Average quarterly flight utilization for business aircraft has exceeded the 30-hour mark for the first time in a decade, according to the latest business aviation index from aircraft maintenance plan provider JSSI. During the second quarter, average per-aircraft utilization reached 30.35 hours; year-to-date average flight hours are up 4.6 percent, it said.

“As we entered the summer season, one of the strongest periods of the year for flight activity, we fully expected to see an increase in aircraft utilization,” noted JSSI president and CEO Neil Book. “However, the continued growth this year has been exceptional. It’s also encouraging to report that average flight hours for the quarter exceeded 30 hours for the first time since 2008.”

Of the nine industries using business aircraft analyzed by JSSI, seven reported an increase in quarter-over-quarter flight activity. The growth was primarily driven by the business services sector, which saw a 15.8 percent quarter-over-quarter increase. This was followed by the aviation sector, up 11.3 percent, and consumer goods, up 7.7 percent. Real estate and construction business aircraft users saw flight activity decreases of 7.4 percent and 1.6 percent, respectively.

All seven world regions reported increases in year-over-year flight activity, according to JSSI. Europe topped that growth, climbing 13.3 percent year-over-year, while Asia-Pacific was not far behind with a 12.6 percent rise. North American flight hours increased 2.4 percent year-over-year.

Used inventory 14% lower yoy in June, down to ,9% of installed base, the lowest since before the financial crisis.

Inventory levels for young used aircraft (0-10 year old), which are most important as a comparable to new aircraft, are at 5.2% of installed base (including 0-5 year aircraft at 4.1% and 6-10 year at 6.2%). With young inventories down 34% yoyi. young inventory is 250-300 bps below long-term average levels and now roughly in line with pre-financial crisis levels.

Inventory for each cabin class is at⁄near post financial crisis lows.

For 0-5 year, used inventories are lowest for midsize cabin at 3%, followed by small cabin at 4% and large cabin at 5%. For 6-10 year, used inventories are lowest for small⁄midsize cabin at 6%, followed by large cabin at 7%.

The decline in young used inventories has been largely driven by north america,

The largest region with ~50% of young used inventory. North american young used inventory at 4.3% of the installed base (including large cabin at 4.0%, small at 4.2%, midsize at 4.5%) has declined by nearly 300bps since early 2017. By manufacturer, Bombardier⁄Cessna⁄Embraer⁄Gulfstream very young (0-5 year) inventories all look low at less than 5%, while Dassault is slightly higher at ~6%.

Used prices were 2% lower yoy in June (r3m), but 1% higher sequentially.

By cabin class, used pricing continues to decline for midsize (-6% yoy), while small⁄large cabin prices were 1% lower. The sequential increase in pricing was driven by large cabin (+3%) and small cabin (+1%) with midsize cabin flat.

Scraps running low, poised to increase.

We estimate business jet scraps are currently running at less than 1% of the fleet, down from ~1.5% of fleet in 2014. We would expect retirements to pick-up going forward given the average age of the fleet has increased from ~14 years to ~17 years since the financial crisis, which presents a large replacement opportunity. The FFA’s mandate for all aircraft that fly in U.S. airspace to be equipped with ads-b out transmitters by Jan 1, 2020 could also stimulate replacement demand, as older aircraft may be scrapped to avoid the relatively expensive upgrade.

Positive on Bizjet:

After nearly a decade at trough levels, key business jet market indicators now all signal improvement, including much lower used inventory levels along with stable used pricing, increasing flight activity and higher corporate capx. In addition, our survey of industry professionals indicates rapidly improving market conditions. Among our coverage, we see bbd/gd/txt (all rated overweight) as the primary beneficiaries of improving industry conditions.

Our bizjet quarterly summarizes our views on the business jet market and serves as a reference guide for key trends in the industry

Indicator at 67:

Our barclays business jet indicator (bbji), which reflects .100 responses, came in at 67 in June, down slightly from our prior survey in may at 68, while continuing to indicate substantial improvement in market conditions. Our June survey result is particularly strong considering that we are entering summer, which is typically slower for the bizjet market. By cabin class, our bbji was led by small⁄large cabin at 68, followed by midsize cabin at 64. Our straight up measure of overall business conditions came in at 6.7 (0-10 scale), trending consistently higher since our first survey in January.

Used inventory 15$ lower ffioffi in May, down to ,9$ of installed base, the lowest since before the financial crisis.

Inventory levels for young used aircraft (0-10 year old), which are most important as a comparable to new aircraft, are at 5.3$ of installed base (including 0-5 year aircraft at 4.0$ and 6-10 year at 6.5$) with young inventories down 36$ ffioffi. Young inventory is 250-300 bps below long-term average levels and now roughly in line with pre-financial crisis levels.

Us cycles 2$ higher ffioffi in May:

Estimated business jet cycles were 2% higher from the prior year in May and 4$ higher on a r12m basis. On a seasonally adjusted sequential basis, cycles were 1$ higher. ¢harter cycles were 3$ higher ffioffi, compared to non-charter 1$ higher. Seasonally adjusted cycles are ~40% higher from the bottom in 2009 and roughly in line with pre-crisis levels, we estimate average daily utilization remains low due to continued fleet growth.

Positive on Bizjet:

After nearly a decade at trough levels, key business jet market indicators now all signal improvement, including much lower used inventory levels along with stable used pricing, increasing flight activity and higher corporate use. In addition, our survey of industry professionals indicates rapidly improving market conditions, corroborated by recent positive commentary from oems⁄suppliers. Among our coverage, we see bbd⁄gd⁄tflt (all rated overweight) as the primary beneficiaries of improving industry conditions.