CJI Miami 2023 Recap

By Jeffrey C. Lowe, Vice President of Asian Sky Group

CJI Miami ’23 just concluded yesterday. The event covered all the issues currently facing our industry from a US perspective; including current market conditions and projections for 2024; as well as a series of tantalizing, one-on-one “fireside” chats with Shawn Vick from AE Industrial Partners, George Mattson from Wheels Up, Bill Papariella from AeroVentures and Andrew Collins from Flexjet.

Key takeaways were:

• 2023 got off to a slow start in Q1 and Q2. However, Q3 saw a significant uptick in business volume and transactions. So, opinions are that 2023 will end strong. Overall transaction volume for 2023 is down 25% vs 2022, but 2022 was an exceptional year. Going forward there are a couple of key markets of interest: S.E. Asia and India where growth is expected.

• Looking at Q4, due to constraints with PPI slots & parts availability, it is felt that a portion of the planned Q4 business will inevitably roll over into Q1 2024. So, Q1 2024 will be strong but overall, 2023 will see business slow.

• Aircraft values are in the process of normalizing, and we will see that continue through 2024, with depreciation eventually returning to a usual 5-7% per year. Light and Midsize jet values will be affected the most.

• 2024 will see a soft landing for the economy, with the biggest challenges being labour-related. But there are a number of key uncertainties: 1) interest rates; 2) geopolitical unrest; and 3) the 2024 US elections. The market never fails to surprise however and has in the past demonstrated its robustness to absorbing shocks.

• These uncertainties are driving more people towards to private aviation, but these users are not necessarily new aircraft buyers. The complexities associated with buying an aircraft these days is discouraging buyers. This is compounded by huge backlogs at the OEMs.

• Supply chain issues are improving but are here to stay for the next two to three years before returning to normal. Supply chain issues are being felt all the way back to sourcing the raw materials needed to even manufacture the parts in the first place.

• As we all know, sustainability is at the forefront of issues for business aviation to tackle. But this needs to include not just fuel & SAF but address the whole ecosystem – therefore we need to also focus on increasing operational efficiencies, aircraft performance & using recyclable materials, especially in the cabin.

• Management companies are currently experiencing good business levels, such that they can pick and choose clients. After a period of consolidation, most are now focused on organic growth.

• Gulfstream presented its line of business jets, focusing on the G700, G800 & G400. GAC is still hoping for G700 FAA certification before the end of this year, although most in the audience thought this unlikely as the FAA has only just confirmed a permanent administrator; Gulfstream still must conclude function and reliability flying with the FAA; and Boeing’s 737 Max 7 certification is in the queue in front of the G700.

• The charter market is slowing down with fewer enquiries & rates coming down too. But one needs to be mindful of what reference you use as 2021 & 2022 were extraordinary years. Having said that, the Asia market is bouncing back with Vistajet moving assets back into the region.

• George Mattson said Delta & others wouldn’t have invested half a billion dollars in Wheels Up if they didn’t think the recovery plan was going to work. A key element for success is accessing Delta’s corporate companies & clients and making them Wheels Up clients too, with long-haul flights serviced by Delta and then the “last mile” by Wheels Up. Delta would roll this concept out to its airline partners too.

• Fractional providers are booming – never in their history has there been such a high demand for shared ownership & jet cards. Solidly a “seller’s” market.

• Europe has its own unique challenges, and it varies from country to country throughout the 27 states of the EU: Punitive taxes, outright banning, airport & operational restrictions, and Eco terrorism. The industry in Europe is currently being framed by others. We need to gain back the narrative, move away from Brussels and tackle the issues on a national level.