First-time buyers of business aircraft have re-energised the market since June 2020, Jay Mesinger, CEO and President of Mesinger Jet Sales, told hundreds of delegates attending Corporate Jet Investor’s first Town Hall online meeting of 2021.

“When you get first-time buyers, our whole industry gets a shot in the arm,” said Mesinger. “It’s a multiplier. Hangars get rented. Pilots get hired, insurance policies get sold and maintenance facilities get booked up for pre-buy inspections.”

While some prospective aircraft buyers have “made a career of  fence-sitting”, Mesinger noted a key change in June 2020. “Starting in June, calls went beyond idle conversation [about purchases] into actual transactions with people we had not seen before.”

‘One of our very best years’

The trends noted last year had continued into the first quarter of this year. “2020 was one of our very best years, transactions-wise. And I’m not seeing it slow down in 2021 – other than there’s no magic date to close deals by month-end.”

As evidence of brisk industry business, Mesinger said his company had one aircraft in pre-buy, an offer was being made on another aircraft and fresh listings had been collected. Buyers were interested in all sizes of aircraft. “The plane I have in pre-buy now is a Gulfstream 450 and we have closed several smaller ones – Challenger 300s.”

Most of the business was confined to North America and specifically the US. While inventory was difficult to source, Mesinger did not believe that had driven up aircraft prices. But corporate purchases were noticeably absent.

This year would be characterised by renewed balance, he predicted. “Residual loss rates will start to balance out. Supply and demand will start to become well-balanced and clients coming into the market will be balanced by clients leaving the market.”

‘Flight hours were off by about 30%’

Less optimistic about the prospect for business flight hours, at least, was Neil Book, President and CEO Jet Support Services, Inc, (JSSI). The first half of 2021 was likely to look a lot like the second half of last year. “I obviously view the world through the prism of flight hours. In 2020, our flight hours were off by about 30% from 2019 and we are going to see that trend probably continue in the first half of this year.”

But business performance in the second half of 2021 would start to resemble 2019 levels as the global Covid-19 vaccines roll-out continued and people became more confident to return to the office. “I think there’s a lot of pent-up demand on the business side and we will see that unleashed in the second half of 2021.”

Jeffrey Emmenis, CEO and partner with Vertis Aviation, reported that charter business had picked up, beginning in December 2019. For many, private aviation was “the only way to get around” but February would be a tougher month, he said.

Corporate Jet Investor’s first Town Hall online meeting of 2021 took place on Wednesday January 13th. Meanwhile, read seven predictions made by Town Hall speaks for 2021.

Seven Town Hall predictions for 2021 – at a glance

• 1. Dispute with China: Steve Varsano, CEO with The Jet Business, predicted that arguments about the origins of Covid-19 between the US and western countries with China could disrupt the global economy

• 2. Manufacturers: Will remain in a positive position because “Some buyers don’t want ‘an old airplane’, whether that’s just out of warranty or 15 years old,” according to Varsano. (At our CJI London 2020 conference in February last year, Varsano successfully predicted that Covid-19 would have a devastating impact on the global economy).

• 3. Virtual technology “is not here to stay”. While virtual pre-buy inspections and meetings have served during the Covid-19 pandemic, the industry will revert to physical inspections as soon as possible, said Jay Mesinger, CEO and President of Mesinger Jet Sales. But Neil Book, President and CEO JSSI, predicted: “There will be a transformation in how people go back to work [incorporating remote working]”.

• 4. Tax incentives benefiting business aviation. These are likely to remain in place, at least for the short term, as the new Biden administration grapples with the worsening Covid-19 pandemic and civil unrest following the election. However, the current tax incentives benefiting business aviation would come under increasing scrutiny in due course, said Varsano.

• 5. Stepping up trend to continue: “We’ve seen everyone stepping up,” said Book of JSSI. “Jet card holders have stepped up to fractional and fractional have stepped up to ownership. We will see that trend continue.”

• 6. Sustainability. Speakers agreed scrutiny of business aviation’s environmental impact would continue. Jeffrey Emmenis, CEO and partner with Vertis Aviation, said: “Sustainability will become a big topic again.” Versano believed President Elect Joe Biden, may be encouraged by his supporters to adopt a more radical agenda now that Democrats control power in both the House of Representatives and the Senate. Book highlighted the potential for greater use of Sustainable Aviation Fuel (SAF).

• 7 It’s supersonic. Commenting on the potential for supersonic business jet sales, Varsano said: “There will be buyers out there. But there’s not room for two or three players. One player could make a bigger airplane – not a Concorde – but a 20-seat commuter aircraft to sell seats on. I think there is demand for that.” Book added: “There’s not huge demand for individual customers to buy a $125m [supersonic] jet and who knows what the operating costs will be? There will be demand but I don’t know if it will be enough to sustain it.”

Neil Book, President and CEO JSSI, predicted flight hours would pick up in the second half of  2021.