He traces its origins to how new owners shaped the business jet market during the onset of Covid. The storm’s outcome may leave some struggling to recoup the value of their initial investment.

“At the onset of Covid, many factors collided to create the perfect opportunity for first-time buyers to enter the market,” Foster tells CJI. “Now, these same factors are creating a perfect storm, which potentially could prove disastrous to these same owners.”

Business aviation caught fire over the last two quarters of 2020, driven by the desire to travel but not via public transportation. Charter and fractional providers enjoyed this early burst. “The fractional segment sold right through their lift capacity but were contractually bound to still provide lift – so they turned to the charter market for supplemental lift,” explains Foster. “Now the charter market held a captive client (fractional) over a barrel. So, with unprecedented high demand, hourly prices sky-rocketed to two-or-three times pre-pandemic levels.”

Consequently, by the end of 2020, fractionals were largely sold-out and charter prices reached the “point of insanity” – again fuelled by both fractional contractual need and demand, he explains.

‘Point of insanity’

That prompted non-owners to turn to whole aircraft ownership. For many, this seemed the perfect opportunity. Market conditions created from the onset of Covid included “free” capital from government stimulus programmes, significant gains in equity markets and a desire to travel to new vacation homes and remote work destinations – but not via the airlines.

Further incentive was supplied by bonus depreciation and historically low interest rates. “Finally, there was the promise (or lie) from some management/charter companies they can fly enough charter to ‘make the plane pay for itself’,” Foster says.  All combined, the “perfect storm” was formed and first-time buyers raced to the market to purchase an aircraft.

Before the pandemic, the average market supply generally hovered around 10-12% of fleet, or roughly 2,500-3,000 aircraft available at any time. By mid-2022, market supply settled in at 3-4%, with some modern models seeing available supply at less than 1% – perhaps even just one unit available. Predictably, with low supply, prices surged – prompting many legacy models to move upwards of two to three times their pre-pandemic values.

“But the worst part (for these buyers) is the transaction pace changed to unimaginably short time frames,” says Foster. “Aircraft were transacted in a matter of days with little or no due diligence on the aircraft, its valuation, nor parties involved and a lot of bad behaviours by brokers/middlemen.”

The perfect storm

This year that perfect opportunity looks like heading towards the perfect storm, according to Foster. Here’s how the storm is building: while overall supply sits at only 6% or about half the pre-pandemic level, total supply is already two to three times the level in mid-2022.

Charter demand is also down significantly. “The promise (made by some) has now become a lie. Owners are not able to create significant returns by chartering and many are realising that fixed and variable costs are much higher than originally budgeted or sold to them, exacerbated by significantly higher crew salaries, supply chain issues, etc. Finally, with rising supply, slowing pace, and far less demand, prices are falling.”

Legacy aircraft hold the greatest exposure due first, to the rapid rise in values that are already retreating quickly. The second reason is the “almost complete lack of sophistication” of buyers and limited or no due diligence completed at the time of purchase. “These owners will face significant exposure when they elect to sell, and the buyer demands a typical pre-purchase inspection.”

What might happen

But it gets worse (in terms of what might happen). “A large majority of these first-time buyers financed 90-100% of their purchase and also took 100% bonus depreciation,” Foster, from OGARAJETS tells us. “For easy math, let’s say the principal reduction on a $5,000,000 at 18 months is $500,000 or $4,500,000 balance – but the aircraft is only worth $3,500,000 today – less than 30% [of its previous value].

“Plus, the seller will have to stand behind the airworthiness and corrective actions arising from the buyer inspection. So, perhaps the seller nets $3,200,000, which requires them to write a check at closing for $1,300,000.”

Then, worse again. Many first-time buyers depreciated the aircraft to $0 in year one which offset other gains in the purchase year. “Now they must recapture this loss as ordinary income. The simple math is $3,5000,000 at 40% or a $1,400,000 tax bill.”

All of this raises the uncomfortable question: how many of these owners can afford to sell their perfect opportunity aircraft? Also, delaying the sale only exacerbates the challenge. Prices will continue to fall on these legacy platforms, while maintenance will continue to accrue. “Potentially, this is not a pretty picture,” says Foster.

