Under traditional industry wisdom, recovery in the business jet market should be well under way by now.
There's typically a 24-month lag period between economic recovery and a positive impact on business jet demand.
But the lag time has come and gone and a full-blown recovery has yet to take shape.
So what's going on?
A number of things, says aerospace forecaster George Tsopeis, vice president of operations of Zenith Jet, a Quebec-based aviation services business.
"It is our view that we are experiencing a 'new normal' in terms of the recovery, which is in effect challenging some of the very basic tenets of our industry," Tsopeis said.
There's been a disparate market in the narrow-body and wide-body business jet segments.
The assumption has been that manufacturers building wide-body jets have recovered, while narrow-body jetmakers are still feeling the residual effects of the downturn.
To an extent, that's true, Tsopeis said.
But, while the recession of 2008 and 2009 hit every business aircraft manufacturer, their recoveries have more to do with the competitiveness of their product lines and less with their focus on wide- or narrow-body airplanes, he said.
Corporate profits and the number of used jets on the market have long been key indicators of new business jet sales.
Some think business jet recovery has been elusive because corporations have derived profits through cost cutting and not by growing revenues.
But that's just part of the story, Tsopeis said.
"It is our view that a huge segment of the narrow-body customer base -- that emerged during the last business aviation bull run -- has effectively retracted from the market," he said.
The reasons are many, Tsopeis said.
High net worth individuals, primarily those who were new to aviation during the last upturn, such as surgeons, CEOs, successful entrepreneurs, private equity types and others, took a hit to their net worth in the downturn, found unattractive financing terms or lost their appetite for ownership, Tsopeis said.
"Whatever the reason, the point is that they have since left and have not returned," he said.
Some industry watchers see it as a positive sign for business aviation that corporations have been hanging onto cash.
But, "we should not be giddy with the fact that companies are ripe with cash," Tsopeis said.
Instead of buying business jets, they have other ways to deploy the money -- such as acquisitions, stock repurchase plans or redistribution to shareholders.
In addition to corporate profits, the industry keeps tabs on the number of used aircraft up for sale.
"We regularly read how industry watchers claim that 'we're still x-percentage points above normal inventory levels,'?" he said.
But today, demand is greater from international markets, where buyers prefer new planes. Those customers tend not to be interested in getting a great deal on a used airplane.
That means that the current state of the used market may be as good as it gets, Tsopeis said.
While it's not time to write off the metrics of corporate profits and used aircraft inventory, the key to understanding the market is integrally linked to manufacturers' product lines and strategies.
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