Asian Sky Quarterly 2023 Q1

EUROPE AVIATION
MARKET PROFILE
As a highly established and consolidated market in business aviation,
Europe's business jet fleet has demonstrated a relatively steady
operational trend over the past three years. Despite the inevitable
impact of the COVID-19 pandemic and the geopolitical conflict in
Ukraine had on the overall market in Q4 2020 and Q2 2022 respectively,
the number of aircraft in various categories, including Light aircraft,
have remained resilient in the region.
With a stable and consistent track record, Europe's business aviation
market demonstrated its ability to weather the challenges of both the
pandemic and political instability.
In 2022, the business jet market underwent a stabilization process after
experiencing a period of volatility characterized by an influx of first-time
business jet travelers during the onset of the pandemic. This period of
soaring demand and inflated pre-owned market values was coupled
with limited supply of quality pre-owned aircraft. Inventory has gradually
replenished, yet the pre-owned market remains a mixed environment.
While prices for certain models, such as the Challenger 300 and the
G550, have faced a downward correction due to their increased supply
in the market, values for highly sought-after Light jets, such as the
Embraer Phenom 300 series, have maintained strong asking prices,
thanks to the low levels of supply in the region.
Since 2022, various macro-level factors have introduced a sense
of fragility to the business jet market. The ongoing war in Ukraine
triggered an energy crisis, and the European Union's implementation
of isolating measures against Russian-linked or owned business
aircraft, as per Regulation (EU) 833/2014, led to the grounding of their
aircraft. Moreover, there has been mounting public pressure to suspend
business aircraft operations within the region due to accusations of a
high carbon footprint per passenger journey, with Amsterdam's Schiphol
Airport even proposing a ban on business jets by the end of 2025.
Most recently, the collapse of major banking institutions, such as
Silicon Valley Bank and Credit Suisse, has sent shockwaves across
the business jet market. Known transactions have been aborted that
were linked to the creditors' demise. These factors have added to the
uncertainty surrounding the market and its future prospects.
The helicopter market is poised for a gradual recovery following a rather
muted market during Q4 2022, particularly from the perspective of
major lessors in the region such as LCI, who have seen recent doubledigit
lease rate increases. Lessors are expected to renew their aging
fleets to maintain optimal fleet utilization among key leasing partners
in Europe, which could potentially replenish the pre-owned market
inventory. Additionally, resolving supply issues for critical servicing
components may bring presently stored and inactive aircraft back into
service, thereby making them available in the marketplace.
Despite the inevitable headwinds facing the business aviation market
in Europe for the remainder of the year, such as continuing high interest
rates and looming uncertainties regarding an impending economic
recession, the industry looks set to remain buoyant. Supply chains
are gradually recovering, and OEM deliveries are tentatively releasing
production backlogs. As the market moves towards rationalized pricing
and depreciation levels away from the frenzied initial pandemic peak,
the pre-owned market for business jets is expected to maintain demand
from seasoned aircraft owners looking to replace their existing aircraft
with newer models.
DATA BY
Note: Due to a difference in statistical methods between data sources, the data presented in the Quarterly report may differ from the data
displayed in the Business Jet Fleet Report.
6 | GLOBAL SKY QUARTERLY — FIRST QUARTER 2023