Tue, May 18, 2010
Shift Will Be Slow, But The Trend Is Up, Says Brian Foley
General aviation aircraft are
typically priced in dollars, and with the index up 15 percent in
just the last six months, the industry will slowly see a shift from
predominately non-North American buyers to a more even mix.
“This year the non-North American sales component helped
arrest a further slide and has been the starting fluid for the
downtrodden general aviation industry,” says aviation market
advisor Brian Foley. “Those economies and stock markets
revved up long before the beleaguered US, and with the dollar
remaining weak, effectively rewarded buyers with double-digit
discounts when purchasing with their strong, local
currencies.”
These trends have been confirmed by some manufacturers who
report that well over half their sales now come from non-North
American customers, who once represented a traditional 30 percent
of all aircraft sales.
What factors underlie this shift? Foley's hypothesis is that
offshore buyers have been quietly helping to reduce the bloated
inventory of pre-owned aircraft, particularly late models which
compete directly with new sales from manufacturers. As the North
American economy continues to improve and the dollar value rebounds
from its lows, there will slowly be a shift from predominately
international sales to roughly an equal mix. Foley believes the US
market will eventually help lead the new aircraft sales revival
since the most desirable used aircraft will have already been
picked over from overseas. “They’ll have no place to go
but the new aircraft showroom.”
Foley’s recent 10-year forecast by model calls for North
America to account for an average of 52 percent of all future
deliveries. This is a fairly significant shift from two aspects:
first, that this is a permanent departure from the pre-2000 average
of around 70 percent; and second, that it will rebound from the
most current estimate of just 40 percent. “Going forward,
manufacturers will have to balance their presence and resources
more wisely throughout a widening world.”
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