Europe remains a key market for trading private aircraft and, more specifically, the annual EBACE show is a prime location for conducting this trade. These are the factors that keep global preowned aircraft broker Jetcraft focused on the region, but, as company president Chad Anderson told AIN, the European market is complex and requires deep expertise.
“Overall activity in Europe isn’t bad in terms of having good sellers there, and there is still demand from buyers,” he commented. “In 2016, 20 percent of our deals came from the region and it’s very important to us.”
That said, most aircraft sold are leaving Europe to go to buyers based elsewhere, in many case to North America. In part because European sellers are currently benefitting from the strength of the U.S. dollar, which bolsters what they make on transactions.
“The market always looks favorably on European aircraft, which are generally in good condition, fairly young, well equipped and well maintained, due to the good support infrastructure,” Anderson added. “But there is definitely more supply than demand there. And for North American buyers, Europe just doesn’t seem that far away these days.”
However, economic and political uncertainty—due to factors such as the UK’s impending Brexit separation from the European Union—continue to suppress demand and business aviation activity generally within the continent. “There is still too much unknown in Europe and we can’t predict when the market will bounce back,” said Anderson. “It’s still more of a supply than a demand market, but remains the second largest market [for business aircraft] worldwide. And that’s why we’ll continue to invest time and resource there, because it will bounce back as a demand market.”
U.S.-based Jetcraft’s European headquarters is in Zurich, Switzerland, and the group’s founder and chairman, Jahid Fazal-Karim, is based in Europe. European representatives Pascal Bachman and Guillaume Chamoin are based, respectively, of Geneva and Paris. Part of the attraction for Jetcraft is that the continent is a strong draw for wealthy individuals from Africa, the Middle East and Russia. “It’s a lovely melting pot,” concluded Anderson.
Meanwhile, Jetcraft sees trading conditions in North America getting stronger in the wake of the November 2016 election that brought business aviation cheerleader Donald Trump to the White House as U.S. President. “This has driven a return in confidence to the market,” commented Anderson. “Deals are still hard to do, but activity levels are up. Deals don’t just fall in your lap, but when certain aircraft hit the right price point, all the inventory goes quickly and there is enough stability in demand that inventory isn’t sitting there too long. Sellers can no longer be arrogant when it comes to resolving pre-sales issues.”
Generally speaking, the aircraft that move most quickly on the market are less than five years old, according to Jetcraft. “There is still a nice enough difference in price between these aircraft and new models, while the older aircraft have a relatively higher rate of depreciation,” Anderson said. “There has been a healthy reduction in inventory, so the market isn’t paralyzed anymore.”