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Argus: Bizav Flights Continue Upward Trend

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Business aviation activity in the U.S., Canada, and the Caribbean increased 2.2 percent in May, continuing the general upward trend in 2018, according to the latest TraqPak report from aviation researcher Argus. The 2.2 percent increase follows a 2.6 percent overall year-over-year increase recorded in the past couple of months.

In May, Part 135 showed the strongest increase, up 2.8 percent from the same month in 2017. Part 91 activity also increased in May, up 2.1 percent. Fractional activity, meanwhile, inched up 0.7 percent. This improvement came in spite of a precipitous drop in large-cabin fractional flights, which were down 21.9 percent in the month, Argus reported.

All categories of aircraft in North American/Caribbean regions flew more in May, led by a 2.9 percent gain in light-jet flights. Midsize jets nearly matched that improvement with a 2.8 percent increase year over year. Large jet flight activity, meanwhile, was up 1.2 percent and turboprops 1.5 percent, Argus reported.

In the U.S., the Southeast region by far was home to the largest number of departures in May (60,958). The Western region, including California, Nevada, and Arizona, accounted for the next highest departure tally at 34,676.

Argus believes the general improvements in flying will continue, projecting a 1.9 percent increase in overall flight activity this month.

Inventory of Used Business Aircraft Continues To Shrink

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Preowned turbine business aircraft inventories tightened across the board in the first quarter, but business jets shined most brightly, according to the latest data from business aviation research firm JetNet. Across all segments, including helicopters, there were 5,675 aircraft for sale in the quarter, down 10.7 percent, or 680 units, from a year ago. That equates to just 5.4 percent of the in-service fleet on the market.

Notably, the business jet inventory showed the largest year-over-year decrease, shrinking by 350 units, to 2,020, or 9.3 percent of the in-service fleet. In terms of units, that marks the lowest inventory level for business jets at the end of the first quarter since 2008; by percentage, it is the lowest since at least 2005, the earliest year for which JetNet provided data.

Likewise, preowned turboprop inventory also showed a large decrease, falling 0.9 percentage points, to 6.9 percent, at the end of the quarter. That amounts to just 1,051 of the 15,337 in-service turboprops up for sale.

While business jet full-sale transactions fell 3.8 percent, they are taking 16 fewer days to sell versus last year, at 297 days. Business turboprop transactions slid 0.7 percent and are taking more time to sell at 303 days on the market, up 13 days year-over-year.

USED BIZJET SCARCITY POSITIVE FOR NEW AND USED:

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Used inventory 17% lower yoy in april, down to less than 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 5.5% of installed base (including 0-5 year aircraft at 4.0% and 6-10 year at 6.9%) with young inventories down 35% yoy. Young inventory is approximately 250 bps below long-term average levels and now roughly in line with pre-financial crisis levels.

By cabin size, 0-5 year used are at post financial crisis lows at 4% for all three cabin classes (small⁄midsize⁄large). For 6-10 year used, all three classes are about in line with post-crisis lows including small cabin at 6% and midsize⁄large at 7%.

North america only ,5% young used available. Among the manufacturers, inventory levels are lowest for embraer at 5% of fleet and gulfstream at 7%. Among young (0-10 year) aircraft, inventory is low at approximately 5% for all manufacturers other than dassault.

Used prices have held roughly flat ytd, although were 2% lower yoy in april (r3m). by cabin class, used pricing is improving slightly for small and large cabin (+1% yoy), while midsize pricing continues to decline (-10% yoy).

All the ingredients for bizjet turn look in place: 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, corroborated by recent positive commentary from oems and suppliers. Among our coverage, we see bbd/gd/txt (all rated overweight) as the primary beneficiaries of improving industry conditions.

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