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Wed, Aug 08, 2012

Foley: Latin American BizJet Market Could Be Pivotal

European Markets Stagnant, Asian Sector Slowing

With the European general aviation markets essentially stagnant and the Asian markets evidently running out of steam, hopeful eyes in the business jet industry are turning toward Latin America. "We believe this region will continue to play a key role in sustaining what has been a very troubled industry, hopefully until the US market regains its strength," says aviation consultant Brian Foley (pictured). 

Comparing recent trends in non-US markets, Foley points out that traditionally strong markets in Europe and the Middle East have seen consistent yearly decreases in their business jet fleets while those in South and Central America have steadily gained. According to JetNet, that region's fleet has grown by 10 percent in the last year (almost 200 units), bringing its total fleet size up to 2100. 

What made up this increase? Interestingly, it was the smallest and the largest jets that gained the most. The under-10,000-pound models like Cessna's Mustang and Embraer's Phenom 100 increased their numbers by 20 percent. And the over-35,000-pound jets, including the larger Falcons, Gulfstreams, Bombardiers and converted airliners, almost matched this with 17 percent growth.

Historically, light and medium jets have dominated the Latin American market and currently comprise three-quarters of the region's business jet fleet. However, they recorded much slower growth last year; actually under 10 percent. “This is in line with what we've been hearing from manufacturers," Foley said. "New-aircraft sales in these classes seem tepid everywhere. It's a classic case of muddle in the middle, with all the action happening here at the top and bottom ends."

Aircraft imported into Latin America represent a healthy mix of new and pre-owned, Foley said. As for regional market shifts, his field sources see Brazil moderating somewhat while Mexico is coming back following elections. “This is a strong professional community with a lot of savvy buyers. If buying pre-owned, they have the foresight to act when prices are low. If buying new, they shrewdly find and use negotiating leverage."

Foley holds that Latin American market has been under-appreciated. "It currently accounts for 10 percent of all the world's business jets, and it operates on a somewhat different economic cycle. Were it not for the steady activity the region has provided, especially during this recent downturn, our manufacturers would be in even direr straits today."

FMI: www.brifo.com

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