Originally published as a blog for AINsight for Aviation International News on 2/2/24
As I have always said, we are not in the aviation business, we are in the people business. People selling people business aircraft, people fixing people’s aircraft, and so on. I had the privilege this week of hosting an NBAA News Hour webinar that was targeted at actually seeing ourselves in 2024 rather than just guessing about the year from the perspective of 2023. Obviously, we are early in it; however, we have some great indicators already.
On the panel were several of the best thought leaders in the industry—all professionals I am proud to call my friends: Vivek Kaushal, CEO of Global Jet Capital; Rollie Vincent, president of Rolland Vincent Associates; and Alasdair Whyte, co-founder of Corporate Jet Investor. This group really hit the industry nail on the head.
Vivek was able to help us define the current, as well as the previous year’s, market for financing, as well as appetite for capital investments. The conversation started by reviewing 2023 and labeling it a relatively tough year. Some of the problems with the year revolved around the rising rate environment due to the fed cycle, which created a mini crisis in the banking sector.
He spoke of what he believes will be an easing of this cycle and the opening of better rate markets, which will strengthen the financing climate in 2024. Rollie added that we are getting regular GDP reports—including this last much more positive one—that will also lead to a better environment for business aviation in 2024. It is actually happening rather than being predicted.
Rollie then went on to answer an audience question about the current values of airplanes being well above trend. He commented that, while aircraft prices and values for pedigreed aircraft are holding quite firm, there is a clear shift back to more normalized rates of annual depreciation, which has helped to take some of the froth out of the market. Getting PPI slots has become less challenging, but scheduling and orchestrating maintenance, repairs, and overhauls can still be difficult, reflecting the realities that MRO shops are facing worldwide in attracting and retaining qualified A&P talent. Aircraft values are holding up fairly well despite the fact that inventories are on the rise, up significantly to 7 percent more of the fleet overall, from record lows in 2022.
We spoke a bit about consolidation within our industry, and Alasdair commented on the fact that capital is more readily available and, with interest rates both easing a bit and predicted to continue that easing this year, we could see more consolidation taking place. This will be a positive phenomenon for our industry.
Alasdair went on to discuss companies like Vista Jet that have been in the news of late. His take was again a positive one, comparing Vista to an airline that has built its business model with a large amount of debt as standard in the airline industry. He wanted to remind us they also have a large amount of cash. He felt very good about the future of the company.
With respect to charter and jet card use softening a bit, everyone believed this was not a bad thing for our industry but in fact a good example of right-sizing. The cost coming down a bit for these services was also reflective of the need for a bit more of a competitive position for the providers.
As we as an industry move through the year, it is so positive that we have such great opportunities to enlighten ourselves, with tools like AINalerts and other AIN publications; NBAA regional forums and BACE events; CJI events; and other group gathering opportunities. I encourage each of you to take out your individual calendars to include at least one, if not more, of these gatherings. These will help you tap into the thought leadership of our industry.