The Latest US Business Aviation Market Trends

While the US business aircraft market experienced a post-Covid boom, there have been signs of softer demand in recent months. Nevertheless, although the sector is adapting to new economic and geopolitical realities, industry experts retain strong optimism looking forward.

Among the factors impacting today’s market, Wen Chongjian, Vice President, Aircraft Sales at Leviate Air Group, says the US business aircraft market in 2024 faces a unique set of challenges and opportunities, driven by political uncertainty, economic factors, and shifting demand dynamics.

“Compared to one to two years ago, demand in the pre-owned market has softened somewhat, with more buyers taking a cautious approach due to heightened uncertainty and higher interest rates,” Chongjian notes.

“Key geopolitical events, such as the ongoing war in Ukraine, have added complexity by impacting fuel costs and global supply chains, indirectly influencing aircraft ownership decisions.”

Chongjian reckons the more immediate drivers of demand in the US market are domestic political uncertainty tied to the Presidential election in November, as well as broader economic conditions reflected by inflation and interest rates.

There has been a gradual increase in inventory across most aircraft markets, which is impacting pricing strategies, Chongjian notes. The overall percentage of fleet for sale is still below 10%, which typically indicates a seller’s market, but there are signs of transition in some segments, he says.

“Older models with higher operating costs, for instance, are increasingly entering a buyer’s market due to reduced demand, and certain markets have already dived deep into the buyer’s market with nearly 18% of the fleet for sale,” he qualifies.

“The current interest rate at over 7% for aircraft financing is making aircraft ownership more expensive, especially for those models that are less fuel-efficient or come with higher maintenance costs.”

Aircraft Owners to Adapt to Higher Interest Rate Expectations? 

Mike Christie, Head of Sales – Americas, Global Jet Capital, shares there were nearly 4,000 business jet transactions in the global market in 2021 for both new and pre-owned jets, representing a recent peak.

While it fell back to more typical levels over the next two years, market activity is showing signs of picking up again.

Discussing the state of financing, Christie says that for decades, opportunistic aircraft owners were able to use low-cost aircraft financing to invest for a higher return, while aspirational aircraft owners could afford more aircraft.

However, higher interest rates dampened demand for aviation financing relative to cash, he says. Recent reductions in long-term rates and expected easing by the Federal Reserve will help demand for financing at the margins, but they aren’t expected to ease significantly. 

“As in previous higher rate cycles, aircraft owners will adapt to higher rate expectations and those who financed in the past will continue to finance with the loss of some opportunistic owners,” he says. “Aspirational owners will be able to stretch less due to higher financing costs but will still be involved in the market.” 

Global Jet Capital has seen greater interest in operating leases among both corporates and ultra-high-net-worth individuals recently, as the market increasingly focuses on access to – and usage of – business jets, versus outright ownership. 

The finance specialist expects the supply chain and labor issues that have impacted the market to be increasingly resolved in the coming years. 

“Global Jet Capital and its partners have seen increased activity in the first half of 2024 and demand for new aircraft, and financing to help purchase those aircraft remains steady,” Christie adds. 

Today’s Market is More Balanced Than Before 

Brian Proctor, CEO of Mente Group, says the market is now more balanced than it was two years ago, when it was much more of a seller’s market. Depreciation levels have returned to a more normal level, he highlights. 

For example, a 12-year-old Bombardier Challenger 300 might have sold for $13m-$14m two years ago but would today sell in the region of $10m-$11m. 

“Different markets are doing different things, but I would say the Super Mid-Size and larger parts of the market are rationalizing, probably a little bit more quickly than the bottom end of the market,” he observes. 

Second, Proctor says the US market is seeing significant limitations when it comes to parts and equipment, and the supply chain has not caught up with the business cycle. “The industry is still struggling to support the products that are out there with parts and equipment, and you’re really beginning to see that with some of the MRO shops when it comes to engine overhauls, for example. There's just a backlog that's continuing to guild.” 

This is connected to a third trend facing the US market: a lack of personnel on the technician side. There was a widescale retirement of personnel during the pandemic, Proctor notes, and the ranks have not yet been refilled to the necessary degree. 

In some cases, this has naturally seen workers with decades of experience being replaced by relatively inexperienced colleagues. “As an industry, we need to really think about how we get people excited about aviation,” Proctor highlights, noting that compensation will need to rise to attract new employees. 

“We often hear that planes don’t fly without pilots – well, planes don’t fly without maintenance as well, so we need to be very considerate of what’s happening on the technical side,” he emphasizes. 