But what do you think? Is the outlook sunnier? Or are the storm clouds gathering for new entrant aircraft sales? Please let us know.

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Not silver but sustainable business aviation dominated the two-day event at the resort amid the tall saguaro cacti. Prickly topics under discussion included the health of the US economy, particularly the impact of high interest rates, the disillusion of some first-time buyers and business aviation under attack.

But there was more gain than pain when it came to the upbeat assessment of the US economy from Gus Faucher, chief economist, PNC Financial Services Group. Without minimising the impact of high interest rates, which could (but not necessarily will) pitch the US economy into recession, Faucher highlighted positive factors likely to lead to steady growth this year and into 2025.

“The US economy is in very good shape right now,” he said. “The economy is 8% larger than it was before the pandemic. Some 22m jobs were lost due to the pandemic but those have been regained and another 8-9m jobs added to where we were before the pandemic.” Strong labour markets underpin consumer spending power, which was driving broad-based economic growth across the US, he added.

Returning rates to 2%

But there are reasons for pessimism. The “inverted yield curve” – meaning short-term interest rates were higher than long-term interest rates – was often associated with recessions. Faucher estimated the likelihood of a US recession at about 35%. However, he felt confident that the Federal Reserve would be successful in returning rates to its goal of 2% from their current level of just over 5%.

“There is likely to be slower growth this year but still growth,” he summarised. “Spending will continue to support growth in 2024, with the Fed cutting rates later this year for technical reasons [partly to cool wage growth] starting in July and in 2025. That will support growth this year and into 2025.”

Interest rates are affecting the decision to buy aircraft but not in the obvious way of affecting decision-making, said Shawn Dinning, senior partner, Dallas Jet International. “I don’t see a situation where a prospective buyer or borrower is looking at rates and saying, ‘I can’t afford this deal’. We are not seeing a delay in decisions to buy. About 70% of our business lately has been cash.”

But interest rates are affecting the core business of his clients – principals and corporations. “We do a lot of multi-family-type real estate companies and two years ago they were printing money, now they went from a nice positive cash flow position to bleeding hundreds of thousands if not millions of dollars because of interest rates,” said Dinning. In some cases, owners need the liquidity on the airplane. “They have to prioritise, so the airplane gets the axe,” he added.

On a more positive note, he said: “Demand continues to surprise me in a good way and it’s keeping up with this increase in inventory in a pretty good way.”

‘More transactions in Q1’

Wayne Starling, executive director of International Aircraft Dealers Association (IADA) agreed. “There were more transactions in the first quarter of this year than there were in the first quarter of last year,” he said, based on his association’s latest report.

But Johnny Foster, president and CEO, OGARAJETS reported growing frustration and disappointment among first-time buyers. Before the pandemic, almost every year consistently, first-time buyers accounted for about 5% of the purchases of aircraft. But that figure rose to 38% of buyers between 2020 and 2022, he said.

They came into the market, often buying legacy aircraft with the promise of bonus depreciation and excessive demand for charter. “Now we are hearing and seeing these first-time buyers are disenfranchised with the model because their aircraft is not flying 600 or 1,000 hours a year [through charter]. It’s flying 100 hours a year,” he said. “And their pilots’ salaries have tripled over the past three years, and they are now being told they have to have three pilots instead of two pilots.”

These frustrations were compounded by their first main maintenance event, which “has caught many by surprise”. The legacy aircraft that cost only $2m or $3m to buy could be facing inspection costs of half a million dollars, said Foster.

‘Full-scale attack’

From disappointment to hostility. Business aviation is under “full-scale attack” and not just in Europe, warned Ed Bolen, president and CEO, National Business Aviation Association. “There is an effort to find ways to disparage our industry which is not consistent with data and our strategy. We see it in a lot of ways,” he said. Examples include the February 21st announcement by the Internal Revenue Service (IRS) that it intended to step up its aircraft owner audits.

