BizAv Market Insights from Chad Anderson, Jetcraft

It's been a fascinating 18 months in pre-owned aircraft sales with vibrant activity and increasingly diminished inventory. What are the important market trends to note leading into 2022? Jetcraft's Chad Anderson shares his thoughts...

Jetcraft has been in Business Aviation for 60 years, and, during that time, has grown to offer highly astute market research capabilities, plus expertise in aircraft sales, marketing, and deal management – all the tools today’s aircraft buyers and sellers need to ensure a smooth transaction.

So it’s unsurprising to hear that in 2021 Jetcraft capitalized on a lightning-quick market, exceeding the previous year’s transaction count, putting it on track for a record year, according to Chad Anderson, President of the company (pictured below).

“With demand at its highest level, low inventory levels present a challenge, with just 3.2% of business jets and turboprops currently available, according to AMSTAT,” he told AvBuyer as he joined us for an interview. “However, we’re managing to overcome this by leveraging our global structure.”

The Jetcraft team has experts stationed in more than 20 offices worldwide; a fact that Anderson says gives it the ability to provide timely market intelligence in every critical locale. “By drawing on our strong relationships, we also have the ability to source aircraft globally, moving high-quality inventory around the world to make acquisitions possible,” Anderson adds.

Aviation has always played an important part in Mr. Anderson’s personal and professional life. “After graduating from the University of North Dakota in Aviation Administration, I worked as an aviation underwriter before joining Bank of America as the National Asset Manager and Business Development Officer in the corporate aircraft finance division,” he shares.

“Earlier in my career, I also gained my commercial pilot license, and I take great pleasure flying when I can.” Anderson joined Jetcraft in 2005. “In my current role as President, I lead the company’s overall global operations and strategy,” he explains, as he offered his insights with AvBuyer on the current aircraft sales landscape…

AvBuyer: Chad, tell us about the pre-owned business aircraft market in 2021 from Jetcraft’s perspective… Was it a good or bad year, or a little bit of both? 

CA: 2021 has been an exciting year for Business Aviation, and our industry has proven its resilience during the pandemic. Private flying regained momentum much quicker than commercial aviation, demonstrating both its health benefits and capability to support travel during drastic cuts to airline schedules. As a result, the industry has been inundated with new users.

Demand for Business Aviation solutions continues to grow, and with aircraft owners often beginning their journey through air charter, fractional ownership and jet cards, this trend bodes well for the future health of our industry.

We’re continuing to see strong levels of demand for pre-owned aircraft, and expect the post-pandemic momentum to carry on into 2022 and beyond.

AvBuyer: As a result of sales activity post-Covid, preowned business jet and turboprop inventory levels have dropped to record lows. How do you expect sales activity to unfold in 2022 because of this? Is there any near-term, or medium-term, prospect of market replenishment?

CA: In keeping with the strong levels of demand our industry is experiencing, Jetcraft’s 2021 Five-Year Pre-Owned Business Aviation Market Forecast, expects sales activity to remain high, with average volume and values maintaining their current healthy growth rates into 2022 and beyond.

We also forecast 2,355 pre-owned transactions in 2022, the highest number in recent years.

OEMs are facing backlogs, and wait times are now around 18-20 months for [customers to receive their] new business jets. We believe this will lead to an increase in the number of first-time buyers turning to the pre-owned market, so they can purchase a Business Aviation solution quicker.

Although the market remains competitive, there are still options available in the near-term. Moreover, with greater volume discipline from manufacturers, we predict aircraft values will remain stable.

AvBuyer: We’ve seen various comments lately that, with a limited number of suitable aircraft for sale, some buyers may hold off making their purchases at this time. Could this mean much pent-up demand for pre-owned aircraft sales once the market begins to be replenished with newer inventory again?

CA: While inventory levels are at record lows, in this environment we still strongly believe that buyers can find an aircraft at the right price, and so there is no reason to halt an acquisition. Even with pent-up demand, the Business Aviation industry is operating in a rational market, reflected by the stable prices seen for pre-owned jets for sale.

For example, current prices for pre-owned aircraft models have depreciated by 57%, on average, from their new list price, as should be expected in a healthy market.

As new aircraft models roll off the production line from 2022 onwards, we expect pre-owned sales to benefit, offering greater choice as current owners opt to upgrade.

AvBuyer: What else would you predict for the year ahead in the pre-owned market, and why?

CA: First, we predict that rising average transaction value is going to be led by buyers purchasing a greater number of Large Jets, which command a higher price. This is particularly the case as international borders open post-pandemic, increasing the opportunity for long-range journeys.

Second, we expect to see the journey to aircraft ownership accelerating. This is driven by reduced [scheduled airline] services and the predicted increase in the wealth-rate among High Net Worth Individuals (HNWIs), which provides a greater incentive for current Business Aviation users to move towards owning their own jet.

Our third prediction focuses on the shifting regional levels of ownership we’re expecting to see in the next five years. In Business Aviation’s largest market, North America, some 4% of its 112k estimated UHNWI population are business aircraft owners.

In the next largest markets of Asia-Pacific and Europe, owners make up only 1% and 2% of the UHNWI population. We forecast the gap in ownership between these two markets and the US will narrow.

AvBuyer: Which markets are catching your eye currently, and why is this? 

CA: The Large Jet segment is an interesting category to watch right now, due to the growing levels of interest in long-range travel. Post-pandemic, aircraft owners are seeking to reaffirm global business relationships and reconnect with their contacts across the world. To do so, they need aircraft that can carry out longer flights without multiple stops en route.

The major manufacturers are investing in their Ultra-Long-Range Jet programs, so it’s an exciting category with lots of potential. We’re seeing heightened interest in Bombardier’s Global 7500, Gulfstream’s new G700, and Dassault’s Falcon 10X model, which is set to make its debut in 2025.

AvBuyer: How would you advise buyers and sellers to approach the market at the start of 2022 to extract maximum value from their purchase or sale?

CA: Although tightening supply is creating challenges for buyers, there is still quality inventory available, especially for those willing to act quickly and consider aircraft from foreign markets.

In this competitive environment, it is even more important to have the right team on hand to support your transaction.

My advice to sellers is that current market conditions make this a great time to list your aircraft. The reduced supply is creating a window of opportunity to sell or upgrade, and prices are holding well across the new and pre-owned markets.

More information from www.jetcraft.com

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