Chad Anderson, president of U.S.-based aircraft broker Jetcraft (Static Display 14), has been having a good year. He is a pilot (he owns a Cirrus) and businessman who has been buying and selling business jets right through the financial crisis that started in 2008. In a pre-NBAA interview, he told AIN, “The key for me now is finally we are seeing normalized supply and relatively high demand, so we are in a more efficient market. We’re about 10 aircraft ahead of the same time last year,” Anderson said.
“One thing we have noticed is the replacement demand [from corporates] has not been as high as originally forecast, but demand from ultra-high-net-worth individuals is more than offsetting that,” he added.
Anderson believes that corporate buyers/flight departments might be waiting for the new aircraft from Bombardier and Gulfstream to come to market, whereas ultra-high-net-worth individuals “were at the end of their patience level" and willing to leave fractional programs and chartering to own their own aircraft. In this case, it is the heavier users who feel they need their own aircraft and can’t wait.
“We’re hearing it industry-wide and worldwide,” he said.
Other analysts have reported that the markets outside of the U.S. are weak, but that is not Anderson's experience.
“I’m seeing emerging markets such as Africa, Asia, Latin America still seeing demand, but different. And we’re counseling our buyers to look at overseas aircraft,” noting the additional attraction of a continuing strong U.S. dollar.
Another factor in the used market is the emergence of demand in Asia, he said. “Asian buyers used to only buy new.”
Generally, Anderson says buyers still prefer larger business aircraft. The average transaction value for his company is $16 to $20 million. But overall the company sees everything from PC-12s to “on the high side” Boeing 787s. “It’s definitely trending to the large category.”
He also believes that the OEMs learned an important lesson since 2008: not to gear up to produce too many aircraft, such that a downturn would cause a major headache. He noted that Dassault was the conservative exception and didn’t get strung out as badly as the likes of Gulfstream and Bombardier.
Now, “this is adding heat to the pre-owned segment” as manufacturers are more cautious about ramping up. “I think that now they like 12-18 months as a lead-time for new aircraft orders…I think the manufacturers will grow logically over the next 10 years, with the huge majority being ultra-long-range aircraft. It’s clear that they are seeing that’s where the aircraft buyers are; long-range is now the common trip, not domestic.” Still, said Anderson: OEM caution means “We see a slow-down in 2019 in terms of new aircraft deliveries."