Other examples cited were the five-fold increase in fuel tax over five years and the plan for longer depreciation periods. Combating these and other threats would rely on a coordinated industry response and lobbying policy-maker, he said. Not least via the NBAA’s Climbing.Fast campaign.

Speaking to CJI after his presentation, Bolen set out his goals for the end of the decade. “By 2030, we will be ready to answer the SAF Challenge of 3bn gallons produced in the US,” he said. “We would like to see operators continue to look for ways to operate even more sustainably.” That means looking at good quality offset programmes and book-and-claim options. “And we are working hard to introduce advanced air mobility and hybrid solutions and the effectiveness of our air traffic integration.”

Despite challenges facing business aviation – not least high interest rates, supply chain difficulties and the shortage of pilots, airframe and powerplant technicians – the industry can look forward to a bright future as wealth generation and transfer continue to fuel demand, according to speakers.

Stephen Friedrich, chief commercial officer, Embraer summed up the reasons for optimism: “Over the next 20 years, we are going to see a $73trn wealth transfer from Boomers to Generation X and Millennials – and that is only just beginning. This is in addition to [aircraft] purchases by corporate flight departments and private individuals.”

Back in the 19th century the silver boom soon turned to bust, with fire consuming the mining town of Quijotoa in 1889. Attendees at the NAFA conference heard strong reasons to believe in a much more sustainable (and profitable) future for business aviation.

Prickly saguero cacti surrounded the conference venue. Inside, delegates discussed thorny topics such as the impact of high interest rates.

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The company first unveiled its HondaJet 2600 Concept back at NBAA-BACE in 2021. Last week it issued a press release saying that it will “commercialise” the aircraft. It aims to have it certificated by 2028.

This is not a formal launch. Honda Aircraft is not taking orders for the new aircraft and it has not announced the price.

Presumably, this announcement is an attempt to firm up demand from customers who are interested in owning a light jet that can fly four passengers 2,625nm. If it achieves this (it is saying that this is target performance) it will be the first light jet able to fly across the US.

Few people will choose to do this. The cabin is longer and slightly larger than the first HondaJet, but five hours or six hours is a long time in a cabin that is 5.08ft (1.55m) high by 5.21ft (1.59m) wide. Charter passengers attracted by trans-continental low rates may try it once but will switch to mid-size aircraft if they can afford it. Owner-pilots (a niche market) will love this range. Even if their families in the back do not. But buyers love long maximum ranges – even if they never fly it.

“Maximum range sells aircraft but is rarely used in real world operations,” says Oliver Stone, MD, Colibri Aircraft. “However, the need to swap out fuel for passengers and still go a long way is something that operators are continually faced with. Other aircraft often struggle with the crucial three-to-four-hour flight with several people on board. This has the potential to do this requirement capably.”

Embraer’s Phenom 300 and the Pilatus PC-24 have four-passenger range of 2,000nm.

“I would love to see Honda’s market research,” says Dustin Cordier, head of global sales, OGARAJETS. “I would go for a bigger cabin. We just had 24 months of first-time buyers who were very focused on the cabin. This is why we saw so many Hawker 900s, Learjet 60s and G200s sold. If I were an OEM, I would be looking at this market where there is no competition and Part 135s would eat the aircraft up.”

Honda Aircraft Company says that it is now finalising the aircraft design and has started some fabrication. It held supplier meetings at its Greensborough headquarters this week.

It looks like the new aircraft will have far less commonality with the first HondaJet than most manufacturers aim for. Not only is the tube a different size from the first HondaJet, but the HondaJet 2600 fuselage will be made by Spirit AeroSystems rather than GKN. “This is a big surprise to me as it means it won’t get economies of scale or volume pricing,” says one former Honda Aircraft executive.

Honda Aircraft is also not using its own engine for the HondaJet 2600. It has chosen Williams International’s FJ44 which powers the rival PC-24 and Textron Aviation CJ4 Gen2. The company has always had a close relationship with Williams.

Honda Aircraft says that the new light jet will “deliver unparalleled fuel efficiency, with up to 20% better fuel efficiency compared to typical light jets, and over 40% better fuel efficiency than medium-sized jets during a typical mission”. It is not clear how it has calculated the first figure, especially as it is using an existing engine.

