2022 Year in Review

1. Demand for Business Aviation Grew in 2022

Despite new COVID variants and continued infections at the start of 2022, the world continued its return to normalcy. The business aviation market was a direct beneficiary as many people resumed travel for both business and pleasure. Many people who had never flown aboard a business jet before began flying privately to avoid potential crowds on commercial flights. At the same time, many habitual users of business jets returned to the market in 2022. As a result, global flight operations in 2022 increased 12 percent compared to 2021 and 19 percent compared to 2019, according to flight tracker WINGX. The increase supported operators of large business jet fleets and lifted demand for private aircraft.

2. Strong Demand Improved OEM Strength

Strong demand has also improved financial health for the major business jet manufacturers. Four major OEMs have reported Q3 results (Q4 results will not be known until Feb. 2023): Bombardier, Cessna, Embraer, and Gulfstream. In Q3 2022, backlog for these OEMs reached $43.5 billion, a 39 percent increase from a year earlier. The larger backlogs are a result of strong order intake in 2022. In the first nine months of the year, OEMs received $23.8 billion in orders, up from $20.7 billion – a 15 percent increase – from the same time in 2021. Furthermore, strong results have also enabled manufacturers to pay off debt. The best example is Bombardier, which reduced its long-term debt by $871 million between the end of 2021 and Q3 2022. The strong 2022 results increased OEM resilience, enabling improved margins no matter the macro environment at the time.

3. Business Aviation Tackles Supply Chain Woes

Disrupted supply chains have affected a broad range of industries following the turmoil of COVID-19 and Russia’s invasion of Ukraine. The business jet industry, part of the wider aerospace industry, was no different. Business aircraft manufacturers reported throughout the year that they were able to obtain parts needed to build aircraft, however, deliveries of raw materials and components were delayed thus, lowering aircraft production rates. Lower production levels delayed delivery to some customers, resulting in longer wait times. When paired with the high orders mentioned above the delays further strengthened the position of the OEMs headed into 2023.

4. Investment in Business Aviation Continues

In 2022, there was a high volume of investor activity in the business aviation sector, following a similarly high volume of investment in 2021. Fresh off its public listing in 2021, Wheels Up acquired Air Partner and Alante Air Charter in 2022. The fleet operator has now acquired five Part 135 operators in three years. Likewise, Vista Global closed acquisitions of Air Hamburg and Jet Edge in 2022, adding 100 aircraft to its fleet. Following a May announcement of a plan to double its European business aircraft fleet, Flexjet indicated a plan to go public in October 2022. Flexjet expects to complete the deal in mid-2023. In non-M&A activity, Global Jet Capital raised $609 million in the asset-backed securities market. GJC remains a leader in the aviation ABS market, proving that there is strong demand for high quality aviation assets in the bond market.

5. Russia-Ukraine War Doesn’t Impact Business Aviation

As the world was coming to terms with COVID-19, another major global event shook things up. On February 24, 2022, Russia invaded Ukraine, establishing a new stage in the conflict between the two countries that started in 2014. While the war has wrought devastation on the nation of Ukraine, it has had little direct impact on business aviation. Based on Global Jet Capital calculations, less than 2 percent of the business jet fleet was based in Russia or owned by Russian corporations or HNWIs at the time of the invasion. Western sanctions quickly blocked many of these aircraft from global markets. OEMs did cancel orders by Russian individuals, but with strong demand, these were quickly snapped up by others. Furthermore, as demonstrated above, demand for business aircraft remained strong in 2022, despite disruptions to energy markets caused by the war.

6. New and Upgraded Aircraft Increase Appeal of Business Aviation

Following a few years of major announcements, there were no announcements of new aircraft families in 2022. There was a flurry of activity within the industry, however. Many new aircraft reached major milestones and OEMs announced major upgrades. In terms of major milestones, the first green Airbus ACJ TwoTwenty (the fully configured aircraft will be delivered to the end user in 2023) and Bombardier Challenger 3500 were delivered, while the Cessna Citation XLS Gen2 was certified by the U.S. FAA and EASA. Certification of Dassault’s Falcon 6X are underway as of late 2022, while major components for the pre-production Falcon 10X – such as the composite wings and the engines – began production in 2022. The Gulfstream G800 took its first flight and the second Beechcraft Denali undertook its first flight in 2022.

