MONTREAL (CANADA) – Pre-owned corporate aircraft transactions are witnessing a recovery this year with affluent travellers staying away from commercial flights. It is reviving demand for new aircraft even as the aviation segment is preparing for a slump in 2020 deliveries.
Jets which are customised as corporate aircraft can ferry up to 19 passengers and the risk of infection is less as the passengers can avoid the airports and those who come on board can be selected.
Compared to commercial airlines, private jets have staged a recovery with operators like NetJets showing an improved demand.
Canada’s Bombardier Inc and its ilk have been observing whether the rebound in leisure flights would mean new orders for aircraft.
Pre-owned jet transactions are nearing 2019 levels, while lawyers and brokers are seeing orders for new planes trickling in after the lull triggered by the pandemic.
“There’s just so much more activity than we anticipated four or five months ago,” said Don Dwyer, managing partner at Guardian Jet, engaged in aircraft brokerage, appraisals, and consulting.
“In April you could hear crickets chirping for new orders.”
The private jet industry delivered 809 new aircraft last year. But it is yet to recover since its peak of 1,317 deliveries in 2008, said analyst Brian Foley.
For the first nine months of this year, pre-owned transactions ranged from flat to down 8%, which surprised aviation analysts Foley and Rolland Vincent. During Q-3, transactions went up 9% to 643, said Vincent’s JetNet IQ data.
According to executives, the improvement in the pre-owned market has been attributed to a combination of tax incentives in the US, which is the biggest market for corporate aircraft, along with demand from first-time and occasional business jet travellers, upgrades, and charter firms.
Executives said small to super mid-sized aircraft carrying up to 10 passengers are especially in demand for domestic leisure travel.
In September, business flights in the US, Caribbean and Canada were up 1.2% compared with the previous month. But they remain down almost 17% on an annual basis, according to data released by Argus TRAQPak.
Amanda Applegate, a partner at Aerlex Law Group, said she did post-pandemic transactions for new-model Bombardier Challenger 350s, Embraer SA Praetors, along with Gulfstream G500 and G600 jets, some of which were for patrons who took commercial flights previously.
According to Florida-based attorney Stewart Lapayowker, aircraft manufacturers are likely to offer discounts off retail pricing to secure deals. “I think you’re seeing manufacturers get realistic about their new aircraft pricing,” he said.
Canadian plane-share operator AirSprint is taking two pre-owned aircraft post-COVID. The number of new fractional owners increased by 36% between April and October compared with the same period in 2019, said Chief Operating Officer James Elian. Fractional ownership allows passengers to invest in a private jet to gain access to it.
Flexjet, scheduled to accept delivery of more than 10 aircraft by year’s end, including Praetor 500s and Challenger 350s, has not seen a steep cutback on flying private compared with previous downturns, said Chief Operating Officer Megan Wolf.
“This time around has been different.”