London, February 6th 2015: With the Corporate Jet Investor conference opening in London next week, the International Bureau of Aviation (IBA) looks at the trends affecting the business aviation sector in 2015 and how business jet values are performing.
“2015 is shaping up to be an interesting year”, comments Chris Lennon, Head of IBA’s Business Aviation and Private Jet Department. “With the price of oil fluctuating to as low as US$ 65 per barrel, there is a growing demand for corporate aircraft, especially within Africa, the Middle East and Asia. Add to this the apparent resurgence of the Corporate Aircraft Market within Europe, the outlook for 2015 is positive in many regions.”
“However, challenges remain. Chinese austerity measures mean corporate jet owners and operators still face restrictions. But this also brings about greater ambition, with Chinese operators intending to expand their services into Europe or invest in existing operators” continues Chris.
“In the Eastern part of Europe, with economic sanctions and the weakening of the Rouble, Oligarchs and Corporations are diverting their attention elsewhere. Many Russian corporations are now focusing their business activities on the BRICS, due to this immediate strategic change in focus, last minute travel arrangements are often required in areas that would be deemed ‘secluded’ leading to a large rise in utilisation of Corporate aircraft in these regions.”
Jonathan McDonald, Senior Analyst for IBA, shares his knowledge of business jet values, “Whenever IBA attends industry related conferences, we hear about how business jet values should be recovering. Sure, in a few instances we see young G650s selling at well above list, and the odd Boeing BBJ2 can certainly attract premium pricing. But have values really crept up, especially when one considers the used fleet?” Let’s sample a few popular types:
VLJs – Cessna Citation Mustang. In July 2013 the oldest Cessna Citation Mustangs were probably trading at around US$ 1.8 million. Now they’re down to US$ 1.43 million according to our research. That’s a 20% drop in less than two years. Okay, so there’s probably around 10%-12% natural depreciation on that aircraft, but strip that out and it’s clear that the aircraft’s market value has not risen.
Light – Cessna Citation CJ2. In July 2013 the oldest Cessna Citation CJ2s were probably trading at around US$ 2.3 million. Now they’re down to US$ 2.06 million according to our research. That’s a substantial drop in less than two years. Again, natural depreciation will take care of some of this; however there is substantial room for the market values to improve yet we still aren’t seeing it.
Medium – Learjet 40/45/60 Series. In July 2013 we reckoned the cheapest of these could be yours for anywhere between US$ 1.8 to US$ 2.3 million. Now those aircraft are down to US$ 1.33 million and US$ 2 million respectively.
Super Mid- Size – Bombardier Challenger 300. Actually values of the oldest examples seem to have settled around the US$ 9.3 million mark so no great changes from 2013. We are aware of for sale aircraft advertised in the US$ 8 million-US$ 9 million price range, but it does seemingly have 7,000 plus hours on it.
Heavy – Well we already know that new Bombardier Challenger 605s are coming out of the door at around US$ 27 million. That’s barely any more than a new super mid-size Challenger 350. Used Legacy 600 pricing remains weak. We have not seen any evidence of values creeping up on those.
Large – Much of this fleet is still made up of “maturing” Global Express, G-IV/SPs and G550s etc. Have we seen improved market values on early examples? Well based upon the oldest Global Express aircraft coming down from US$ 16 million in 2013 to US$ 14.10 million in 2015, or G550s coming down from US$ 27 million to US$ 25.3 million, the answer has to be an emphatic no.
Jonathan is speaking at the Corporate Jet Investor Conference in London next week, taking place on the 9th and 10th of February, http://london-2015.corporatejetinvestor.com/. Visit the IBA table at the event to pick up your free copy of IBA’s full ratings guide, covering many business jet models.
IBA is now pleased to offer CAMO services for the ATR 72, Gulfstream G450, Gulfstream G550 and Gulfstream G650 with the following aircraft type to be added to the list in the following months: Airbus A318, Airbus A319, Airbus A320, Airbus A321 and the Boeing 737 Family. For further information on the services offered by IBA, please contact Owen Geach, Commercial Director, on [email protected] or call +44 (0) 1372 224488.
ABOUT IBA
The International Bureau of Aviation (IBA) was established in 1988 to provide independent expert business analysis to the aviation industry. IBA advises commercial and business aviation clients, aircraft/engine manufacturers and operators. Services include asset valuations, technical and engine management, consulting and commercial services, industry and sector research and analysis. For further information on the services offered by IBA, please contact Owen Geach, Commercial Director, on [email protected] or call +44 (0) 1372 224488.
