Business aviation professionals predict increase in demand for finance
Business aviation professionals are predicting that demand for finance will increase over the next five years, thanks to a growing trend for potential buyers to use less of their own capital and the current attractive pricing of operating leases.
They also think that growth in the sector during the next 12 months will lead to increased demand for finance.
They were responding to a survey by Corporate Jet Investor and finance provider Global Jet Capital, which questioned 144 business aviation professionals last month.
Seventy seven percent of the people who took part in the survey expected demand for finance to increase during the next five years, with one in six of them expecting the increase to be “dramatic”. Only 6% of the respondents expected demand to decrease.
Sixty two percent of the survey respondents attributed the predicted rise to the current economic climate making potential corporate jet buyers use less of their own capital, while 21% also pointed to the fact that operating leases are currently very attractively priced and are consequently a more likely to be considered by potential buyers. And 40% said the overall level of sales of business aircraft will grow, resulting in an increased demand for finance.
The research suggests that the industry is set to meet this growing demand, with 57% of respondents believing that the overall amount of finance made available to the market will increase in the coming year. A quarter said this was because more specialist lenders have recently entered the market, while 34% thought that traditional lenders would want to increase their exposure to the market.
Thirty two percent of those taking part in the survey think the market growth during the next 12 months will naturally lead to more finance being available.
The survey asked participants for their views on finance rates. Fifty one percent predicted that rates will increase between now and 2020, while 21% thought they would stay the same as today’s rates and 18% thought they would decrease.
“With such an overwhelming majority predicting either stable or increasing rates, it indicates that now may be the best time to take out an operating lease and secure guaranteed rates for the longer term,” said a spokesperson for Global Jet Capital.
Shawn Vick, Global Jet Capital CEO, added: “We are seeing slow but steady improvement in market fundamentals, largely the result of the OEMs making difficult but necessary decisions related to production rates, and emerging strength in the global financial markets. From our perspective, we experienced a solid increase in business over 2016 and see strong demand heading into 2018 for both new and used aircraft financing.”