GAMA, the General Aviation Manufacturers Association, released its Year End 2022 results summarizing the industry’s shipments and billings earlier today. Â Business aviation continued a slow improvement during the 4th quarter, with shipments and billings exceeding pre-pandemic levels in piston and turboprop aircraft, but falling short in the business jet category. Â Overall, GAMA 2022 billings were 1% higher than in 2019, not keeping pace with inflation, as supply chain issues continued to constrain the industry. Â
Data for the 4th quarter are shown in the table below, illustrating a trend towards single engine models and away from multi-engine piston and turboprop models. Â With engine reliability at exceptionally high levels, the upgrade path for owner pilots has shifted from single to multi-engine pistons in the past to single engine piston to turboprops today. Â Daher, Pilatus, Epic and the forthcoming Beech Denali will likely benefit from this trend.
For the entire calendar year, the industry was relatively flat when compared to pre-pandemic levels in 2019, with shipments up 6.4% but billings down 2.8%, reflecting a higher mix of piston and turboprop aircraft while higher value jets remained 12% down from 2019 levels. Â The following table summarizes the full year activity and billings for GAMA 2022.
The helicopter market regained strength, pulling just ahead of 2019 in billings, with 8,4% more piston and 2,3% fewer turbine deliveries than in the last pre-pandemic year. Â Both piston and turbine helicopters have rebounded over the last three years, and should exceed 2019 levels in 2023. Â From an overall standpoint, the industry appears on the road to recovery, with positive trends lines from 2020-2022. Â The only area of marked weakness remains business jets, which remain down from 2019 levels by 12%, despite the increase in general aviation activity and acquisition of new business jet customers during the pandemic when airline restrictions were in place. Â While we remain optimistic on the business jet industry over the next two to three years, we foresee a flattening out period in our AirInsight business jet forecast.
By manufacturer, shipments business jet shipments remained strong for many industry players, with Textron, Bombardier, Gulfstream, Embraer, Dassault, and Cirrus showing year to year gains over 2021, as Airbus, Boeing, Honda, and Pilatus were lower or flat. Â However, when compared with 2019, only Cirrus and Pilatus remain ahead or even with pre-pandemic 2019 delivery levels, with Airbus, Boeing, Bombardier, Dassault, Embraer, Gufstream, Honda, Pilatus and Textron remaining behind pre-pandemic results. Â The industry, with strong book to bill ratios last year, expects to resolve some supply-chain issues (the same supply chain that also serves Airbus and Boeing) and to recover to pre-pandemic levels in 2023.
From a billings standpoint, the results were slightly better than the delivery numbers, as business jet manufacturers pulled within 4.6% of 2019 billings in the GAMA 2022 results. Â The following table shows billings by manufacturer of the last four years, and reflects a steady recovery over the last three years, with a remaining shortfall when compared with pre-pandemic levels. Â Only Boeing, Cirrus, and Bombardier exceeded pre-pandemic levels, with Airbus, Dassault, Embraer, Gulfstream, Honda, Pilatus and Textron falling short of 2019 billings. Â We expect industry billings to exceed 2019 levels in 2023 as the supply chain recovers and the high backlogs begin to be filled through additional aircraft deliveries. Â Unfortunately, we are not expecting a massive uptick, simple a continuation of the steady trend line that we’ve seen over the last couple years with a steady, but positive, recovery.
We also look at market share in two ways, aircraft deliveries and billings. Â In terms of deliveries, Textron is the business jet market leader, as shown in the following chart, followed by Bombardier, Gulfstream and Embraer. Â For those of you who prefer tables, the data are shown in tabular form as well.
From a billings standpoint, leadership changes to Gulfstream and Bombardier, who offer more expensive ultra long-range intercontinental jets, leading the way financially. Â Bombardier made strong gains on the back of its Global 7500/Global 8000 models that are now being delivered. Gulfstream will soon introduce the new G700, G800 and G400 models, and with Dassault soon introducing the Falcon 6X mid-size and Falcon 10X, the competition will soon be intense at the top end of the market. Â The following table and charts illustrate market share by billings over the last four years from GAMA 2022 results.
The Bottom Line
The GAMA 2022 shipments indicate that the General Aviation industry, while recovering, has still not reached pre-pandemic levels, which will likely happen in 2023. Â Despite the influx of new business aircraft customers during the pandemic and strong backlogs, those backlogs take time to build and deliver, so we don’t expect some of those aircraft until 2023 and 2024. Â But at the same time, demand for business jet travel took a major downturn in the second half of 2022, after strong gains during the first six months. Â It appears that much of the additional demand for private aviation during the pandemic has now reflected on the cost, and perhaps environmental image, and changed their mind. Â Whether this trend continues and how it will impact the OEM order books will be a key question for 2023.
If we look at flight hours in 2022, the quarterly results showed strong gains in the first half of the year and weakness by year end. Â The following table summarizes flight hours in the US from ARG/US, and reveals an interesting trend. Â The gains in activity made during the pandemic have all but disappeared in the last half of 2022. Â The strong upward trend that continued into the first quarter of 2022 fell flat and went negative by the end of the fourth quarter. Â Demand for business jet travel has taken a rapid downturn in late 2022, which could be a harbinger of a more difficult environment for the business jet manufacturers in the near future. Â The table is self-explanatory, and a bit alarming in the speed in which the market has drastically changed. Â This is one of the reasons our business jet forecast does not return to the levels of production seen in 2007 and 2008 for the foreseeable future.
As with many recessions, business jet travel is an early indicator of economic difficulty. Â With higher interest rates, and growing social and environmental pressures, travel by business jet is no longer as easy as it once was. Â While everyone who tries business jets can’t help but love the comfort and convenience, the question that needs to be answered is whether the new customers for business aviation who tried private flying during the pandemic will remain over the longer term. Â Initial indications aren’t positive, based on flight hour demand. Â Nonetheless, we remain cautiously optimistic that business jet deliveries and billings in 2023 will exceed 2019 levels, as orders already placed for 2023-2025 deliveries will take place. Â But with used jet inventories up 40% (albeit still at historically low levels) in early 2023, the market is definitely changing. Â To what extent and how quickly are the operative questions.
