By Vincent Wigmans
The stock market is often seen as a good barometer of the economy, a strong economic can be measured by a stock market that is doing well. When the economic is doing well, we can see an increased demand for business jets. This increased demand is caused by executives that travel more frequently and the expansion of companies. Also, business leaders may feel more optimistic about the future and are willing to invest in an asset like a business jet. Next to this, lenders are more willing to provide financing for a business jet purchase.
If there is a downturn in the stock market, it can be seen as an indication that there is some uncertainty in the economy. As a result, there is a decrease in business jet sales. Business leaders are cautious and hesitant to spend money on a business jet. Also, the lenders are more cautious to extending credit for a business jet purchase. The above is also applicable for the high-net-worth individuals that can afford a business jet.
During the financial crisis in 2008, there was a clear decrease in the whole business aviation sector. Used aircraft came into the market in large numbers, the residual value went down, cancellation of orders with aircraft manufacturers increased, and the manufacturers decreased their production. This lasted until H2-2009, then the business jet usage has increased, and the credit availability recovered.
Although there is no direct correlation between business jet sales and for instance the S&P500, there were some peculiarities in the past. For instance, the light jet deliveries till 2008 have followed the trend of the S&P500. Till 2008, you could almost predict how many light jets would be delivered. This trend stopped due to the overproduction of aircraft.
Another indicator that has been used was the Morgan Stanley Capital International (MSCI). This aggregate stock market index is a good indicator of wealth creation. When the MSCI plunged, the business jet orders stalled.
Overall, the stock market has a significant impact on business jet sales. You can see, with the resumption of the global economic growth, that the demand for business jets is increasing, this increase is clearly connected with the creation of wealth.