Entering the light jet market may seem like a natural move but it is still brave. Honda Aircraft says that existing HondaJet customers have asked for extra range but not every very light jet owner can afford to pay twice as much for a light jet. Honda Aircraft is also competing against existing light jets and loyal customers bases.

“Honda Aircraft is still a bit of a peripheral brand compared to other manufacturers. Few buyers come to us mentioning Honda but they do like the aircraft when we introduce it,” says Emily Deaton, chief executive, jetAVIVA. “The brand is not yet front of mind.”

Textron has thousands of Citation Jet owners. There are 385 Phenom 100s and 716 Phenom 300s flying, according to AMSTAT. Pilatus also has a fantastically loyal customer base. AMSTAT says that the active HondaJet fleet is 228 aircraft – it delivered 17 aircraft in 2022.

Honda Aircraft started working on the concepts and high-level drawings for the H2600 in early 2019. Getting a new aircraft approved by 2028 is ambitious – but it also gives competitors the opportunity to respond. “It’s an interesting offer – and some existing HondaJet customers have asked for range, but it is five years away from service which gives Embraer, Pilatus and Textron time to adapt their products,” says Deaton. “I am not saying that they will necessarily be able to add 600nm to a Phenom 300 or a CJ4 Gen2 but we have seen other manufacturers successfully improve existing products and they have got the time to do this.”

The first HondaJet is an exciting aircraft, and the HondaJet 2600 Concept will no doubt continue to surprise us when we find out more about it. Including the aircraft’s new name.

This is from Corporate Jet Investor’s One Minute Week email – you can sign up for free here

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The company first unveiled its HondaJet 2600 concept back at NBAA-BACE in 2021. This week it issued a press release saying that it will “commercialize” the aircraft. It aims to have it certificated by 2028.

This is not a formal launch. Honda Aircraft is not taking orders for the new aircraft and it has not announced the price.

Presumably, this announcement is an attempt to firm up demand from customers who are interested in owning a light jet that can fly four passengers 2,625 nautical miles. If it achieves this (it is saying that this is target performance) it will be the first light jet able to fly across the US.

Few people will choose to do this. The cabin is longer and slightly larger than the first HondaJet, but five hours or six hours is a long time in a cabin that is 5.08ft (1.55m) high by 5.21ft (1.59m) wide. Charter passengers attracted by trans-continental low rates may try it once, but will switch to mid-size aircraft if they can afford it. Owner-pilots (a niche market) will love this range. Even if their families in the back do not. But buyers love long maximum ranges – even if they never fly it.

“Maximum range sells aircraft but is rarely used in real world operations,” says Oliver Stone, managing director, Colibri Aircraft. “However, the need to swap out fuel for passengers and still go a long way is something that operators are continually faced with. Other aircraft often struggle with the crucial three-to-four-hour flight with several people on board. This has the potential to do this requirement capably.”

Embraer’s Phenom 300 and the Pilatus PC-24 have four passenger range of 2000nm.

“I would love to see Honda’s market research,” says Dustin Cordier, head of global sales, OGARAJETS. “I would go for a bigger cabin. We just had 24 months of first-time buyers who were very focused on the cabin. This is why we saw so many Hawker 900s, Learjet 60s and G200s sold. If I were an OEM, I would be looking at this market where there is no competition and Part 135s would eat the aircraft up.”

Honda Aircraft Company says that it is now finalising the aircraft design and has started some fabrication. It held supplier meetings at its Greensborough headquarters this week.

It looks like the new aircraft will have far less commonality with the first HondaJet than most manufacturers aim for. Not only is the tube a different size from the first HondaJet, but the HondaJet 2600 fuselage will be made by Spirit AeroSystems rather than GKN. “This is a big surprise to me as it means it won’t get economies of scale or volume pricing,” says one former Honda Aircraft executive.

Honda Aircraft is also not using its own engine for the HondaJet 2600. It has chosen Williams International’s FJ44 which powers the rival PC-24 and Textron Aviation CJ4 Gen2. The company has always had a close relationship with Williams.

