The corporate aviation industry has been riding the struggle plane amid a dip in private jet ownership. According to a report by Bloomberg reports that companies like Gulfstream and Bombardier Inc. have slowed production as demand continues to slide. This has led the companies to even offer significant discounts on their planes, hoping to spark purchase incentive.
Trump’s election bred industry optimism
According to Bloomberg the industry expected positive financial results with the presidential election of Donald Trump. The U.S.makes up about 49.7% of the private jet market, with Europe accounting for 20.8%. Trump, as a private jet owner himself, had promised tax cuts that would encourage plan ownership. However, the opposite proved to be true. Bloomberg reports that U.S. Health Secretary Tim Price resigned following criticism of his use of taxpayer funding to fly his private plane. General Electric is also selling its private fleet all together to save money.
So, just how low is private plane ownership?
According to Honeywell International, Inc., corporate plane buying is at a 17-year low, Bloomberg reports. The Honeywell survey found that companies plan to add or replace an equivalent of 19% of their current planes. This dipped from 27% in just a year.
Corporate aviation is still a high profile industry
While the corporate aviation industry has not fully recovered from the 2008 recession, according to Bloomberg, it is certainly still a lucrative industry. We’re talking an $18 billion industry.
Private planes are held to high industry standards and are made from some of the best materials available. For example, many aircraft parts are made out of Aluminum Alloy 2014, which is one of the strongest heat treatable products on the market. But these materials and innovations just keep getting better.
Take Bonmardier’s new $72.8 million private plane as an example. This beacon of luxurious excess recently took its first flight as the world’s largest dedicated private jet, according to Business Insider. This plane, called the Global 7000, can hold 19 passengers and contains four living areas. It is able to cruise for 8,500 miles — about the distance from New York to Dubai.
According to Bloomberg companies hope that newer luxury models, as well as new small planes, will boost interest and help the market climb. In a statement to Bloomberg, Bombardier CEO Anna Cristofaro said that last year’s revenue was up from 2015, marking a promising trajectory for the company.
“Our actions in 2015 have yielded results, and Bombardier?s young pre-owned Global model aircraft continue to be among the top performers in the large category in terms of value retention and pre-owned inventory levels,” she said.
But while Bombardier is cruising comfortably, the rest of the industry may need some work before taking off.