Despite the unprecedented surge and then retraction in the business aviation market, Global Jet Capital (GJC) CEO Vivek Kaushal has been encouraged that business has remained steady.
“Business has been good this year,” Kaushal said. “We're roughly on pace with where we were back in 2022, which is actually really good considering that it's been a somewhat smaller marketplace.”
Kaushal noted that sales transactions in its target markets are down probably in the 35 percent to 45 percent range, but said that was not unexpected given that “it was a blistering year last year.”
But for GJC financing and leasing products, he said that—along with keeping pace with 2022—“we've also gotten a good chunk of business as in our backlog going into 2024 and 2025.”
He pointed to the continuing strength of the OEMs’ order books and said, “The underlying demand is there, and there is predictability” in the business aviation market.
The predictability has strengthened GJC, Kaushal said, and added, “The team's done really well.”
He noted that the GJC team has worked to be “out in front” of events such as one in Hong Kong when it was emerging from Covid lockdowns, as well as EBACE.
“People in the industry were just really thrilled to get back,” he said. “From our perspective, there's a lot of engagement with the industry and that's led to what's been a really nicely diversified book of business for us that cuts across geographies, aircraft mix, and OEMs,” he said.
Going forward, he said, “It's clear that we're slowing, but we're slowing moderately.”
Kaushal believes that this trend will continue. “There aren't really any catalysts for the trend to accelerate in either direction, up or down. I think it's just a sort of gentle reset from the highs that were scaled back in 2021 and 2022. It’s actually very healthy.”
Noting that GJC is approaching its 10th anniversary, Kaushal said, “This is a special NBAA for us. We launched the business back in 2014. Here we are nine years later, and we’re close to about $4 billion in originations. We're not quite there yet but we'll get there in due course, and we're very well established.”
Founded with a veteran group of business aviation industry officials, GJC rapidly built its team and became one of the largest industry financing businesses with the acquisition of the $2 billion GE Capital portfolio.
“From the beginning, we were committed to being a global provider at scale. That's why we went and acquired the GE Capital portfolio. It was a landmark for us because GE Capital was a trusted name, and we also got a team of people who were highly experienced in that space. But we doubled down on that commitment,” Kaushal said.
This included hiring significantly more people globally, he explained, saying, “We positioned ourselves in the regions where business is transacted.” While based in Danbury, Connecticut, “We don't run this business out of Danbury. We've got people in Hong Kong, in Zurich, [and] in London that are available in the same time zone as our client base.”
Kaushal also believes GJC established itself through a breadth of its product suite that includes not only traditional aircraft loans and finance leases but also operating leases. “In fact, the operating lease is our flagship product. It's a product that we've offered in every geography,” he said. Outside of the U.S., Kaushal added, “There's hardly anybody that will actually do an operating lease on a business jet.”
But GJC has done leases around the world, including Vietnam, Hong Kong, Indonesia, Singapore, and many countries in Europe and in the Middle East. He said these lease products are harder to find internationally because of the expertise that it takes to offer them.
“You have to have a very, very deep understanding of the domain because you're really making a call about the value of the aircraft seven to ten years down the road,” Kaushal said. He noted that such leases also require technical asset management expertise.
Many people on the GJC team have 30 years of experience or more, and the company has a certified A&P on staff to help people manage their assets.
“The asset management expertise is actually embedded throughout the organization,” he said. “It's very hard to replicate. For a bank, these are capabilities that are hard to build just because that's not their core business.”
Also, banks are a little more constrained by regulatory requirements around long-life assets such as aircraft. “This is our core business; we know how to run it, and we positioned ourselves to provide that product globally.”