Aircraft Buyers Can be More Discerning in Today’s Market 

Johnny Foster, President & CEO of OGARAJETS, says that in terms of the supply-demand relationship, the market peaked in mid-2022. Supply in virtually every market segment, make and model was at its lowest point, with prices broadly or significantly higher than older/legacy markets. 

“Demand has definitely slowed since the market peak. In that time, supply restored significantly and is still moving towards a position of parity between buyer and seller,” he adds. “However, supply in most makes/models remains well below the pre-pandemic levels,” he explains, noting that the fourth quarter of 2023 witnessed a strong burst of buying activity, with indications that the same quarter of 2024 “will see the same feverish activity, with buyers focused on quality late model aircraft.”

Demand is now at a more normalized level for private aviation, Foster adds. “Buyers now have the opportunity to be more discerning, selecting aircraft that meet their needs without compromise. 

Despite this normalization, supply remains at only around 50% of pre-pandemic levels. “As markets shift from seller’s markets to a neutral stance across various aircraft categories — from Light to Long-Range Jets — we remain optimistic for a strong close to 2024,” Foster shares. 

Pre-Owned Aircraft Prices Drop, But Not Dramatically 

Brad Harris, Founder, President & CEO of Dallas Jet International, says that while prices have come down, it has not been a drastic shift. “I am surprised at how new and pre-owned aircraft sales have flourished, and continue to do well despite high inflation, high interest rates, the wars in Russia/Ukraine and in Israel,” he says. 

“You would think we are on the brink of a recession, but the pre-owned aircraft market has not shown [significant] signs of weakening [even] with all the economic and world factors in place.” 

According to Harris, there is still a large number of first-time aircraft buyers and high net-worth individuals acquiring aircraft in the US market while Fortune 500 companies are also increasing their purchases. 

He expects the third and fourth quarters of 2024 to be very healthy in the US, largely due to the available tax deductions. 

Tim Edmonds, Vice President of Aviation at Surack Enterprises, which owns Sweet Aviation, offering charter services, training and other aviation-related activities across the Midwest and Great Lakes regions recalls the huge demand for chartering services from the time of the pandemic until 2023, but adds this has now calmed down. 

“Some of these customers are now using the airlines again, along with other methods of travel,” he explains. But he adds there remains a big demand for private aircraft ownership. “When you look at the ownership side, I don’t think it’s dropped that much.” 

The Raw Data on the US Market 

So, how are business jets being used in the US? According to WingX, in the year from August 1st 2023 to July 31st 2024, corporate flight departments took up the biggest proportion of US business aircraft departures (just over 727,488 departures), representing about one-fifth of the total. This was down 9% on the same period of the previous year. 

Aircraft management was second, with 627,628 departures for the period, comprising 17.5% of the total – a slight increase of 0.8% over the previous year. 

Fractional ownership was third with 555,177 departures (an increase of 9.3% over the preceding 12-month period), while the top five was rounded out by private flight departments (546,400, a decrease of 3.7%) and branded charter (468,380, a 14.8% drop). 

Chongjian says the demand profile for Business Aviation in the US market has diversified over the past few years. High net worth individuals and businesses remain key buyers, but there has been an uptick in demand overall, from charter operators and fractional ownership programs, which have expanded their fleets to meet increased interest in private travel post-pandemic. 

“These operators are primarily focused on acquiring newer, more efficient models that align with customer preferences for lower operating costs and more advanced technology,” he highlights. 

“Additionally, there is sustained interest from private individuals, especially those who are new to the market and seek flexibility through shared ownership or on-demand charter services.” 

Doug Roth, Aircraft Sales & Acquisitions Sales Rep for Duncan Aviation, says there has been significant interest in the US market from business owners who need their aircraft for a mix of business and personal factors. 

“In the Large Jets there has been some interest in leasing an aircraft to a charter operator in hopes of offsetting fixed costs,” he says. “In these cases, the buyer's use of the aircraft is expected to be primarily for personal travel.” 

There are basically two payload range categories within the US, he says: one is for 1200nm and below that take passengers from the center of the US to either coast, while the other is for coast-to-coast legs. “Primary, demand is probably in the first category,” he says. 

However, where many post-pandemic buyers believed there would be ongoing high demand for charter, according to Foster, “many of the buyers who expected their aircraft to fly significant hours every month and ‘pay for itself’ are now feeling the pressure of significantly reduced charter demand.” 

This does not indicate an unhealthy trend, Foster qualifies. Rather, there has been a natural diminishment in demand for charters as Covid-19 has abated. 

