Much of the media focus last month at NBAA-BACE 2019 in Las Vegas was on the new top-of-the-line Gulfstream G700 and Bombardier Global 7500 ultra-long-range business jets, which have emerged as the new pinnacles of engineering design and new product development investment. Offering the ability to connect vast distances at high speeds with unsurpassed connectivity—all while providing supreme privacy and the next generation of in-flight comforts—these latest business jet offerings have already tempted a host of buyers with pen-in-hand to the negotiating table.
At JetNet iQ, we anticipate that more than half of the revenues generated by new business jet sales from 2019 to 2028 will come from large, long-range models and a new class of supersonic business jets. From a competitive perspective, this upper end of the market looks like a good place to be today and for the foreseeable future.
As cabins get larger and more comfortable, and speeds and non-stop range capabilities increase, business aircraft enable the sort of transcontinental and ocean-spanning connectivity that literally opens worlds of possibilities to customers. Whether many of these same customers truly need these capabilities to accomplish real-world missions and/or to stay ahead of their competition are different questions entirely.
Beyond the highly anticipated and professionally executed product development announcements, less headline-worthy developments in play in and around NBAA-BACE 2019 could actually have even more profound and enduring impacts on business aviation’s image and future directions. While this might seem an odd thing to say about an industry that lives and breathes engineering and new product investment, consider it a comment on a maturing industry that serves a global network of customers with a fleet of more than 38,000 turbine-powered airplanes.
Flygskam—Swedish for “flight shame” that only entered the aviation lexicon about a year ago—is the name of an anti-flying movement that aims to “educate” travelers on the environmental impacts of their travel decisions. At this stage, it is difficult to know if Flysgkam is a call to action to reduce unnecessary flying, to stop flying, or to stop traveling altogether. In any event, the movement has certainly attracted attention and grabbed headlines both in and outside of Europe, part of a groundswell of efforts that collectively shine a spotlight on the aviation community for what is perceived to be a poor environmental record.
While some (and perhaps many) in our industry might brush off business aviation’s environmental impacts as small and therefore rather inconsequential—an estimated 2 percent share of 2 percent of all man-made emissions, or about 0.04 percent of the global total—the environmental issue is exceedingly complex and one that has more parts and pieces than an IKEA furniture kit.
In another development just last week, the UK's opposition Labour Party said it is examining a proposal to ban private jets from the country’s airports as soon as 2025, should it win the upcoming federal election. Whether this is a policy that ever comes into effect or is nothing but a “tip of the iceberg” indicator of similar proposals lurking just below the surface in other jurisdictions and geographies remains to be seen. In any event, this is a potentially troubling and certainly unwelcome development that will be on all of our radar screens in the weeks and months to come.
Encouragingly, business aviation leaders are making progress to drive awareness and use of sustainable aviation fuel (SAF), which is becoming more available, affordable, and acceptable—straight A’s in my assessment. A panel of experts, including Bombardier Aviation President David Coleal, representing both his employer and as chairman of GAMA’s Environmental Committee, has spoken eloquently and passionately about the many benefits of charting pathways towards a more sustainable future for business aviation.
The business aviation industry has committed to an array of ambitious goals to achieve carbon-neutral growth by 2020 and an absolute reduction of 50 percent of CO2 emissions by 2050 relative to 2005. These goals will be reached through airframe and aviation engine technology development; more widespread SAF adoption; next-generation air navigation and flight operations procedures; and market-based measures.
Expect to hear more and more about these developments as environmental topics evolve from “things to do” towards “what we do” in the future.
This week was also witness to the Trump Administration’s notification to the United Nations of the U.S. government’s intention to withdraw from the Paris Accord, a 2015 agreement signed by 188 countries that aims to limit the global increase in atmospheric temperatures linked to carbon emissions. A foreign policy about-face that has irked allies, introduced questions about the U.S.’s commitment to multilateralism, and thrust “American First” into the daily lexicon looks to be impacting business aviation and no doubt other industries with unintended consequences.
Ironically, just as new long-range jets come to market, one of the fundamental assumptions driving their development—that customers need globe-spanning nonstop capability to conduct their affairs effectively and efficiently—might already becoming less important in a world where nationalism is once again on the rise. In what may be a sign of just such a change, purchase interest in middle-of-the-market business jets with comfortable cabins and “continental” range has increased quite markedly in our last several JetNet iQ surveys of business aircraft owners and operators.
With Brexit still unresolved and an agonizing year-to-go of divisive political rhetoric and seemingly endless impeachment hearings before the next U.S. federal election, business confidence in both the U.S. and Europe has fallen, in line with a sharp downturn in the sentiment of business aircraft owners and operators. What a difference a year makes—JetNet iQ market sentiment indicators were at an eight-year high as recently as second-quarter 2018, but have suffered five consecutive declines and have now returned to their lowest point since surveys began in 2011.
Whether this has much to do with macroeconomic or geopolitical developments, the juxtaposition of events that last dragged down customer sentiment in mid-2016—when Brexit was announced and a fierce U.S. Presidential election battle was monopolizing the daily news—is striking. In the current environment, keeping busy and focusing on local matters at hand that are well within our span of control—whether in ramping up production, finalizing certifications, closing year-end deals, making substantive progress on lowering carbon emissions, and/or taking excellent care of customers—seem like the right things to do.