Honda Aircraft says that the new light jet will “deliver unparalleled fuel efficiency, with up to 20% better fuel efficiency compared to typical light jets, and over 40% better fuel efficiency than medium-sized jets during a typical mission.” It is not clear how it has calculated the first figure, especially as it is using an existing engine.

Entering the light jet market may seem like a natural move but it is still brave. Honda Aircraft says that existing HondaJet customers have asked for extra range but not every very light jet owner can afford to pay twice as much for a light jet. Honda Aircraft is also competing against existing light jets and loyal customers bases.

“Honda Aircraft is still a bit of a peripheral brand compared to other manufacturers. Few buyers come to us mentioning Honda but they do like the aircraft when we introduce it,” says Emily Deaton, chief exec, jetAVIVA. “The brand is not yet front of mind.”

Textron has thousands of Citation Jet owners. There are 385 Phenom 100s and 716 Phenom 300s flying, according to AMSTAT. Pilatus also has a fantastically loyal customer base. AMSTAT says that the active HondaJet fleet is 228 aircraft – it delivered 17 aircraft in 2022.

Honda Aircraft started working on the concepts and high-level drawings for the H2600 in early 2019. Getting a new aircraft approved by 2028 is ambitious – but it also gives competitors the opportunity to respond. “It’s an interesting offer – and some existing HondaJet customers have asked for range, but it is five years away from service which gives Embraer, Pilatus and Textron time to adapt their products,”says Deaton. “I am not saying that they will necessarily be able to add 600nm to a Phenom 300 or a CJ4 Gen2 but we have seen other manufacturers successfully improve existing products and they have got the time to do this.”

 The first HondaJet is an exciting aircraft, and the HondaJet 2600 Concept will no doubt continue to surprise us when we find out more about it. Including the aircraft’s new name.

The post Honda’s long-range light jet appeared first on Corporate Jet Investor.

Four of the awards were given to university students to help pay for their studies, while the other six were awarded to young people already employed in the sector by IADA members for education, learning and leadership opportunities.

Atlanta-based brokerage Ogarajets had two young professionals receive scholarships. The other professional recipients work for Guardian Jet, Clay Lacy Aviation, brokerage Soljets and Eagle Creek Aviation Services.

“These great young professionals and students who are building their business aviation careers will be the industry’s leaders in the future, and the IADA team is so very fortunate to be a part of their stories,” said Wayne Starling, executive director, IADA. “We wish them well as their careers takeoff and they become the business aviation leaders of tomorrow.”

Those awarded the scholarships include:

• Andrew Dondelinger, Soljets
• Ashley Graves, Eagle Creek Aviation Services
• Sam Campos, Ogarajets
• Kyle Canna, Guardian Jet
• Myrthe Simons, Clay Lacy Aviation
• Luke Leonard, Ogarajets
• Tyler Kleinsasser, South Dakota School of Mines and Technology
• Julia Alise Hummel, Auburn University
• Marcus Frank Gross III, University of Nebraska Omaha
• Paul Wynns, University of California San Diego

IADA established its Business Aviation Scholarship for university students seeking a career in the industry, specifically in aircraft sales, marketing, finance, legal and insurance. The association offers scholarship awards between $1,000 to $5,000.

One of the recipients, Luke Leonard, marketing manager, Ogarajets spoke about his scholarship at CJI London, which you can watch here.

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It all began in 1956, with a call on his cousin at Dallas Aero. After serving as an aeronautics technician in the US Air Force, Jack easily mended a faulty automatic direction finder, which had frustrated the company’s workforce. He was hooked. After joining the company, he was soon running the radio shop. In the early 1960s, Jack was one of three employees at a new division of Qualitron Aero at Meacham Field, Fort Worth, Texas. The company later blossomed to more than 400 employees engaged in modifying government and corporate aircraft. Jack left as senior vice president.

