Jefferies: Prices Jump, Bizjet Backlogs Push into 2025

Business aviation OEM backlogs are now extending at least through 2023 and in most cases into 2024 and 2025, according to Jefferies. The analyst reported on the OEM backlogs after hosting the third annual Jefferies Business Aviation Summit last week, bringing together industry leaders from the manufacturing, brokerage, charter, MRO, and other segments.

Noting there are no signs of “demand destruction” thus far, Jefferies said, “business jet demand remains robust with stickiness in conversion of flyers from airline first-class to private aviation.”

The two- to four-year lead times for new aircraft have created a sellers’ market on the preowned side, which is pushing up pricing and resulting in quicker turns, according to Jefferies. Pricing has increased 10 percent month-over-month for aircraft less than five years old over each of the last four months, Mesinger Jet Sales reported during the Jefferies summit. Flexjet, another participant in the summit, said it has seen purchase prices increase by as much as 30 percent to 40 percent over the last 24 to 30 months for certain models. CFS Jets, meanwhile, estimated prices across cabin sizes have grown 20 to 25 percent year-over-year.

Average jet-card prices are also increasing, up more than 22 percent since October 2020 and 1.5 percent since the end of the first quarter.

These increases come as aircraft utilization, while still down in the Asia-Pacific region, remains above levels in 2019, Jefferies said, describing the recovery as “V-shaped.”

Despite risks of a potential recession, industry sentiment remains strong, Jefferies said, and noted that customers at operators including Vista Global and Wheels Up have accepted the higher pricing. “Flexjet is more concerned over the supply constraints in aircraft and pilot availability than demand elasticity,” Jefferies added.