CJI Middle East & Africa: ‘None are looking to sell their airplanes’

 
Aircraft owners are preferring to retain ownership of their planes – despite, or perhaps because of, the global Covid-19 pandemic, Simon Davies of Global Jet Capital told delegates at Corporate Jet Investor’s Middle East & Africa online conference.

“You might think that people would want to get out of aircraft [ownership],” said Davies during the forum Aircraft Finance in the Region. “But one of the drivers that’s unique in this case is the ability of people who want to get from A to B and who are struggling to get there [due to the shrinkage of commercial airline services].” Unlike in the Great Recession of 2007-2008, most owners seem determined to retain their aviation assets. Two reasons underpin this, according to Davies, who is the firm’s sales director, UK, Middle East, Africa, Turkey, India and Eastern Canada.

Distressed aircraft sales

“First, they are constrained by the lack of flights, which makes their travelling using commercial airlines very inefficient. Second, private jets give them a feeling of comfort and security from a health perspective. And, also, the feeling of freedom and flexibility they require to make their business travel effective,” said Davies. While there has been “the odd case” of distressed aircraft sales, the overall number has been “very, very small”, he added.

Inventory values have remained a lot better than expected. “Global Jet Capital focuses on the super mid-size and up as our primary target market,” he said. “And in that group of aircraft, you only have about 7% of production being available for resale, which is a very low number.”

Don Walsh, Senior Vice President at Stonebriar Commercial Finance, agreed with that assessment. “We are in regular contact with all of our clients and none of them are looking to sell their airplanes.” While there are “difficulties and uncertainties” in the market, there is also a large degree of resilience.  “In our portfolio, the aircraft are operated privately and we have seen our utilisation go way down [during the pandemic]. But clients are remaining current on their obligations and there have been no unscheduled sales.”

Davies believed business aviation was continuing its slow recovery. “It’s coming back – certainly not to pre-Covid levels yet. But we are experiencing more enquiries on  a regular basis and not in any single segment of the market,” he said.  “We are seeing enquiries through the very small aircraft categories to the very large aircraft and from traditional operators of aircraft through to new entrants.”

‘A good story for business aviation’

Even if Covid-19 continues for a while, people are still going to want these planes, said Davies. “So, it’s a good story for business aviation all round,” he concluded.

Meanwhile, in a separate forum, Mark Winzar, Senior Vice President Business Development at Jet Support Services Inc. (JSSI), said making the costs of owning and operating a business aircraft much more transparent would significantly boost growth in the sector.

The online conference – Corporate Jet Investor Middle East & Africa 2020 – took place on Wednesday September 16th. You can listen to the free access conference by registering here.