Professional Pilot, October 2016

Current data shows low bizjet market index scores The bizjet market already is giving cause for concern UBS Global Research measures demand with its business jet market index A reading below 50 indicates a weakening market In May the bizjet market index was 29 the lowest reading since 2009 By July it moved up slightly to a still dismal 31 Even North America the strongest region scored only 48 Segment indices were 32 for small 76 PROFESSIONAL PILOT October 2016 cabin jets and under 30 for large cabin models Customer interest in preowned jets slipped 10 even as inventories rose Only 1 in 4 respondents expected business conditions to improve in the next 12 months This all seems to fit the established trend Some 700 bizjets were delivered in 2015 down from a peak of more than 1100 in 2008 Rockwell Collins predicts industry deliveries to slip 3 to 4 in 2016 Bombardier expects its deliveries to shrink by 10 this year At the end of 2015 the big 5 airframers Bombardier Dassault Embraer Gulfstream and Textron had 37 billion of firm orders in backlog down 18 from a year earlier And sales in Q1 2016 were off 16 year on year It was the biggest drop since 2011 Current bizjet movements also are worrisome In the US they are at last up to 2003 levels with a current fleet almost 50 bigger than it was then For the month of April Part 135 and Part 91 movements were down 49 and 42 respectively Fractional operators were off 69 By August domestic movements for the year to date were up a weak 088 over 2015 However international movements were down 209 In Europe movements in August were down 2 from the previous year despite gains in the ultra long range and VLJ segments Year on year monthly figures there have been declining almost continuously for more than 4 years There is very little to like in that list Lets keep it in mind as we look into some important corners of the global economy and figure out whether bizav statistics are likely to get better or worse in the next few years United States In the worlds largest economy by far the biggest market for business aircraft there are mixed reviews Many Americans are complaining of bad times even when current reports say they are doing relatively well Are they right to be worried According to the headline number the economy is growing reasonably fast GDP has been rising at about 24 annually roughly average for the advanced economies This year it is expected to come in around 2 Good enough yes Unfortunately things look a lot worse if you divide GDP growth by the population and that says more about how well off people are Adjusted for inflation GDP per person grew by 2 per year on average for most of the half century ending in 2005 It has slowed since then This year it is down to about 04 When GDP per capita grew at 2 personal income doubled in 35 years fast enough for people to feel good about it At the current rate it will take 160 years The risks of Brexit on European Union economies Europe real GDP growth in 2015 Source Stratfor US Global Investors