Story ID: 440
Bizjet Broker: 2020 Uncertainty Driving Used Activity
By: Jerry Siebenmark
Caption: Mente Group thinks political and economic uncertainty in the U.S. is driving higher pre-owned business jet activity.
Word Count: 442
After a slow summer for preowned business jet sales, Mente Group (Static SD709) president and CEO Brian Proctor said he’s seen a notable change in the market. It’s why he expects a swing to more preowned transactions between now and year-end. “It feels like right now, on the buy side, that there’s more activity than there’s been in a while, with a lot of people focusing on trying to get things closed before the end of the year,” Proctor told AIN.

Mente Group is a Dallas-based business jet broker that also consults to business aviation operators. Most of the preowned inventory it deals with are midsize and larger business jets.

There’s a lot of uncertainty among business jet buyers going into 2020, and that’s why Proctor expects a surge in transactions ahead of the new year. “It feels like to me that there are a lot of buyers now who are looking at the market— and the uncertainties they are going to hold in 2020. They want to move quickly this year because of what they know this year versus what they don’t know next year." 

What’s driving the uncertainty among buyers in 2020 includes the upcoming U.S. presidential election, the impeachment investigation of President Donald Trump, and a recent move by the Federal Reserve to increase its balance sheet by boosting liquidity in the market. He noted right after Fed chairman Jerome Powell announced the move, the market responded by dropping 100 points. Unrest in the Middle East and unanswered questions about the effects of Brexit are driving uncertainty globally, Proctor added. “That just creates an environment where people are less willing to make a significant capital investment like this,” he said.

Elimination of the 1031 exchange in 2018 following the passage of the U.S. Tax Cuts and Jobs Act of 2017 is also prompting more buy-and-sell activity before the end of the year, Proctor added. “With that gone, we see a lot of people now who want to exercise the buy and sell in the same calendar year for tax purposes.”

Proctor said pricing is driving the speed with which a preowned jet will move on the market. While there is some price sensitivity among preowned buyers, they are not solely focused on value, They are looking for a fair price.

“Buyers are very savvy and they want to make sure that the airplane has the right equipment with the right options and with the right inspection cycle, and that the pricing is matching all of those parameters of the aircraft,” he explained.