CJI Town Hall: ‘Good opportunity to purchase ultra-long range on resale market’

“There is a one-off deal here and there and those opportunities are triggering people who have airplanes actually to add an airplane to their fleet,” Steve Varsano, CEO, The Jet Business, told Corporate Jet Investor Town Hall online meeting delegates. While activity is way below pre-Covid levels in the ultra-long range market, there are transactions happening, said Varsano. But it was too early to identify trends.

The lack of transactions and restrictions on global travel could be leading to significant discounts in the ultra-long range market, according to David Crick, MD DavAir Group, told delegates: “In large body, intercontinental aircraft – – your large Gulfstreams and large Bombardier type product – we are seeing some reasonably significant discounts in transactions, so therefore values are reducing as well.”

In the small and midsize markets the story is different, Crick said: “Some Falcons and some smaller aircraft are transacting with very little discount whatsoever.” Crick noted that these reductions could not necessarily be linked to Covid-19. He said appraisers should contact the people involved with the transaction to determine if the sale value was high or low for specific reasons. For example, was a particularly low price the result of a a distressed sale? Or, did other special factors affect the transaction’s value?

Rene Banglesdorf, CEO, Charlie Bravo Aviation, said the year began very well with more transactions than in the same period of 2019 and even 2018. But travel restrictions as a result of Covid-19 resulted in a rapid downturn because no one was travelling. As restrictions lift, Banglesdorf said she has seen more and more first-time buyers and is currently working with six. These buyers are mainly individuals “rather than large corporations”.

Meanwhile, the recovery in business aviation is being led by leisure travellers rather than corporate travel, according to Varsano. “There’s no question that there’s much more personal flying now and, with the summer coming, that’s going to be exaggerated. But the corporates aren’t really flying that much. All of them are working from home using Zoom. There’s just no reason to travel.”

This week’s Corporate Jet Investor Town Hall online meeting, staged on Wednesday June 24, focused on aircraft values. You can listen to the meeting here and register for your free place at next week’s one-hour session here.