I mentioned at the end of Wednesday’s piece that I attended a second conference in Las Vegas – The National Business Aviation Association’s Business Aviation Convention & Exhibition, or NBAA-BACE.
Quite the mouthful, I know. But it was absolutely worth attending.
As I explained yesterday, I went there while pursuing a real estate-based stock lead. There, I met its CEO and CFO to ask them a list of pertinent questions that made me more interested than ever.
If that was the only thing I got out of the whole experience, it would have been more than worth my time and money. Yet what I found was a literal wealth of information about an industry I always thought I knew a thing or two about.
I fly all the time, of course… over to Vegas, down to Florida sometimes (though I mostly drive) … up to Europe… or wherever else duty calls. And back in my commercial real estate (“CRE”) development days, I used to fly even more.
(Incidentally, I’m now flying to Nashville next week to meet another CEO of a company I plan to add to our coverage spectrum.)
Yet, attending the 2024 NBAA-BACE brought me:
… up close with the most cutting-edge business aircraft ever designed, the leading advanced air mobility vehicles taking flight and an exhibit floor packed with game-changing innovations that are making aviation safer, more sustainable, and ever-more accessible to today’s entrepreneurs and trailblazers.
That conference description wasn’t lying. If anything, it undersells it.
The Aviation Industry Is So Much Bigger Than Boeing
We all know the once cutting-edge Boeing Company (BA) is sputtering badly.
Parts flying off of planes. Corporate scandals. Stranded astronauts. A massive labor strike. An exploded satellite…
And now a really bad earnings report that showed revenue of $17.8 billion – down from $18.1 billion this time last year – and a massive $6.2 billion loss at the income level.
With all due respect to Boeing’s new CEO, Kelly Ortberg, I really don’t know how this story is going to end. But I do think it’s important to point out that Boeing is not the entire industry.
From the conference, I learned that the entire aviation market is actually estimated to be worth $333.96 billion this year. And according to market intelligence and advisory firm Mordor Intelligence, that figure should rise to $396.15 billion by 2029, “growing at a [compound annual growth rate, or CAGR] of 2.87% during the forecast period.”
A notable chunk of that will come from the:
… significant rise in demand for helicopters and business jets to transport medical supplies, cargo, VIPs, and charter operations. Thus, the aforesaid factors are expected to propel the growth of the market. The orders and deliveries improved during 2022 compared to 2021, signifying the growth in demand for general aviation aircraft and recovering the market to its pre-Covid-19 level.
Moreover:
Several manufacturers are now focusing on developing newer generation aircraft in various aviation segments. The newer generation aircraft offer better fuel efficiency and safety for commercial and general aviation customers and better situational awareness and tactical advantage for military customers. The advent of such aircraft is expected to drive market growth during the forecast period [2024-2029].
There’s plenty more data to support a bullish outlook here. This includes how the United Nations’ International Civil Aviation Organization (ICAO) expects air transport demand to increase by an average of 4.3% per year for the next 20 years.
In which case, it notes, we’re looking at 15.5 million more direct jobs created and $1.5 trillion added to the world economy. Minimum!
I’d call that intriguing. How about you?
A Jet for Every Billionaire (and That List Is Growing)
One area I’m personally zooming in on is the private jet market already briefly mentioned above. It seems like a logical place to look, considering the rise in billionaires.
In “The Richest in 2024,” Forbes noted that the wealthy’s “fortunes continue to swell as global stock markets shrug off war, political unrest, and lingering inflation.” There are actually more of these elites than ever: “2,781 in all, 141 more than last year and 26 more than the record set in 2021.”
They’re also richer than ever, owning a collective $2 trillion more than they had in 2023. And we all know how much the wealthy like their jets.
The World Economic Forum’s annual Davos convention always comes with headlines about all the private jets flying in. And then there are all the sports teams… popstars… big businesses…
They don’t do commercial. Not even first-class. And who can blame them for wanting to skip traditional airport chaos?
There’s also an enormous rental market for these vehicles. Smaller companies that want to transport a dozen or so employees can save immensely by chartering appropriately sized planes instead of booking business seats – or even economy – for everyone.
That’s why, earlier this week, the Robb Report highlighted two surveys that put the private jet market in really good long-term light. Those would be JETNET iQ’s third-quarter survey and Honeywell’s 33rd Global Business Aviation Outlook.
Apparently, the latter predicts new business jet deliveries – especially for larger models – to rise 12% year-over-year in 2025. This is based on the fact that 90% of respondents said they expect to fly at least as much, if not more.
And while the JETNET report showed that overall aircraft deliveries are flat all over the world right now… Annual backlogs of $50 billion since 2022 show the demand is still very much there.
I’m not going to lie. I left the NBAA-BACE inspired and enthused about aviation’s potential, both as a consumer and an investor.
There’s undoubted opportunity to make money here – and a lot of it at that. There’s even an exchange-traded fund (“ETF”) out there devoted to U.S. jets.
With that said, I’ve also realized what a novice I am in this area, which means I have some serious research to do. And this is on top of that previous pick I’m pursuing (and almost ready to give the all-clear on).
In other words, give me some time to process everything I just learned. Once I do, I can’t wait to tell you more.
Regards,
Brad Thomas
Editor, Wide Moat Daily