Foley Believes Largest Market Recovers First

When the business aviation market finally recovers, the first sparks of life for the beleaguered industry will appear in the United States... at least, that's the opinion of one analyst.

"This is good news since this region has always been the industry's biggest market, accounting for 64% of the active worldwide business jet fleet," says Brian Foley Associates (BRiFO) President Brian Foley.

Foley cites evidence the US recession and bizav slowdown began in 2007... well before the rest of the world entered the downturn. As such a first-in, first-out scenario will occur with the US recovering before other regions. Foley believes this will be aided by the sizeable fiscal and monetary stimulus which outspends other parts of the world.

Since business jets are priced in dollars, any early international demand would be meaningfully tempered by a dollar that is now 20% higher than a year ago.

For decades North America accounted for around 70% of worldwide deliveries. With a weakened US economy, plunging dollar and surging non-North American stock markets this number decreased to less than 50% for the past 2 years.

"Once an eventual upturn takes hold it will again account for over half of all deliveries," states a BRiFO release. "Even if the likes of a China or India were to recover sooner these types of regions account for only a sliver of the overall business jet market and would not provide a measurable boost."

Before a comeback certain indicators must first begin to show signs of improvement including lower used aircraft inventories and higher utilization, GDP, corporate profits, stock market levels and credit availability.

Even then the pace of recovery will be subdued by sizeable negative wealth affects, lingering credit constraints and remnants of Capitol Hill jet bashing, Foley warns.

FMI: www.brifo.com