NOTE: The below originally appeared as the editorial in our October 26 One Minute Week newsletter. To find out more, and sign up for free, please click here.
Like economists, if you get more than 200 business jet people in one room you get 200 different opinions. But one thing that everyone at CJI Miami agreed on last week is that the US is set to be by far the most important market for the next few years.
But that is where the consensus ended.
Financiers think that OEMs are building too many different aircraft. Banks and lessors say that it is becoming harder and harder to predict residual values and they also argue that this is one reason why buyers are not returning. “Why would someone who has seen the value wiped off their aircraft come back again?,” was one question. (One broker suggested that it was a good reason for trading up. He said: “You just need to say, ‘for every dollar you lose, you get two back on a bigger aircraft.”)
OEMs – led by Marco Túlio Pellegrini, president of Embraer Executive Jets – say that new models are the key to getting new sales. One OEM said: “So you are basically telling us that we should not listen to what our customers want and stop selling aircraft?”
Banks agreed that the market has never been so competitive, but non-bank entrants – like Stonebriar and Global Jet Capital – think that there are large underserved markets. One other area that got a lot of agreement was that the market needs to grow by attracting new customers. But some of the fiercest debates were between the technology companies looking to do this.
I don’t want to give you the wrong idea. The whole conference was not a series of arguments and there were no fights. It was all extremely good-natured. There was also a lot of relaxed networking and conversations. But an industry that is challenging itself is a healthy one. Everyone should agree on that.