1Q23 for Business Aircraft: Improving but Not Fully Back

GAMA released its report on business aircraft shipments and billings for the first quarter 2023. The GAMA report can be downloaded here. Business aircraft deliveries were flat year over year for business jets, but the helicopter market improved substantially. The following table summarizes first-quarter deliveries over the last five years and illustrates that the business jet industry has not yet returned to pre-pandemic production levels.Despite a significant increase in the use of private aviation during the pandemic, that growth has not yet translated to deliveries. With a downturn in business aircraft activity in early 2023, the question now becomes the degree to which the pandemic-induced increase in traffic will translate into long-term customers, whether through charter, fractional ownership, or full aircraft ownership. While manufacturers remain confident, it is difficult to predict the percentage of new business aircraft customers that will remain versus return to first-class airline travel post-pandemic.Virtually all of the market growth in general aviation came from smaller piston aircraft, which accounted for 81.8% of the growth in shipments for the first quarter of 2023 compared to 2022. The business jet market remained relatively flat, down five units from 2022 and near the pandemic low point of 113 first-quarter units in 2021. Supply chain issues remain for business jets, continuing to impact production rates negatively. While those issues are slowly improving, industry executives at EBACE recently did not see the full resolution of all issues before 2024.Surprisingly, the helicopter market had a significantly higher first quarter, exceeding shipments for the last four years and solidly above pre-pandemic levels in the first quarter. Turbine helicopter shipment rose from 100 to 153 units, and total helicopter billings increased by 59.9% over the first quarter of 2022. The rotary wing market has rebounded strongly, and supply chain constraints are no longer problematic.Business JetsThe business jet market has not yet returned to the pre-pandemic levels of 2019 and is unlikely to catch up until supply-chain issues are resolved from late 2023 to early 2024. In the first quarter, deliveries dropped by five units from 2022, a 4.2% shipment decrease. The mix also shifted to smaller models, impacted by Gulfstream’s changeover from the G650 to the G700, requiring production facility adjustments. Billings decreased by 3.5% for fixed-wing aircraft year over year, remaining about 14.2% below 2019 levels. Our AirInsight forecasts show the general aviation industry finally catching up with 2019 billings in 2025.The following chart shows business jet deliveries by the manufacturer. With its popular Cessna line of small business jets, Textron is the leader in deliveries, followed by Bombardier and Gulfstream. Cirrus popular single-engine jet is in fourth place, followed by Pilatus with its successful PC-24, Embraer, and Honda, which has fallen precipitously to only a single aircraft delivered in the first quarter of 2023. Several industry leaders, including Gulfstream, Textron, Bombardier, and Embraer, remain behind their delivery levels from 2019. First quarter billings for aircraft by the manufacturer are shown in the following chart from 2019-2023. Notably, 2023 remains 14.2% lower than 2019 in billings. Notably, Bombardier is the only manufacturer to show consistent 1Q growth in billings from 2019-2023. The following chart shows the historic market share for business jet deliveries by the manufacturer from 2019-2023. The trend of Textron leading with Gulfstream and Bombardier fighting for second place in deliveries continues into 2023, with the OEMs separated by one aircraft. With its jet aimed at the owner-flown market, Cirrus has strong deliveries but substantially lower per aircraft billings. The data in the table above are illustrated graphically in the following chart:The following chart shows the market share based on deliveries for the first quarter 2023. Airbus and Boeing reported no corporate jet deliveries in early 2023, bringing up the bottom. Honda, with only one delivery, struggled in the first quarter. Textron led in deliveries, followed by Bombardier and Gulfstream. Regarding billings, as shown in the table below, Textron falls well short of its market leadership position on deliveries. With high-end aircraft, Gulfstream typically leads in billings, with Bombardier, who have both medium and large jets, vying for a close second in billings. These trends have continued into early 2023. With smaller aircraft, the remaining players fall off quite sharply from the two players at the top of the market. Dassault, which reports only semi-annually, is moving upscale with its forthcoming aircraft and will become a more significant player at the top end of the market with the Falcon 10X and Falcon 6X aircraft entering the market.Historic first quarter market share by billings is shown graphically in the chart below. Gulfstream, Bombardier, and Textron have traditionally been the leading players in billings, in that order, over the last decade. For the 1st quarter of 2023, market share leadership based on billings goes to Gulfstream, followed closely by Bombardier, and Textron, as shown in the pie chart below. The results in early 2023 follow the typical pattern, with Gulfstream having the most expensive mix of aircraft, resulting in higher billings per aircraft. HelicoptersThe rotary wing market rebounded significantly in early 2023, with year-on-year growth of 49.3% in deliveries and yy.y% in billings. When contrasted with the flat business jet market, it is clear that demand has returned much faster in the helicopter market than for business jets.The following table shows comparative first-quarter deliveries from 2019-2023. Airbus and Leonardo substantially grew in 2023, as did Robinson in the small helicopter market. Bell remained relatively flat in early 2023 as it struggled post-pandemic.With respect to billings, Airbus and Leonardo led the way in revenue growth, as the segment achieved a 59.9% increase over the first quarter of 2022 billings. It would appear that the post-pandemic turnaround in helicopter demand and production has been completed with fewer supplier issues than in the fixed-wing sector. The question is whether this segment can maintain that momentum into the 2nd quarter. So far, all indications are positive.The Bottom LineThe general aviation market in early 2023 remains a contrast. The business jet market is flat, while the smaller end of the market with piston aircraft continues to grow slowly. The helicopter market exploded in early 2023, with substantial unit deliveries and billings gains. At the same time, the latter was what industry executives wanted to see in business jets, as supply chain issues kept OEMs from delivering additional aircraft. Given recent drops in a business jet flying demand and flat book-to-build ratios in the first quarter, the potential for concern in the business jet market is emerging. While most believe the industry will rebound to pre-pandemic levels, it is unlikely that we will return to production levels from 2007-2008 anytime soon. AirInsight's projections call for modest industry growth and relatively flat performance through 2027, and that scenario appears to be playing out.

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