Private Jet Demand on the Rise?
Posted by: Amir Nada Jun 18, 2014 02:06 PM
The recent uptick in private jet sales and orders has some in the industry calling a bottom in the market. For certain types of used aircraft the inventory is down to levels not seen since 2007 or so after they had gone up sharply in 2010.
According to several jet manufacturers orders are up between 5 – 15% over last year. The big announcement by NetJets that they agreed to purchase more than 1,250 new planes has many hoping that the bottom of the market has been reached and we’re on our way up.
Along with the other positive signs is that when customers of certain fractional share companies want to exit their contracts they can sell them back to the company based on an appraised value of the jet, plus some other fees and charges. The prices on these sell backs have shown a slight rise lately, the first increase in four years.
But inventories are still way off their pre-crisis levels and there is still a large number of jets on the market. With the recent shocks to the financial markets in Europe and potential for a spread to other parts of Europe and China, demand could drop quickly again. Prices for mid-cabin and smaller jets are 50 percent or more off from their peaks in 2008.
Banks continue to be reluctant to lend for aircraft purchases. With many planes worth less than the loan values there is a fleet of jets out there in financial limbo. Lenders have repossesed many jets and continue to charter them to generate income.
If you’re waiting for a huge pop in the private jet sector it appears you’ll be waiting for a few more years at least. You can of course charter a private jet and get all of the benefits of private air travel without all of the hassles of owning your own aircraft.