Corporate Buyers’ Return Buoys Market

The lack of corporate participation in the pandemic era’s buying spree has been among the most discussed side stories of the preowned market’s resurgence. “Where are the corporate buyers?” industry insiders have asked. “What will happen when they return? And could the market thrive without them?”

Now we can reply to the last question in the affirmative, and answers to the first two queries are coming into focus. Based on buyer data and behavior, “it is clear corporate buyers have returned, and show no sign of stopping,” states global brokerage Jetcraft in its latest five-year Pre-Owned Business Jet Market Forecast, which it published in May.

“A lot of corporations had a ‘no travel’ policy until COVID was effectively overcome,” Jetcraft CEO Chad Anderson told BJT, explaining their absence. “Conferencing technology served its purpose for all of us when borders were closed, but businesses recognize the value of in-person meetings.”

The forecast numbers in this ninth annual edition of Jetcraft’s report are in line with a five-year prognostication for new and preowned aircraft issued by business aircraft financier Global Jet Capital, also in May.

When post-pandemic demand surged, high-net-worth individuals comprised 80 percent of its preowned-aircraft customers, Anderson said, but the balance shifted by the end of 2022 to corporate purchasers, which now command 60 percent of the company’s market activity. 

One could say the return comes not a moment too soon, as preowned sales have fallen from their 2021 record totals, dropping 18 percent last year to 1,999, among the fleet of 40-plus turbine models Jetcraft tracks, which range from the single-engine Cirrus SF50 Vision Jet to Airbus and Boeing corporate airliners.

Transaction Values Are Stabilizing

The average transaction value increased by an unprecedented 38 percent last year, to $8.2 million, but normal depreciation rates have now resumed even as sales continue last year’s decline, with 2023’s forecast for 1,791 transactions representing “an inevitable market correction,” Jetcraft says. 

As supply increases and depreciation normalizes in 2024, the North Carolina–headquartered firm expects average transaction values to gradually decrease but sees “no drop in prices on the horizon.” Steady transaction growth will continue during the forecast period, “setting new annual benchmarks for volume and value,” rising a predicted 4.7 percent annually, from 2,327 in 2024 to 2,510 in 2027. That last year’s tally will exceed 2021’s record total of 2,446.

Annual market value is expected to remain relatively constant—between $15.4 billion and $15.6 billion over the succeeding four years—as a decrease in residual values is balanced by an increasing volume of transactions. Jetcraft also expects larger jets, which have higher values, to take a bigger slice of the preowned market, as manufacturers emphasize midsize and large-cabin models on their production lines and aircraft they replace are offered for sale. 

As for the high-interest-rate environment that has spooked some customers, “When inflation is high, the market is more favorable to cash-rich corporations opting to buy outright,” says Anderson. “We expect to see corporate buyers lead the aircraft investment market during this period of high inflation.”

With their return, “We can continue to be confident about the health of our industry,” adds Jetcraft’s owner and board chairman, Jahid Fazal-Karim.

Global Jet Capital, which is based in Boca Raton, Florida, likewise foresees a “steady growth pattern for both new and preowned aircraft” over the next five years. For now, preowned transaction volume has fallen to historical levels, and the company expects them to continue declining in 2023 as they did last year. But the firm believes preowned transactions will pick up in 2024 and says, “Continued market demand should lead to more preowned deliveries over the next five years.” Echoing Jetcraft, Global projects stable increases in transaction volume—2.5 percent annually—with total values remaining basically static over the period.

For most of its 60-year history, Jetcraft has specialized in large-cabin jet transactions, but in April it purchased light jet and turboprop brokerage CFS Jets, “to give more focus and intelligence in that segment,” says Anderson. In developing its forecast, Jetcraft uses data from its global purchases and sales (about 100 aircraft annually before the CFS Jets acquisition) and input from reps worldwide; market intelligence gleaned from within the brokerage community; and contacts with family offices, brokers of high-end real estate and yachts, and luxury goods and services purveyors. Along with forecast transaction volumes and values, the outlook includes data illuminating current aircraft usage and trends.

Aircraft Usage Has Doubled

This year’s edition of Jetcraft’s report indicates that aircraft usage among both corporate and individual buyers has doubled since 2020, the year Covid cratered flight activity. Though rising, numbers are low by historical standards, averaging just 135 flight hours annually over the last five years. 

“Historically, we've all thought a corporate airplane better fly 300 to 400 hours a year to make sense,” said Anderson. “That’s not so much the case right now.”

In a potential portent of future activity, during that time younger owners have flown their aircraft 19 percent more on average than those over age 50. 

“Many of our younger buyers are tech entrepreneurs flying globally to carry out business, which increases their overall usage,” the forecast notes. Yet on average, light jet owners flew more frequently than those with larger aircraft during that span until last year. With corporate activity resuming, flying has now evened out to 200 hours per year across all business jet sizes.

Globally, clients in EMEA are using their aircraft more than those in the Americas, underscoring the region’s growing interest in business aviation. In the Asia-Pacific region, Australia and Southeast Asia lead the preowned market, but the fleet lags the global trend in the growth of average flight hours. Meanwhile, Greater China has become a net seller of preowned aircraft, and bizav consumers there are turning to charter. The region’s flight hours are expected to trail the Americas and EMEA through the forecast period.

Long-time BJT contributor James Wynbrandt is a multi-engine instrument-rated pilot who has also written for our sister publication, Aviation International News, as well as for the New York Times, Forbes, and Barron’s.