The Wall Street Journal
By Robert Wall
February 9, 2018 7:30 a.m. ET
Private-jet makers and operators are showing signs of recovering from a decadelong slump in the industry.
The 2008 financial crisis hobbled demand for private aircraft, and corporate caution and cost cutting since then have kept a lid on the market. Now, rising corporate profits, a demand-boosting incentive in the U.S. tax overhaul and a strong economic recovery in Europe are lifting the industry’s prospects. And a weaker dollar is now making American-made aircraft cheaper overseas, attracting buyers.
“All kinds of factors are suddenly pointing in the right direction,” said Chad Anderson, president of aircraft broker Jetcraft Corp. , in Raleigh, N.C.
Deliveries hit a record 1,154 jets in 2008, then fell sharply and have since stayed closer to 600 planes a year, according to Jetcraft figures. Recent order activity suggests an upturn: the broker is forecasting deliveries will top 800 by 2020.
“Order activity and customer interest are picking up across the industry,” Phebe Novakovic, chief executive of Gulfstream jet maker General Dynamics Corp. , told analysts last month. The final quarter of 2017 was the second-best ever for orders of Gulfstream’s top-of-the-line G650 model planes with a sticker price of around $67 million, she said.
French business-jet maker Dassault Aviation SA in January said it secured 38 net orders in 2017 compared with 21 net deals in 2016. Deliveries of new planes last year topped its original expectations, the company said.
“The level of activity out there is stronger than we’ve seen in some time,” Textron Inc. Chief Executive Scott Donnelly told analysts last month. The company owns business-jet maker Cessna.
Corporate shuttles, the planes that companies own or rent to ferry workers between plants, “are coming back into play,” said Mark Briffa, chief executive of British commercial-jet broker Air Partner PLC, which has been adding staff in the U.S. The number of Air Partner customers who have signed up for the company’s jet cards, which entitle clients to hire a private plane at a fixed cost, jumped 36% in 2017. “The market is growing,” Mr. Briffa said.
Craig Hall, who runs a Dallas-based real-estate firm and owns vineyards in California’s Napa Valley and Sonoma County, sold his Dassault Falcon 50 in 2008 for $6.5 million. “I got rid of the plane because of a downturn in business,” he said. He has since rented a series of jets.
Now, the new U.S. tax rules could tip him toward owning again, Mr. Hall said. He is looking at a two- to three-year old jet, like a Dassault Falcon 2000, which can list for about $20 million.
“I tend to travel at odd hours and go to places that commercial aircraft don’t cover well,” he said.
The U.S. tax overhaul signed into law in December includes several provisions that could help make a business-jet purchase more attractive. For instance, under the new rules, companies can write off 100% of the cost of a plane in the first year after purchase through at least 2023.
“For a company, that can be a big deal,” said Scott O’Brien, senior manager of finance and tax policy for the National Business Aviation Association, an industry lobby group.
Used planes get the break, too. That will help shrink inventory of old aircraft on the market—a supply that has kept a lid on demand for new planes. About 11% of all business jets in service are for sale, down from 16% in 2009, according to aircraft market data provider JetNet.
The U.S. tax code is just part of the new attraction. European buyers also are back. The U.S. currency’s recent slide against the euro has made planes 15% to 16% cheaper for European buyers, said Jetcraft’s Mr. Anderson.
Demand for private flights in Europe is also rising. TAG Farnborough Airport near London, one of Europe’s busiest hubs for private jets, said recently that 2017 was its busiest year since 2007. So far, 2018 is looking good, too. The airport said takeoffs in January were up nearly 18% from a year earlier.
Original article can be found here ➤ https://www.wsj.com
After Obama was elected, one speech almost killed corporate and General Aviation for 8 years.......
ReplyDeleteFinally, the private aviation industry begins to recover from the thrashing dealt upon the industry by Obama - during an economic downturn no less while complaining there weren't enough "high paying manufacturing jobs" in the US. Even union workers in this industry were aggrieved at these attacks, and in fact, one of the great manufacturers in the industry - Hawker Beechcraft - filed for bankruptcy in 2012.