There were also a handful of new aircraft announcements, representing major upgrades to existing models. Daher announced the TBM 960, which features an upgraded engine and propeller, to its lineup of popular turboprops in April 2022. With EASA certification already in hand at the time of the announcement, the first model was delivered three months later. Bombardier introduced its Global 8000 in May. The Global 8000 features longer range and a higher top speed than the Global 7500. Finally, HondaJet introduced a major upgrade to its HA-420 lineup. The upgrade, designated Elite II, offers additional fuel capacity, a redesigned cabin, and an upgraded Garmin avionics suite that includes autothrottle and Emergency Autoland features.

Overall, these upgraded models will continue to increase the appeal of business jets to users around the world.

7. Business Aviation Industry Takes Lead in Environmental Sustainability

Environmental sustainability continued to be a major issue for the business aviation industry in 2022. Business aircraft carbon emissions are a small fraction of global totals. Still, activists targeted business aviation, as demonstrated by protests at European business aviation airports in November 2022. With the environment becoming an increasingly important issue, the business aviation sector has taken the lead in improving sustainability. Under the Business Aviation Commitment on Climate Change initiative, the industry has committed to achieving net-zero carbon emissions by 2050. Initiatives include increasing adoption of sustainable aviation fuel (SAF), adopting new technology and operational efficiency to reduce fuel usage, and encouraging cooperative programs to increase sustainability. While more work is needed to achieve these ambitious goals, the industry continues to make strides. For example, Rolls-Royce and Gulfstream flight tested a BR725-powered Gulfstream G650 using 100% SAF. Work will continue going forward to improve sustainability.

8. Learjet Marks an End of an Era

With delivery of the final Learjet, 2022 marked the end of an era. The final aircraft, a Learjet 75, rolled off the line in March 2022 on its way to be delivered to a US-based customer of Northern Jet Management. Bombardier originally announced the plan to end production in February 2021. Bill Lear founded Learjet in 1963 and it became an iconic brand around the world with 3,000 aircraft produced throughout its life. While the news marks the end of an era, it also marks the beginning of a new one. Bombardier announced plans to make the former Learjet plant in Wichita, KS the location of its US headquarters as well as the home of its Bombardier Defense unit. The plant will produce specialized aircraft for the US and global militaries.

9. Milestones Highlight Importance of Industry Groups

A few business aviation organizations reached major milestones in 2022. The first was EBACE’s return as an in-person event after two years due to COVID-19. In another milestone, Aviation International News (AIN), marked 50 years since its founding. The first issue was published in 1972, covering the NBAA convention that year and by the 1990s the publication covered a wide variety of aviation topics, which it still does today. Finally, the National Business Aviation Association (NBAA) celebrated its 75th anniversary. Founded in 1946 as the Corporation Aircraft Owners Association, NBAA continues to serve as the leading advocate for business aviation.

10. Full Bonus Depreciation Ends, but it’s Not Going Away

As 2022 comes to a close, many people in the industry have turned their attention to bonus depreciation tax plan. Bonus depreciation was implemented as part of the 2017 Tax Cuts and Jobs Act (TCJA), enabling buyers to write off 100 percent of the purchase price of a business jet (along with other assets) on their taxes. That tax write-off provided a strong incentive to acquire aircraft, providing a boon to the industry. Starting in 2023, that write-off is set to begin to gradually decline, dropping from 100 percent in 2022 to 80 percent in 2023. The amount of the write-off allowed will continue to decline, until it reaches 0 by 2027. There are also certain cases where 100 percent bonus depreciation will continue to benefit buyers. Overall, the tax write-off will continue to affect the market for a few more years, despite the gradual phaseout.