CJI Global 2020: Business aircraft sales to see ‘manageable price reductions’
Pre-owned business aircraft sales are likely to see “manageable reductions” in price due to the Covid-19 global pandemic, according to the CJI Global 2020 forum Reborn in the USA – selling aircraft in 2020 and 2021.
Jay Mesinger, CEO of Mesinger Jet Sales, told delegates: “The right-hand bracket on Covid has not been placed yet and we have seen an effect on pricing. But we haven’t seen pricing drop 50% or more off pre-Covid levels and we haven’t seen desperation among sellers.”
While Covid-19 travel restrictions were stopping buyers from “feeling the need to jump on a plane” to view a prospective purchase, the price reductions so far had proved relatively modest. “We are seeing more manageable price reductions of 5% to 20% depending on the type of air plane and its age and technical capabilities.”
‘10% being the sweet spot’
Kevin White, President Jet Edge Partners, agreed with that price range. “We are seeing that pricing has fallen by 5% to 20%, with oftentimes 10% being the sweet spot. The value of aircraft will go down the question is: How fast?”, he said.
White reported encountering many first-time buyers – or people who claimed they intended to buy – prompted by concerns about the threat of infection from Covid-19 on commercial flights. “We are seeing a lot of first-time buyers who are taking the ‘Never-again-on-an-airline approach,” he said. “But whether they are just wannabee buyers will remain to be seen.”
Brian Proctor, CEO of Mente Group, noted: “New OEM pricing is not rationalising as fast as the pre-owned market. There will be a place where OEMs have to shift their pricing.”
‘OEMS have to shift their pricing’
Mesinger expected buyers to realign their new aircraft purchases to their current needs. “We see 650s flying domestically [in the US] when the owners could use a 550. So, I do see people stepping down a notch [in terms of their aircraft choice] to be more clearly aligned with what they needed rather than what they wanted. That is healthy.”
The opposite purchasing decision was also true, according to Proctor. “It’s always good to upgrade in a down market.” He believed now could a good time to make purchases. “For the right assets, this is a good time to buy. For a good pedigree air plane that’s widely accepted in the marketplace, we have no bias against it.”
Chad Anderson, President Jetcraft Global, expected seven to eight business aircraft transactions in a normal month. “We had one in April, seven in June and we will see seven in July. So, we are back to the pace,” he told delegates.
Meanwhile, you can watch more panel discussions and presentations from business aviation industry leaders here.
Reborn in the USA – selling aircraft in 2020 and 2021
-Chad Anderson, President Jetcraft
-Jay Mesinger, CEO Messinger Jet Sales
-Brian Proctor, CEO of Mente Group
-Kevin White, President Jet Edge Partners.