It’s the start of a new year and, traditionally, time for holding tight to resolutions and making predictions for the year ahead. In that spirit, we resolve to make our best predictions for the private and business aviation industry based on trends, past occurrences, and expert opinions for 2018.
The Tax Cuts and Jobs Act will provide a boost for private and business aviation. The recently approved tax overhaul is good news for business aviation as the biggest benefit is new owners’ abilities to depreciate jets 100% during the first year of ownership — as opposed to five years — which should also increase demand. The provision applies to both new and pre-owned aircraft. Tax breaks for individuals and private corporations may also spur interest in aircraft purchases.
However, it’s not all good news. The bill also repeals like-kind exchanges, although the depreciation provision will basically offset the change. And a one-time repatriation tax may cause leaders of multinational companies to delay purchasing business aircraft until next year. This could play into the overarching prediction that deliveries of private jets will remain flat in 2018.
The business jet market will be slow to recover. Despite the so-called “Trump Bump” insiders expected with the new administration and tax overhaul, financial experts predict that aircraft sales will remain stagnant in the near term and that 2018 will be a “reset” year for the market. According to the AINonline article, UBS Global Research forecasters stated that, “The manufacturers appear to be planning for flat industry deliveries in 2018 with new model introductions—Cessna Citation Longitude, Gulfstream G500 and Bombardier Global 7000—offsetting declines in certain older legacy products.” This means Bombardier, Gulfstream, and Textron should see increased deliveries in 2018 while Dassault and Embraer Executive Jets will likely see fewer.
FAA oversight will likely heighten. Illegal charter operations — most commonly operating on-demand charter flights without proper Part 135 certification — is a growing problem, and the National Air Transportation Association (NATA) wants the Federal Aviation Association (FAA) to crack down. The FAA has historically weakened or heightened its regulatory enforcement according to events and pressures from the pubic or aviation organizations. In calling for greater enforcement, NATA reiterated its position that incidents involving illegal charter operators “mar” the general aviation safety record. In recent years, the FAA has tended to let operators find and correct their own problems. However, with pressure from NATA, FAA enforcement policies could be on the upswing.
New technologies will allow for new product innovations. The FAA has loosened its stance and now allows lower-cost electronics inside cockpits, paving the way for advanced product developments and upgrades for older jets. Smaller head-up displays (HUDs) will allow for their placement in smaller aircraft, thus enhancing their safety, and advancements in sensor technologies will allow pilots to see through thick fog. Other advancements, such as high-speed Ka-band connectivity, will allow passengers enhanced internet connectivity while traveling.
It’s difficult to know whether tax cuts will be enough to boost aircraft sales, but combined with low prices on new and used private and business jets, sales should begin to pick up and really gain momentum going into 2019. In addition, constant technology advancements are sure to offer better and safer flight experiences. With so much to look forward to in the aviation industry this year, isn’t it time you got on board?
Need to sell your jet? We can assist with that, too. Contact the private aviation professionals online, by sales@L-Lint.com, or at +1 (305) 754-3313.