US Aircraft Operators Rationalizing Their Fleets 

Meanwhile, Proctor says that many of Mente’s corporate clients are rationalizing their fleets, particularly on the Ultra-Long-Range Jet side, and he thinks there could be a boost in demand for intermediate aircraft because of the lower operating costs. 

“We've had several clients with Ultra-Long-Range Jet orders, the largest airplanes that the manufacturers have, who have actually cancelled or downgraded orders” to a smaller aircraft, he shares. 

This is being driven by new technologies, he says, such as the rise of videoconferencing through Teams or Zoom. “A New York-based executive might previously have travelled to Asia six times a year. Now they go there twice, and the other four trips are replaced by Zoom,” he illustrates. “And so that need for some of those Ultra-Long-Range planes is going to subside.” 

Bifurcation Starting to Show in the US Market

Proctor says there is a bifurcation in the market, with older airplanes beginning to struggle, particularly any that are older than the turn of the century. 

“Older airplanes are going to struggle with some of the pressure that's happening right now with charter operators and charter rates going down and demand going down, that's going to impact those business models fairly significantly,” he explains. 

However, there is significant value in the market, he says. His company has seen particular interest in such aircraft as the Pilatus PC-12, Embraer Phenom 300 and Bombardier Challenger 300/350, while he notes there has also been growing activity in the Gulfstream G650 market. 

Wider economic trends or unexpected geopolitical events (such as those we’re seeing today) typically cause a temporary pause in transaction activity as buyers and sellers assess the situation, notes Foster. However, the market has historically started to rebound from such events within six to 12 months, he adds. 

“Although each events impact the market differently, most tend to reinforce the demand for the freedom that private travel offers, underscoring the resilience and enduring value of the private aviation sector.” 

Many legacy aircraft had “one foot in the grave” in 2019, says Foster, but have come back to life thanks to the pandemic surge. However, maintenance and modernization remains a challenge, so such older and vintage airframes will likely begin to be parted out, he reckons. 

“Late vintages will continue to see strong demand due to current new delivery backlogs, although there may be some price softening from OEMs as these backlogs shorten,” Foster adds. “Additionally, the slowing of charter markets and unmet revenue expectations could become financial motivators for some operators to sell their aircraft.” 

Environmental Pressures to Drive Demand for Newer Aircraft?

Kerstin Mumenthaler, Accountable Manager at AXIS Aviation, says US geography means people typically travel further and require faster, long-range aircraft such as the Bombardier Global 7500 or Gulfstream G650ER. Such jets are ideal for ultra-high-net-worth individuals and international operators looking to travel transcontinental, where speed and range are a priority. 

Mumenthaler says AXIS Aviation expects growth in the sector to continue, though at a slightly slower pace than in the post-Covid years. An increasing demand for newer, cleaner aircraft is also likely. 

“With mounting environmental pressures, sustainability is becoming a key theme throughout the industry, though possibly still more so in Europe than in the US,” she says. “Businesses and individuals are increasingly seeking aircraft that offer reduced carbon footprints and greater fuel efficiency. This will continue to drive replacements and upgrades.” 

The US is expected to remain the largest private aviation market for the foreseeable future, a position reinforced by large aircraft orders from companies like NetJets and Flexjet, she adds. Additionally, the integration of technology is likely to continue driving innovation. 

“Advanced technology, such as real-time analytics and predictive maintenance, can support operators to tailor their services to meet the needs of their customers while simultaneously informing decision-making.” 

Looking Ahead at the US Business Aviation Market 

Forward-looking, Chongjian expects the market to remain dynamic, with several trends likely to emerge. There is anticipated growth for newer, fuel-efficient models, he predicts, as operators seek to optimize their fleets in response to rising operating costs. 

Specific aircraft types in the Mid-size and Super Mid-size Jet categories could see stronger demand thanks to their balance of range, cabin size and operational efficiency. And the outcome of the Presidential election and any subsequent economic policies will also be pivotal in determining whether the market shifts back towards growth or continue in a more balanced or buyer-favored direction, he says. 

“In summary, the US business aircraft market is navigating a period of transformation, driven by a mix of political, economic, and operational factors,” Chongjian concludes. “The growing emphasis on strategic pricing, coupled with the cautious optimism surrounding year-end activity suggests a market that is both resilient and adaptable to evolving conditions.”

More information from: 
AXIS Aviation: https://axis-aviation.com
Dallas Jet International: www.dallasjet.com
Duncan Aviation: www.duncanaviation.aero
Global Jet Capital: www.globaljetcapital.com
Leviate Air Group: https://leviateair.com
Mente Group: https://mentegroup.com
OGARAJETS: https://ogarajets.com
WingX Advance: https://wingx-advance.com