Cheaper Fuel Lifts Demand for Company Jets

Ahead of next week’s Corporate Jet Investor conference in London, the International Bureau of Aviation (IBA) has assessed trends affecting the business aviation sector in 2015 and how business jet values are performing.

“2015 is shaping up to be an interesting year,” said Chris Lennon, head of IBA’s business aviation and private jet department. “With the price of oil fluctuating to as low as US$65 per barrel, there is a growing demand for corporate aircraft, especially within Africa, the Middle East and Asia. Add to this the apparent resurgence of the corporate aircraft market within Europe, the outlook for 2015 is positive in many regions.

“However, challenges remain. Chinese austerity measures mean corporate jet owners and operators still face restrictions. But this also brings about greater ambition, with Chinese operators intending to expand their services into Europe or invest in existing operators.

“In the Eastern part of Europe, with economic sanctions and the weakening of the rouble (RUB), oligarchs and corporations are diverting their attention elsewhere. Many Russian corporations are now focusing their business activities on the ‘BRICS’ (Brazil, Russia, India, China and South Africa), due to this immediate strategic change in focus, last minute travel arrangements are often required in areas that would be deemed ‘secluded’ leading to a large rise in utilisation of corporate aircraft in these regions.”

Jonathan McDonald, senior analyst for IBA, added that discussions at industry-related conferences regularly focused on how business jet values should be recovering.

“Sure, in a few instances we see young G650s selling at well above list, and the odd Boeing BBJ2 can certainly attract premium pricing,” he commented. However, a sample of other popular types suggested that in many cases values had declined significantly over the past two years.

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