Tuesday May 14, 2013
The Wichita Business Jet market remains stuck on the runway while the high end biz-jet market is soaring.
Richard Aboulafia, Vice President of analysis for the Teal Group, says he believes the thesis for a recovery is still intact.
The aviation analyst was keynote speaker for an unprecedented third time at the Wichita Aero club Tuesday.
Aboulafia admits being wrong about predicting a business jet recovery happening in 2012. He based his forecast then on usually reliable economic indicators such as higher corporate profits and companies with increasing cash on hand.
He says there's still a lot of fear keeping potential customers from buying. Aboulafia says, "What appears to be the problem is that the recovery from an emotionally traumatic downturn for a lot of people is just taking a lot of time, a lot longer than expected."
The often quoted analyst says the recession divided the business jet market in two. Wichita companies, Cessna and Bombardier Learjet manufacture mostly smaller business jets. Business jets in the smaller categories, he says, aren't selling anywhere near as well as high end business jets such as Gulfstreams priced above $25 million.
The analyst says while the overall biz-jet market fell by 29% in the downturn, Wichita's fell by 60%. And while Wichita used to boast of building 50% of all business aircraft, that's down to 20%, he says now.
Yet, that being said, Aboulafia still believes in the re-equipping cycle when just like people get tired of driving an older car so jet owners will want to buy newer jets.
Wichita aviation workers have to hope those buyers purchase planes built in the air capital.