By Alexandra Strehlow
Analyst, AeroDynamic Advisory
and Richard Aboulafia
Managing Director, AeroDynamic Advisory
The aircraft charter and fractional ownership models have thrived in business aviation. Two leading providers of these services are New World Aviation (L) and AirSmart (R), with New World specializing in Part 135 and maintenance, and AirSmart offering Part 91K services.
Business aviation has emerged from the pandemic a different animal. Utilization remains strong, the supply chain is improving after a very difficult period, and OEMs are in a comfortable rhythm of deliveries. Although tariffs and economic uncertainty are clouds on the horizon, long order books and a regionally concentrated supply chain will help the industry mitigate negative effects.
Total global departures are up nearly 30% over 2019, although utilization gains have not been shared equally among operator types. Fractional operator departures are up 60% from pre-pandemic levels, driven by wealthy customers looking for flexible options for destinations and flight times while trying to avoid congested airports. Branded charter flights have experienced a modest increase in utilization, but limiting schedules make fractional ownership a more attractive option for those who can afford it.
Privately-owned aircraft flights are also up, as are management charter flights, as owners/operators seek to maximize utilization of their assets. Increasingly, business aviation is being viewed as a service much like ride-sharing, which has interesting implications for fleet economics and demographics.
The utilization loser of the past 5 years has been corporate flight departments. Once underpinning the core of business aviation, departures have dropped 10% compared to 2019. A contributing factor is the increasing financial burden of running a flight department, as labor and maintenance costs have grown significantly. In parts of Europe, emissions reporting requirements have pushed corporations toward alternative travel options.
Despite its momentum, business aircraft utilization is showing signs of normalization, with a slight decrease in total departures in 2024 from 2023. However, this “new normal” of higher utilization and shifting fleet demographics toward fractional ownership is likely here to stay.
As a result of higher utilization, MRO spending has increased considerably. OEMs are investing in more MRO capacity worldwide to take advantage of the situation, and service revenues are becoming a larger part of their bottom lines. For example, Bombardier achieved a whopping $2 billion of service revenue in 2024, which has been growing at a rate of 20% year-over-year since 2020.
On the supply side, the situation is much better than it was a few years ago. Parts shortages and quality issues that have plagued the supply chain since Covid-19 are improving, although not disappearing entirely.
Despite Gulfstream’s achievement of certifying its G700 ultra-long-range jet in April of last year, it fell short of delivery guidance due to engine delivery delays from Rolls-Royce – plus consequent rework due to premature induction into completions.
Thankfully, these issues appear to be mostly resolved as the newly certified G800 begins to roll off the assembly lines. Dassault also delivered below guidance in 2024 due to various supply chain and quality issues. Textron was affected by a strike in Q4 2024 that delayed year-end deliveries, and it’s still working to return to pre-strike performance levels.
On the other hand, Bombardier and Embraer have weathered sporadic issues quite well. Embraer’s Phenom and Praetor families continue to be strong sellers, and are popular for larger fleets due to bulk order options. Utilization for Embraer-made jets is up 65% from 2019, driven by fractional and charter fleets. Bombardier deliveries in the mid-cabin segment have increased year-over-year, and large-cabin jet deliveries met expectations.
As business jet utilization demand stabilizes and production of new aircraft picks up steadily, there is some relief in the used jet market. Once at unsustainably low levels early in the pandemic, used jet availability is returning to 8–12% of the total active fleet, and asset values are decreasing to normalized prices.
As aircraft supply pressures are relieved, OEM book-to-bill ratios are returning to approximately 1.0, with stable backlogs extending up to 2 years for most OEMs. Embraer, however, bucks this trend, having received a blockbuster $7-billion order from Flexjet earlier this year, extending its backlog out to 4-plus years of production.
Looking further into the future, OEMs have a strong pipeline of announced development programs, particularly in the large-cabin segment. Following on the heels of the G800, Gulfstream’s G400 is expected to achieve certification before the end of 2026. Bombardier’s Global 8000 is expected to enter service this year. Dassault’s ultra-long-range Falcon 10X is targeting entry into service in 2027, having announced last year that the first conforming aircraft had been built.
On the smaller airplane side, Textron’s Denali turboprop continues to experience delays, with certification of the GE Catalyst engine only just received in February of this year. Also in Textron’s lineup is the Citation Ascend – an improved version of the Citation Excel/XLS family, with better engine performance and a new interior. HondaJet is pushing along with the Echelon – its new light jet, which boasts the longest range of any jet that will be single-pilot certified.
For the most part, the Trump administration has been seen as positive for the business aviation industry, with reduced sustainability pressures and more favorable taxation serving as tailwinds for owners and operators. However, any momentum gained in the past several years is threatened by the greater circumstance of tariffs and a looming trade war.
Macroeconomic indicators correlated with business aviation have weakened compared to years prior. Tech stocks and equity markets are facing significant downward pressure, which is a headwind for one leading business aviation demographic – high-net-worth individuals. And corporate uncertainty may lead to lower investments, including into internal flight departments or business travel overall.
Despite this, utilization numbers remain strong, particularly in the US, where departures increased year-over-year for Q1 2025. The first signs of contraction are starting to be seen in the OEM order books, which are down slightly year-over-year. Due to uncertainty on all sides surrounding the tariffs, customers are reluctant to place orders for brand new jets, and OEMs are hesitant to provide guidance for the coming year. As a result, used jet availability is slightly down in early Q2 2025.
However, business aviation may be more shielded from tariffs compared to the larger aerospace industry. Over 2/3 of the global fleet is based in North America, and the majority of deliveries through the next decade will be from North American OEMs with more regional supply chains. On the other hand, since the majority of business jets go to US customers, the majority of tariffs paid for imported components won’t be reimbursed through “drawbacks” – the credits that manufacturers receive for these tariffs when they ultimately export the final good.
With trade compliant with the United States–Mexico–Canada Agreement (USMCA) being exempt from tariffs, new jet imports from Bombardier and parts for other OEMs are largely protected. Rolls-Royce engines on large-cabin Gulfstream and Bombardier jets will be subject to tariffs imposed on the EU and UK, and G280s assembled in Israel will also be affected, although Bombardier is optimistic in projecting a strong outlook for 2025.
Embraer and Dassault have a higher tariff exposure when delivering into the US, although Embraer’s final assembly line in Melbourne FL will provide some relief. Business aviation users also tend to be less price sensitive and may be more resilient against higher costs induced by tariffs.
The post-pandemic hot streak of business aviation has revealed shifting trends toward greater bizjet fleet utilization and a higher demand for private aircraft travel. Despite current headwinds, the business jet industry is poised to weather the storm better than other civil aerospace industry counterparts.
Alexandra Strehlow is an Analyst at AeroDynamic Advisory in Ann Arbor MI. She holds a master’s degree in aerospace engineering and is a recreational pilot with a Pvt–Inst rating.
Richard Aboulafia is Managing Director at AeroDynamic Advisory, based in Washington DC. He’s been in the aerospace and defense industry for 37 years working as an analyst and consultant.