Asian Sky Quarterly - Q3 2020

Q2 2020 – GLOBAL MARKET UPDATE
GLOBAL JET CAPITAL
2020 started off on a stable path. Overall transaction dollar volume was up compared to 2019, and inventories were
increasing – but only gradually. However, as COVID-19 spread and social distancing measures were implemented,
the industry entered a forced hiatus. Flight operations dropped off, OEMs disrupted production and deliveries
to protect their workforces, and pre-owned transactions slowed as simple acts like viewing an aircraft became
complicated. Following year-over-year lows for almost all key metrics in April, flight and transaction activity
increased through the quarter, although they remain low when compared to 2019.
• After dropping 75 percent year-over-year in April, flight
operations have gradually improved through Q2 2020. Flights
in May were down 51 percent from a year earlier and June
flights were down 24 percent, a very positive trend. Overall,
Q2 2020 flights were 50 percent lower than Q2 2019.
• Following a strong 2019 and a highly disrupted first half
of 2020, the major OEMs have seen a collective 9 percent
Q2 year-over-year decline in backlog. Despite this drop-off,
overall backlog remains just under $30B, which represents a
strong position for the industry.
• New and pre-owned transactions for the quarter were down
36 percent by unit volume and 37 percent by dollar volume
versus the same period last year. Following a low in April,
transactions did pick up month-over-month through Q2.
• Despite low transaction volume, the number of aircraft listed
for sale remained stable throughout the first half of 2020,
resulting in only gradual increases in inventory.
• Unlike in the financial crisis of 2008, there has not been a
substantial systemic decline in aircraft residual values during
the early stage of the COVID-19 pandemic. Uncertainty has
reduced reliable data and kept both buyers and sellers on the
sidelines. As people gain confidence, buyers will return to the
market and may further stabilize prices.
Despite all major indicators trailing 2019 levels and a general sense
of uncertainty, month-over-month improvements throughout the
second quarter provide rationale for cautious optimism regarding
the future state of the business aviation market.
34 | ASIAN SKY QUARTERLY — THIRD QUARTER 2020