Sales of private jets for personal or business use nose dived after the financial crisis, and while their fall and rise roughly tracks the economic fortunes of the west, by some measures sales are still below 2005 levels.
Rolls-Royce declined to disclose the numbers of corporate jet engine orders it had received, a quantity which helped sink its share price on Thursday.
According to one analysis, it could be that the rival engine makers Pratt and Whitney are carving out a bigger chunk of Rolls-Royce’s market, rather than it being a case of more trouble ahead for plane manufacturers.
Gerald Khoo, a transport analyst at Liberum capital, said that, in terms of business jet usage as measured by air traffic control figures “Europe looks awful ... it’s down year on year in 44 of the past 48 quarters”. He said the US did not look much better, as it had been flatlining below its long-term trend.
He added: “It’s partly the weakness of the European economy. But figures are down to 2005 levels: the economy’s bad but not that bad. Usage has been weaker than you’d have expected at this stage of the economic cycle. We’ve all been asking ourselves why. The larger jet end of the market has held up better through the recession. One of the ways we rationalised that was that big jets are more the billionaire plaything rather than the business tool.”
The Federal Aviation Administration registered a slight decline in private flights in the US in September, where the level – around 4.3m operations in the last year – was generally recovering but still 12% below the 2007 peak.
But the north American market is where the purveyors of corporate jets are focusing their efforts, as orders from the Bric countries dry up.
Earlier this week, speaking at the Dubai airshow, the head of business jets for the Brazilian planemaker Embraer said that emerging market sales would slow for the next three years, while demand even in the big-spending Middle East was flat. A crackdown on corruption by China’s president, Xi Jinping, has also been cited as a reason for the slowdown in jet sales in China.
However, the long-term outlook remains good for private jet manufacturers, if not for the environment.
Honeywell’s most recent forecast, in late 2014, was for 9,450 new business jet deliveries worth $280bn (£184bn) over the next decade, with slightly more planes to be sold this year than last.
A more recent forecast from Jetcraft, an international aircraft broker, foresees six more years of rapid growth with more than 1,000 private planes a year being sold by 2020, with large, ultra-long-range, jets making up the single biggest category.
Chad Anderson, the president of Jetcraft, said: “The state of the market is improving slowly. North American buyers are coming back to life. The last upturn was heavily reliant on emerging markets, but there has been a relative slowdown there. The primary factor is that the US has the largest base of current owners, and one of the highest number of airports and adequate support. Some of the emerging markets are still building infrastructure and some of the blips on their screen have slowed that growth.”
He said there had been pent-up US demand until the last two to three years, but aircraft needed to be replaced and firms or individuals now had either cash or lenders.
Europe remained slow, but Anderson said: “It is the world’s second largest market in terms of existing owners so it’s incredibly important. The trend though is that there has probably been more people exiting than buying.”
Fractional ownership companies such as NetJets have also placed multibillion-dollar orders in the last decade, while firms have developed Uber-style apps to make private jets available for more widespread booking, making the planes more like an extremely expensive taxi than the private Bentley parked in the drive.
With increasing economic inequality, the jet market should continue to flourish. Anderson said: “The world continues to create more millionaires and billionaires, and it’s unusual to find a billionaire without an aircraft.”
