GAMA Third Quarter 2023 – BizJet Market Flat

GAMA, the General Aviation Manufacturers Association, released its third-quarter shipments and billings report last week. The report reveals that business jets have yet to recover to pre-pandemic levels, either in the number of aircraft or in inflation-adjusted billings. Despite book-to-bill solid ratios during the pandemic, the business jet market continues to underperform. Fortunately, supply chain constraints in the industry appear to be waning, providing hope for recovery in the usually strongest quarter of the year.Below is a summary of shipments and billings from 2019-2023 through the third quarters of each year for east comparison. Volumes in every aircraft category are above 2022 levels, with pistons and turboprops leading the way. Compared to pre-pandemic levels from 2019, the single-engine piston and turboprop markets are about 35% higher than 2019, while multi-engine aircraft and business jets lag at about 89% of pre-pandemic levels. [caption id="attachment_79493" align="aligncenter" width="1228"] source: GAMA[/caption] Looking at the industry for the third quarter only, there are some encouraging signs. Billings in the third quarter of 2023 were higher than pre-pandemic levels by 5.7% overall. However, when inflation-adjusted using the Producer Price Index for aircraft manufacturing, the result in real terms was 5.6% below 2019 levels. Business jet deliveries in the third quarter were 159 in 2023 against 183 in 2019, down 13.1%. From the following chart summarizing only third-quarter comparisons, it is clear that the shortfall in business jet deliveries is driving the market. [caption id="attachment_79494" align="aligncenter" width="1355"] source: GAMA[/caption] In the helicopter market, turbine helicopters had a scorching start to 2023 through 2 quarters but fell back in the third quarter to levels below 2019 production. On a year-to-date basis, as shown in the summary chart above, turbine helicopters remain above 2019 and 2022 levels from that great start. Will things turn upward in the 4th quarter, or will the momentum from the first half end? We will observe this over the next few months to determine whether we have an inflection point or a temporary anomaly. The business jet market remains competitive, and we have added Eclipse, with two aircraft deliveries, to our analysis for completeness. A summary of deliveries by manufacturer is shown in the following chart. [caption id="attachment_79495" align="aligncenter" width="1187"] source: GAMA[/caption] Computing deliveries market share through the third quarter of 2023 shows Textron in the lead, followed by Bombardier, Gulfstream, and Embraer. On a delivery basis, this chart compares historic market share through three quarters from 2019-2023. Dassault only reports on a half-year basis, and we thus show no deliveries from Dassault during the third quarter. Market share by deliveries is shown in the chart below, showing that this historic pattern among the OEMs has not changed markedly over the last five years. Computing market share by billings shows a different story, influenced by the average price of a business jet. Gulfstream and Bombardier continue to battle at the top of the market, with a minimal lead for Gulfstream in the third quarter. Textron, the leader in the number of aircraft delivered, remains at number three in billings. [caption id="attachment_79498" align="aligncenter" width="1017"] source: GAMA[/caption] The table below shows market share data by billings through the first three-quarters of the last five years. Gulfstream’s historic lead in market share billings has closed with Bombardier as Gulfstream transitions from its G650ER to the new G700 flagship model. The battle at the top end of the market will increase from two to three players with the Falcon 10X from Dassault, which remains in development, entering with a very competitive product. We expect Dassault to regain market share with the newly certified Falcon 6X and the forthcoming 10X models over the next decade. The market share for each player on a billings basis is shown graphically in the chart below. Gulfstream, Bombardier, and Textron continue to lead the segment on a billings basis, with the order of OEMs remaining consistent over the last five years. The Bottom LineThe business jet market is slowly recovering to 2019 levels and is unlikely to reach pre-pandemic production or inflation-adjusted billings before mid-2024. While supply chain constraints have waned, demand for business jet travel appears to have peaked post-pandemic, indicating that the majority of the new customers that emerged during the pandemic were easily absorbed by the charter capacity of the industry and are not becoming aircraft purchasers. As mentioned in our 2024-2033 Business Aircraft Forecast, we expect the relatively flat market demand for new business jets to continue for the next decade. With the potential for major technology changes on the horizon, we do not expect major new models, other than the Falcon 6X and Falcon 10X, to emerge soon, given the potential for obsolescence. We also expect environmental concerns, particularly in Europe, to impact demand for business aircraft in that region, with some potential for environmental concerns to extend to other markets.

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