many transactions involved unlisted aircraft while public listings were 25.3 per cent lower than in 2019. In 2022, sellers began to publicly list their aircraft more consistently (in keeping with the historical norm), driving up the number of new listings 13.3 per cent yoy. New listings continued to increase through Q324, many of which were older aircraft. In 2019, 13-year old and older aircraft represented 59.1 per cent of listings, a figure that rose to 70.3 per cent by 2022. The trend favouring older aircraft listings moderated somewhat in 2024, with older aircraft representing 69.6 per cent of all listings at the end of Q324. Listings will likely continue at a similar level through the remainder of 2024 as the market reverts to historical levels.

The number of aircraft available for sale ended Q324 at 7.8 per cent of the total fleet. With more aircraft being publicly listed, availability rose gradually from the all-time lows reached in 2022. However, it remains below the historical average over the last decade, which was approximately 10 per cent of the fleet.

At the end of Q324, the availability of 12-year old and newer aircraft remained particularly healthy at only 5.6 per cent of the fleet. Total aircraft availability was down 33.3 per cent compared to Q4 2019. Availability of 13-year old and older aircraft ended Q3 down one per cent from Q4 2019, representing nine per cent of the fleet.

In Q324, flight operations slowed from all-time highs but stayed above pre-pandemic levels. Driven by an increase in new deliveries, transactions stabilised after a period of declines. As more aircraft were publicly listed for sale, the number of aircraft available for sale rose. The market, previously characterised by seller advantage and rising prices, shifted to a more balanced state with stable prices, especially for newer, more desirable aircraft. OEMs maintained high backlogs and long lead times. Consequently, the business jet market demonstrated resilience and is expected to stay active in the fourth quarter of 2024.