Department of Aviation issued the following announcement on Aug. 12
Pricing on everything from eggs to a new car have gone up in the last few months. Those of you shopping for a new private jet are seeing prices rise, too. But with the cost of a jet ranging from $3 million to $100 million, even a small percentage increase can add tens of thousands of dollars to the price tag.
Business jet deliveries peaked at more than 1,300 units globally in 2008. After more than a decade of recovery from the Great Recession that year, purchases began ramping up again in 2019. The 15 percent increase in 2019, was followed by a 20 percent decrease thanks to COVID-19. (The drop was driven by a combination of airplane factory lockdowns, supplier problems and potential buyers who were too uncertain about the future to sign on the dotted line.)
With an average of just 700 global deliveries a year, business jet manufacturers have had little leverage to raise prices for more than a decade. The five primary manufacturers – Bombardier, Embraer, Textron Aviation, Dassault and General Dynamics (Gulfstream) – are competing for fewer and fewer buyers.
The pandemic is changing that, however. Preowned jets were a hot commodity in 2020 as companies and wealthy individuals wanted to travel in their own “bubble.” With less preowned jets available for sale, prospective buyers are forced to look for new jets.
The latest quarterly updates by the manufacturers bear this out, with recent book-to-bill ratios rising to around two, which means that there were twice as many units sold as were delivered. This in turn is favorable for order backlogs, which have risen in lockstep.
While some pricing pressures still remain, this has all of the hallmarks of morphing into a seller’s market. Preowned inventory remains low with rising prices; new aircraft orders are pouring in, and business jet makers will wait to see if the burst of orders is sustainable before committing to increased production. This all leads to longer wait times for buyers as demand begins to outpace to supply. Coupled with inflationary pressures in general, this can only lead to higher prices for new private jets.
Original source can be found here.
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