Aug. 12, 2021
The unparalleled influx of first-time buyers to business aviation, driven by the COVID-19 pandemic, has confirmed the many benefits the industry delivers. But this rush to purchase aircraft has also raised important questions that the industry must answer, said the expert panel on the latest NBAA News Hour thought leadership webinar, “Business Aviation’s Elephant in the Room – Buying Aircraft,” sponsored by Mesinger Jet Sales.
“We all know the new entrants coming into business aviation are interested in the efficiency, flexibility and safety that this mode of transportation has to offer. However, we must ask ourselves, do they have the right aircraft at the right price and for the right mission? At a time when inventories are at an all-time low, I’d say the importance of these questions is at an all-time high,” said NBAA President and CEO Ed Bolen.
First-time buyers bring a wealth of benefits to the industry, but this new – and welcomed – interest in business aviation inherently depletes the inventory of aircraft available for sale because these new buyers do not have an aircraft to trade, noted the webinar’s moderator Jay Mesinger, president and CEO of Mesinger Jet Sales.
However, he added that the current low number of business aircraft for sale is also the result of supply chain issues, a boom in charter demand and a reluctance among established owners to relinquish their old aircraft “until they have absolute certainty” of receiving their new purchase.
“The combination of these things, plus restrictions on importing airplanes, has depleted our supply,” noted Mesinger, adding that “the inventory pendulum is going to go back toward a strong balance, and that is going to take some of the frenzy out of where we are today.”
The lack of inventory is compounded by the age and condition of many aircraft currently listed for sale, as well as a reduced activity among corporate buyers, noted Anthony Kioussis, president and CEO of Asset Insight. “Once the corporate buyers come back in – and they will – they will relinquish or put into the marketplace aircraft that will sell very quickly,” he explained. “The lack of those aircraft is making it difficult for people to find the aircraft that they want, and that is impacting transactions.”
Corporate activity will remain depressed until long-haul and international restrictions are removed, but the charter market may be a source of aircraft inventory, said Rolland Vincent, president of Rolland Vincent Associates. “Charter and fractional demand have been robust during the pandemic, and while I am more bullish on the fractional demand staying, I think the charter demand is less sustainable.”
Limited access to offshore inventory has also impacted the U.S. market, Vincent added. “Whether it is an issue with crewing, maintenance or inspections, getting airplanes into the U.S. is tough. Added to that, some buyers don’t want to see anything but an N-registered aircraft, but sometimes the history doesn’t include U.S. registration,” he said.
Demand for aircraft maintenance and inspections has soared since the pandemic began, and while this has put some stress on the ability to schedule these tasks, buyers of used – and even new aircraft – should be more sensitive to issues within the supply chain, said Todd Duncan, chairman of business jet service provider Duncan Aviation.
“These issues do not just affect parts; it can manifest in things like software upgrades because we don’t have enough people to conduct the modification,” he said. “ And, this is not just an MRO issue; manufacturers are also facing certain issues in meeting delivery times.”
The supply chain issues are novel, too, said Duncan. “For modifications specifically, we are seeing issues with carpets and even paint, specifically mixed paints. These items are oftentimes difficult to source or have tremendous lead times, and there have been increases in price for many of those supplies,” he said. “We are seeing supply chain support, and the fix is being accomplished, but it takes time.”
Duncan also warned that the “loss of a generation” of workers during the pandemic has created a shortage of trained professionals that could impact the business aviation industry for years.
The expert panel also had a closing message for the business aviation community: If you want to buy an aircraft before the end of the year, contact a broker immediately. And, if you have an aircraft to sell, get it on the market as soon as possible.
International Business Aviation Council Ltd.