Scarcity Principle Breathes New Life Into Business Jet Sales

With an already high price tag, even a small percent increase in price for a business jet can raise the purchase price by millions, says Analyst Brian Foley.

Worldwide business jets hit a peak in sales in 2008 with over 1,300 units delivered, and following the Great Recession there has only been half that amount delivered for the past twelve years. Following COVID-19, deliveries are at their lowest level since 2004.

2020 marked the year for blowout sales in the preowned market which has continued into 2021. With demand soaring, inventory is shrinking to about one third of it’s typical levels, leaving buyers with the only option to buy new.

This has been a good thing for new business jet sales. If Pre Owned inventory remains low with the rising prices, new aircraft orders would be coming in fast and jet makers will wait to see if the orders even out before increasing production.

Ultimately this would result in potential longer wait times for buyers as demand begins to outpace the supply causing scarcity and higher prices for private jets.

Prices have already begun their ascent, according to the 2021 Purchase Planning Handbook published by Business & Commercial Aviation.

Manufacturers have directly provided them prices, and according to that information the cost of a small, single-engine SF50 entry-level jet rose 14.9% over last year to $2.85 million. The price of a super mid-sized Cessna Citation Longitude rose 10.3% to $29.765 million, while the large Gulfstream 500 and Dassault Falcon 6X rose a more modest 4.3% and 4.4% respectively.

This is believed to be the beginning of a steadily rising price point for business jets, giving the industry an opportunity to start recovering from the past decade.

FMI: www.brifo.com