CJI Asia: The pre-owned bizjet market and its new entrants
Private jet sales in the pre-owned market are extremely high, according to pre-owned aircraft brokers Jay Mesinger, CEO and President, Mesinger Jet Sales, and Brad Harris, CEO and President, Dallas Jet International.
Mesinger said: “We are busier than we were in 2004-2007. There is a huge influx of first-time buyers, all High Net Worth Individuals [HNWIs], but almost the entire corporate side of the industry has retreated, except to sell – transition selling – where they might have gone to the OEMs, ordered a couple of airplanes and are having us relinquish the old planes.
“There is a supply right now that is not intruded or impacted so negatively by demand meaning that prices are going down as much as 5-20%. But compared to 2008 or 2015-17, where the market was going down 4-5% a quarter, we’re still enjoying a high degree of transactions and not such a residual loss to sustain.”
Harris said that 2020 would be the company’s first or second-best year in terms of revenue, in its 29-year history. “Our team has never been busier – we are also seeing a lot of first-time buyers, or HNWIs upgrade [about 90%]. It is a weird time, but Covid has not impacted the pre-owned sector transactionally,” he said.
Scott McCreary, attorney at McAfee & Taft, agreed with both, saying his firm is seeing lots of transaction activity. But he pointed out that it is not always about buying and selling aircraft.
“It could be someone wanting to get out of the market or restructure their debt or looking into the sharing the use of their aircraft,” he said. “On the new or pre-owned aircraft side though, we are working with a lot of new entrants.”
Another reason why Mesinger and Harris might be busy, according to McCreary, is that many of these transactions are coming “through established brokers”. He said they are the brokers picking up more deals than competitors who would normally pick up one-off deals.
All noted that corporate clients are getting out of the fractional ownership programmes, while individuals – especially groups of individuals such as friends – are keener wanting to purchase or co-own jets.
Even Harris, who usually sells whole aircraft, is getting asked about charter and jet card memberships.
“Many people who enquire with us are possibly those who were finally ready to get off the fence, some after years of sitting on it, and act on it – by paying our retainer, hiring us and entering the market,” said Mesinger. Safety of private travel and the ease of access are foremost reasons.
However, Harris highlighted the lack of corporate demand: “When that comes back up, in the next few years, 2022-23, what’s going to happen to supply and pricing?”
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