The ageing business jet fleet
Experts in the US say values for older business jets will never return.
One of the subjects that kept coming up at our Miami conference this week was older aircraft. They were discussed in several sessions and if you consider that, according to AMSTAT some 48 per cent of the total business jet fleet is more than 15-years-old, an awful lot of aircraft fall into this category.
The general consensus from the aircraft values panel is that values for these aircraft will not bounce back. This is partly because, as participants on the US finance panel said, few banks like to lend against aircraft over 15-years-old, although there are a few lenders like Singlepoint, which love older aircraft (it is working on financing an aircraft well over 30-years-old at the moment).
The issue is even more interesting when you consider that 60 per cent of all aircraft for sale were built before 1998. Many of these aircraft will never trade.
Anthony Kiousis, founder of Asset Insight, showed how for some aircraft types the financial exposure to maintenance is greater than the price that sellers are asking. George Dom from NFS Advisers also warned that many of these aircraft are idle and storing up problems – especially as the average time to sell an aircraft is now 509 days, according to JETNET.
Edward Kammerer, a partner at law firm Hinckley Allen, added: “When clients come to me saying they are interested in buying an older aircraft, I always say: ‘OK, but remember that every asset has a last owner. Are you prepared to be the last owner of this aircraft?”