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A Cessna Citation jet is showcased at Charles M. Schulz Sonoma County Airport, with a striking aerial view captured on June 1, 2021, near Healdsburg, California.
Recent trends indicate a notable decline in consumer confidence, which has led to a decrease in demand for commercial air travel. This downturn is evident even among affluent travelers, as highlighted by the latest survey from Barclays targeting business jet brokers and financiers.
The survey reveals that interest in acquiring business jets has dramatically decreased by 49% since March. Conducted between April 9 and 15, the survey included 65 participants providing insights into market conditions.
Barclays’ Business Jet Indicator, released last week, evaluates the market using five key metrics, including a one-year outlook and pricing trends. From mid-March to mid-April, all metrics showed a decline, except for inventory levels. This resulted in a drop of the composite score from 52 to 40.
This 23% plunge represents the steepest decline recorded by Barclays since the onset of the Covid pandemic. Analyst David Strauss expressed surprise at the extent of the decrease, noting a more tempered expectation for market sentiment.
A composite score in the low 40s, as reported, signals a deceleration in the market, according to Barclays. This score aligns with airplane manufacturers’ book-to-bill ratios, a critical indicator of their financial performance, reflecting a situation where the value of new orders is trailing by approximately 10% behind current fulfillment rates.
Respondents indicated that clients have paused their aircraft purchases, largely due to concerns over impending tariffs affecting both the aircraft sector and their broader business operations.
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Almost half (46%) of those surveyed noted a decline in interest for business jet acquisitions since March. Meanwhile, 44% reported that customer interest remained unchanged, and only 10% observed an improvement.
When probed about the implications of tariffs on the demand for new aircraft, a significant 93% of participants anticipated a detrimental effect on demand, with most predicting a major impact. Just 7% believed that tariffs would have no effect at all.
Regarding the market for used jets, 67% of participants remained skeptical, expecting either a significant or minor decline in demand. Conversely, about 27% expect some level of increase in demand for these aircraft.
Nevertheless, prospective legislative measures could provide a potential boost for business jet manufacturers.
Both legislative chambers, the Senate and House of Representatives, have passed a budget resolution aimed at extending provisions of the Tax Cuts and Jobs Act (TCJA). A significant aspect of the TCJA allowed businesses to fully deduct 100% of qualified equipment purchases upfront, rather than amortizing the deductions over several years. Since 2023, the deduction rate has been progressively reduced by 20% each year and was initially scheduled to phase out by 2027.
Republican lawmakers now have a feasible pathway to reinstate the full 100% deduction and enable retroactive deductions, a move previously endorsed by President Donald Trump in March. Should they accomplish this, private aircraft could gain substantial appeal from a tax standpoint.
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