Press Release
Issued by JETNET.
August 31, 2011
JETNET LLC, the leading provider of corporate aviation information, has released July 2011 and the first seven months of 2011 results for the pre-owned business jet, business turboprop, and helicopter markets.
As the 2nd half of 2011 begins, we are seeing mixed signals from both new and pre-owned fixed wing and rotary marketplaces. Some of the signs are indicating that the recovery is slowly working, while others are not.
• New aircraft deliveries are down 16% and billing is down 22% compared to 2010
o Business Jets showed the largest decline, down 26%
o Cessna is the only OEM in the Top 6 to show an increase in new deliveries: up 35%
o Dassault Falcon and Embraer are down 58% and 48% respectively
• Pre-owned Business Jet Sale Transactions are up 11.2%
o Average Asking Price is down by 9.2% but showed increases in June and July 2011 vs. 2010
o For Sale inventories have continued to slowly drop to 13.7% for business jets and 10.1% for business turboprops
• Jet-A Fuel Prices have increased steadily and are within 3% of the previous 2008 record level
• The U.S. Economy had a weak 1% GDP growth ("second" estimate) in the 2nd quarter of 2011
JETNET reported that the first six months of the 2011 pre-owned market showed early-stage recovery signs. In July this trend continued as JETNET reported double-digit growth of 11.2% in pre-owned business jet retail sale transactions in the first seven months of 2011. However, the long-anticipated good news is that the average asking price in June and July improved by $1.2 million and $2.7 million respectively compared to 2010, a trend seen for the first time in 2011. Two consecutive months of increases in the average asking price for business jets is a clear signal that the bottom has been reached in average asking price and that a turn-around is in the works.
Market Summary
Business Jet inventory For Sale percentage showed the largest change (down 1.2 points), to 13.7% from 14.9%. However, the only market sector to show an increase in for-sale inventory was the piston helicopter market, increasing from 6.3% in July 2010 to 6.5% in July 2011. Business Jet Sale Transactions increased 11.2% in the first seven months of 2011 compared to the same period in 2010. Business turboprops also showed an increase of 3.7%. Both helicopter categories saw double-digit declines in sale transactions (down 11.5% for turbine and 17.7%
for piston) in the first seven months of 2011 versus the first seven months of 2010.
All pre-owned aircraft categories showed large decreases in average asking price percentages after seven months except piston helicopters, which showed an increase of 5.2%. The decrease in average asking price ranged from a -9.2% for business jets to -3.8% for business turboprops and -11.0% for turbine helicopters.
Business Jet For-Sale Fleet Age
The total percentage for sale in July 2011 is at 13.7% compared to 12.6% in July 2006, there has been nearly a doubling of "aircraft for sale today" for aircraft 20 years or less in age, at 1,239 (10.1%) compared to 664 (7.6%) in July 2006. The for-sale percentages of aircraft 21 years or older are nearly the same—21.1% in July 2011 versus 20.8% in July 2006. The 21 and older age group percentages for sale are very high and account for 1 out of every 5 being offered for sale.
US JET-A Fuel Prices
The 2nd quarter 2011 U.S. Jet-A prices at $6.63 per gallon are on the rise, up $1.10 per gallon (19.9%) from $5.53 in the 2nd quarter 2010. A big concern is that the current fuel price is only 20 cents below the 2008 record-setting price of $6.83 per gallon. US Economy
Real gross domestic product—the output of goods and services produced by labor and property located in the United States—increased at an annual rate of 1.0% in the 2nd quarter 2011, (that is, from the 1st quarter to the 2nd quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the 1st quarter, real GDP increased 0.4%.
Historically, whenever the U.S. economy shows a growth in GDP of greater than 3.0%, the business aviation market is in a growth mode. Unfortunately, the U.S. economy has reported in the first two quarters of 2011 GDP percentage growth numbers well below this level.
Summary
Market recovery in the 2nd half of 2011 depends on stronger GDP growth in the U.S. economy and fuel prices being held in check. It is very important that new aircraft deliveries pick up in the 2nd half as well. The pre-owned market has been slowly improving in 2011, and the average asking price for pre-owned business jets has improved in the past two months, providing positive signs for business aircraft owners.
