“Today we are entering a new era for business aviation,” says JetCraft Chairman Chad Anderson as the company reveals its five-year deal forecast. The company, which has specialized in the sale and acquisition of private aircraft for the past 60 years, forecasts 12,261 pre-owned transactions over the next five years, which equates to $57.2 billion. revenue dollars.
Jahid Fazal-Karim, owner and chairman of Jetcraft, believes the pandemic has helped users – especially new entrants – realize the true benefits of business aviation. “The combination of limited commercial air services and expanding business aviation offerings presents a real opportunity for the sector to further expand its customer base and secure long-term prosperity,” he said. .
So what does the future of business aviation look like? Who are the new market entrants? What is the most requested aircraft? Will the industry be able to maintain its post-pandemic momentum? Anderson Answers dives into the report to answer these questions, and more.
What were the main lessons of JetCraft following the Covid-19 pandemic?
Chad Anderson: At the start of the pandemic, few could have predicted how quickly new users would realize the benefits of business aviation, including the flexibility, safety and control it offers. The last quarter of 2020 exceeded all expectations and 2021 was a record year for used aircraft transactions. This first-time audience, who could afford to fly privately but never had the urge to do so before, has helped accelerate and strengthen the recovery of our industry.
We are seeing strong demand, especially for Midsize and Large Jets, which provide owners with global flight capabilities. As borders continue to reopen and interest in long-haul travel grows, demand for large jets that offer the ability to fly farther is only expected to increase. If you have an office in California and a home in Italy, this is the perfect mission for a big jet because you don’t have to stop halfway to refuel.
We’re also seeing a trend among early buyers who previously opted to start with smaller planes – now moving straight to a larger, long-range Jet. Our 2021 market forecast predicts large jet sales are expected to increase year over year, with 457 pre-owned large jet transactions expected in 2025.
How should the second-hand market evolve?
Pre-owned transaction volume is expected to maintain its current healthy growth rate and we expect 2,355 pre-owned transactions in 2022, the highest number in recent years. Through 2025, we should see a steady increase in the number of pre-owned business jets sold each year, and we expect sales of midsize and large jets to drive a large part of this growth.
When it comes to pre-owned transaction value, again, big jets are a big part of the story. By 2023, the value of these transactions should return to what we saw in 2018, and as far as depreciation goes – we expect it to return to pre-pandemic levels by 2025.
Finally, in average values, the picture for the next five years is rational. We are not going to see the high spike in aircraft values seen during the bubble from 2004 to 2008. Transaction values will now begin to stabilize after the pandemic for two reasons; firstly, a tighter supply and demand environment helps to support prices and secondly, the increasing number of higher priced widebody transactions in the coming years will increase the average value.
In your report, you mention the importance of the UHNW community. Why and how does Jetcraft plan to achieve them?
UHNWIs are a large untapped market, with 12% currently relying on business aviation solutions, with 2% using ownership as their primary solution. We believe there are clear opportunities for growth in the number of users and owners and we are already beginning to see the journey to aircraft ownership accelerating.
Historically, business aviation users have been more inclined to become owners, and shrinking airline services and increasing health and safety issues are accelerating this decision. Our industry has proven its resilience during the pandemic, regaining momentum much faster than commercial aviation and demonstrating its ability to keep businesses and individuals globally connected.
How does the journey to homeownership accelerate?
When analyzing the drivers of ownership by region, wealth levels and flight hours dominate as the top reasons buyers in the world’s largest markets purchase an aircraft. With the increased use of business aviation solutions and increasing global wealth over the next five years, we expect an increase in ownership in Europe and Asia, closing the gap with the United States. United.
While business aviation customers are mostly made up of the corporate sector and HNWIs, the latter continue to grow globally, both in number and wealth, and at a faster rate than ‘previously. A majority report that their wealth has increased or remained unchanged during the pandemic. This further incentivizes charter card and jet card users to own their own jet.
Which aircraft do you see gaining popularity?
The large jet segment is an interesting category to watch right now due to the growing interest in long-haul travel. Post-pandemic, aircraft owners are looking to reaffirm global business relationships and reconnect with contacts around the world. To do this, they need aircraft capable of longer flights without multiple stops along the way. We expect midsize aircraft, and in particular large jets, with their higher price and longer range, to lead overall volume and value growth, and are expected to exceed 2018 values by 2023. .