Industry Insights

The business aviation industry today is showing continued signs of growth, and improved business conditions are creating a favorable environment for individuals and corporations who may have postponed such transactions during the economic downturn to again consider making the high-value investment of procuring an aircraft.

As with any purchase, paying cash is the easiest way to close a transaction. Another option may be for owners to complete an aircraft trade-in transaction which can free up capital so the owner can move more quickly toward acquiring a model more suitable for their changing needs. Some experts, however, advise that even if an individual or corporation has enough cash available or an asset they can trade in, it may make more financial sense in certain instances to either finance or lease the aircraft.

Many aircraft financing institutions focus on the ability of the client to repay the financing. It does not mean they do not care about the aircraft itself, but r...

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Written by Mick Doohan, Authorised Sales Representative, Australia/New Zealand
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It is no secret that flying private has its advantages over commercial, but how can a company convince its stakeholders of acquiring and maintaining such a large corporate expense?

In most cases, it comes down to saving time and increasing productivity—two factors that always resonate with a company’s board of directors.

Difficulty in gaining buy-in for a corporate jet can stem from many areas: concern about appearing extravagant, stakeholders objecting to such company spending or potential negative public relations issues, as some corporations have experienced in the past. But the benefits of private aviation in most cases can outweigh such concerns and justify executives flying via the company’s private aircraft as ultimately being a highly beneficial business decision.

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Written by Chris Brenner, Jetcraft's former SVP-Sales, Americas

In today’s competitive market for selling aircraft, one of the easiest and fastest ways for owners to upgrade is to complete an aircraft trade-in transaction by working with a partner who has the capabilities to facilitate a trade-in and has an aircraft that the seller is interested in purchasing. Transaction specialists such as Jetcraft offer sellers a representative with the ability not only to market their aircraft to a wide audience of potential buyers, but also provide them with an immediate buyer (themselves) if another can’t be found quickly. Jetcraft can also offer a replacement aircraft from its current inventory or may be willing to bring another aircraft into inventory that better fits the buyer’s mission.

Once a seller shows interest in a trade-in process, the seller’s aircraft’s trade-in value will be established, as well as the price of the new aircraft. In such a case, an agreement can be cre...

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Last month we closed another successful presence at the NBAA 2016 convention and exhibition. Despite well documented market challenges and the then-looming US elections, the audience, transaction conversations and number of quality attendees were well above even our own reasonably high expectations.

Through the client and prospect conversations we had at our static venue, we saw that most in the industry remain upbeat and on-track with their aircraft acquisition plans. As we have stated often through this year, there are deals out there and business transactions continue at a solid pace. Jetcraft remains on track to close another record-breaking year, making 2016 and 2015 the two strongest years in our company’s history.

Financing and the US Election

Even though business is continuing at a solid pace, and the majority of our NBAA interactions were positive, a few conversations did raise a few concerns that some buyers and sellers in the industry might wish to keep their eye...

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Written by Chad Anderson, Jetcraft President
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The continued unpredictability of the business aviation sector and the impact of certain world events throughout the past 12 months have directly impacted our long-term growth outlook for the business aviation sector. Accordingly, we adjusted our predictions of deliveries and revenues in our recently released 2016 Market Forecast from last year’s projections resulting in numbers that now point to 7,879 unit deliveries worth $248 billion, from 8,755 worth $271 billion in 2015.

To get a clearer view on what is contributing to these deliverables and revenues projections, we took a closer look at macro-economic issues that will impact the state of our industry over the next ten years. Specifically, our 2016 forecast compares how the private jet aviation sector’s business will fare against certain economic trends– a slowdown in wealth creation, the migration of ultra-high net worth individuals (UHNWIs) from emerging market economies and the fluctuation of oil prices – as well as how our industry’s growth compares with past business cycles.

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Written by Fabrice Roger, former Jetcraft Sales Director, Latin America

Latin America has long been viewed as a key emerging market for business aviation, led by two major countries in the region, Brazil and Mexico. Political and economic pressures, however, intensified in the region in 2015, driven mostly by the slowdown of Brazil’s $US2.2 trillion economy, which is now moving from recession to depression. Once a powerhouse of the region, Brazil’s economy contracted sharply last year, while inflation soared and its currency plummeted. Although Mexico also experienced currency challenges of its own, the market for business aviation in Mexico has grown considerably in the past few years, unlike its southern neighbor.

While Mexico’s business jet market is in ascension, Brazil has taken a backseat in the region, due to recent political and economic turmoil that was intensified by a collapse in the oil and gas sector. Nonetheless, Brazil still offers a significant opportunity for business jet transactions, particularly for those seeking to divest their aircraft investments.

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With prices at historic lows, inventories high, and retrofit options able to transform old airframes into like-new airplanes, will there ever be a better time to buy a preowned aircraft? Possibly, should the long slide in preowned prices that began in 2008 continue. Still, great opportunities for buyers await right now. Just be sure you enlist the help of a broker who possesses the technology that has become so crucial to these deals.

“Top-tier brokers have a lot of technology behind them to manage the sales process for their clients,” says aviation attorney Paul Lange, a party to many business jet transactions. “That’s really a big difference between the larger brokers and the mom-and-pops.”

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Purchasing the right aircraft, at the right price, with the right terms, and avoiding unpleasant surprises can be a daunting process. Unfortunately, because of this, some aircraft buyers do occasionally make mistakes in their buying journey. Here is our advice on watching out for the most common pitfalls and how to avoid them.

Don’t Base the Purchase Solely on Price—Some buyers believe that buying the cheapest is always the best option. Instead, buyers should purchase a well-maintained aircraft with a good pedigree (not too many owners, with a solid manufacturer’s maintenance program, and service performed at an authorized center that kept well documented aircraft records and engine logs), rather than looking for a bargain deal. If not, it could leave buyers with additional maintenance costs down the road. It is important that a buyer knows whether or not the aircraft for purchase is enrolled in a manufacturer maintenance plan, or if there is any remaining warranty that can be transferred.

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Written by Marius Breitenbach, Sales Director
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When the time comes to sell your business jet, what are some critical factors you need to consider before placing the aircraft on the market to ensure you maintain control of the transaction process, achieve a successful outcome and minimize your deal costs?

Many owners make the decision to sell their aircraft based on the expectation of a future event, whether that is a new aircraft coming on the market, the end of a lease, or the sale or expansion of their company. It is often found that the event driving the decision has a specific date for closing, and this is also the desired date for the sale of the current aircraft.

As a seller of a corporate aircraft, the benefits of properly preparing a sound game plan for putting your jet on the market comes down to appropriate long-term planning. Such a strategy should be cornerstoned by a well thought-out business plan, which strategically takes into account market conditions and your company’s growth. Most importantly, knowing the true value of your aircraft in today’s marketplace is an essential first step toward a successful sale.

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