Jetcraft bullish about next five years
Jetcraft published its latest five-year pre-owned aircraft forecast last week. It deserves real credit for finding the time to do this as it rushes to finish closing transactions before the end of the year.
“This year has been a great one for us whatever happens,” says Chad Anderson, president of Jetcraft sitting in his firm’s London boardroom. Outside, colleagues in other meeting rooms are trying to get transactions completed before the end of the year. “We still have more to close. And it is harder now to close now MRO capacity is full and with supply issues if aircraft need parts,” he says. “It will be a good December but maybe not a record one.”
Jetcraft expects 2,267 pre-owned deals, worth $10.2bn, to close this year – compared to 2,119, worth $10.3bn, in 2020. By 2025 it expects the used aircraft market to consist of 2,647 annual transactions worth $12.4bn.
“Ultra-high net worth individuals [UHNWI] will drive future growth of the industry. That is where the demand is coming from – and that demand has been exacerbated by the pandemic. It forced people to try business aviation,” says Anderson.
He cites data from Barton and WealthX that shows just 12% of UHNWIs use business aviation – and of that, just 2% own aircraft. It defines UHNWIs as people with a net worth of more than $30m. “As these UHNWIs experience business aviation, the gap will narrow. Charter, fractional and membership are the seeds that drive people towards ownership,” says Anderson.
He expects buyers in Asia-Pacific and Europe to drive much of this growth as ownership levels amongst UHNWIs rises to US levels. Jetcraft says that just 4% of North America’s 112,000 UHNWIs own aircraft. This falls to around 2% in Europe and less than 1% in Asia. “We are confident that this will change and we are seeing increased interest from young billionaires and first-time buyers in South East Asia, Europe and Australasia,” says Anderson.
Unlike in the 2004-2008 upturn, Anderson expects values to stay rational. “We are a long way away from 2008,” he says. “The market is much more rational. Values have started firming up now from the Covid drop but we expect depreciation rates to come back to normal quickly. We are not going to see the 11% spikes in 2008.”
In total Jetcraft forecasts that 12,261 pre-owned transactions – valued at $57.2bn – will close over the next five years. This may seem like a lot at a time when the number of aircraft for sale is at its lowest level.
“There are aircraft out there, but they are harder to find. That is where our global footprint helps,” says Anderson. “China is a great source of supply for example. Supply will also rise as OEMs deliver more aircraft replacing existing ones.” He says they are also still taking aircraft as inventory.
“You have to be optimistic about the next five years. We had no idea back in March 2020, but the industry has been a big beneficiary of the pandemic – and there is no reason why that will change with other variants,” says Anderson as he heads off to help get more deals closed before New Year.
Above: This 2006 Cessna Citation XLS is among the inventory offered for sale by Jetcraft.
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