In 1973, he found his footing in sales with Associated Air Center at Dallas Love Field. Five years later, he started his own company, Jack Prewitt & Associates. Along with his dedicated team, he built the business into an organisation that has sold more than 1,200 aircraft and tallied sales topping $4bn, according to the company. He was also a founding member of the National Aircraft Resale Association (NARA), now the International Aircraft Dealers Association (IADA).

Behind the detail is a life lived to the full. A life of hard work and even harder play, dedication to family and a passion for people – always tempered by his trademark Texas humour. 

Charles ‘Bucky’ Oliver, founder and chairman emeritus, Jetcraft remembers a lot of fun. “I can’t think of Jack without smiling,” Oliver tells CJI. “That Texas sense of humour. He was a visionary who could smell money.” But his business relationships always extended beyond finance, says Oliver, who met him in the early ‘60s. “You always took his call – you always worked towards a deal and you always ended up a friend.” He remembers: “The only thing Jack did harder than work was play.”

Many remember Jack’s willingness to share advice and the loyalty he inspired. Brad Harris, president and CEO, Dallas Jet International knew him for 25 years. Jack was a friend and a mentor. “He was like a grandfather to me, and I will remember him as such,” he tells us. “Jack was a true pioneer, visionary and laid the groundwork for success in transacting business aircraft.”

For Harris, Jack was the “Godfather” of the broker/dealer world. “His impact on the aviation community will live on for generations to come.” Harris particularly values sharing an office building with Jack and his company and their discussions about business and personal life. “I am grateful for the time I had with the one and only, Jack Prewitt. Rest easy my friend.”

Wayne Starling, executive director, IADA remembers Jack as being “bigger than life”. Everyone in business aviation knew or had heard of Jack. “He will be remembered for many things and for many reasons, but most of all, he will be remembered as a pioneer, a trail blazer, and an ambassador for our industry. He always gave more than was expected.” 

Johnny Foster, president & CEO, OGARAJETS recalls Jack Prewitt & Associates as perhaps the first true global aircraft dealer. “His name became synonymous with deal making – and big deals. Jack carried a mighty line of credit and was willing to buy and hold big-stakes inventory – and often served as a bank for smaller firms that did not have the financial horsepower, or courage, to make a big inventory play.”

Jack’s partnerships were always fair and transparent at a time when other operators felt less constrained by business morals. “Jack’s word was his bond – Jack lived it,” Foster tells us. “Today, aviation remains largely unpoliced, but back in the ‘80s and ‘90s, the industry was truly the Wild West, where most brokers were simply out to take care of themselves.”  

Business for Jack was more than making money. “Of course, Jack was a business man – a damn good one – and he made a lot of money during his reign, however, he also aimed to create genuine relationships with his clients and fellow brokers. He helped bring the industry to a higher-level where buyers and sellers felt more trusting of the process and players.”  

The last words go to Jack himself. It comes courtesy of his advice to Starling from IADA, the organisation Jack helped launch. “Son, if you want to compete and be successful in this industry, you will have to put in hard work and build relationships based on trust and value.”  (Photograph courtesy of IADA).

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Scholarships are helping the industry as well as its young new entrants, according to Luke Leonard, marketing manager, Ogarajets. 

Leonard told Corporate Jet Investor (CJI) at CJI London 2023: “I had the chance to apply for a scholarship through the International Aircraft Dealers Association (IADA), and that’s what brought me out here. It’s an incredible company that allows and gives opportunity to others to experience all of these types of shows and events in the aviation industry, on top of all of the good that they do within the industry itself.”

IADA established its Business Aviation Scholarship for university students seeking a career in the industry, specifically in aircraft sales, marketing, finance, legal and insurance. The association offers scholarship awards between $1,000 to $5,000. 

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The new approach bears an American interstate highway logo. OGARA believes that there are five large ‘buckets’ to buying and selling an aircraft. If customers make one mistake in any of these buckets, they can incur up to five times the cost. Hence the name Five-1-Five.

For aircraft buyers, those five critical areas are:
1. Mission Analysis
2. Data Analytics
3. Due Diligence
4. Closing
5. Post-Closing
For aircraft sellers, the top-five key areas are:
1. Aircraft Audit
2. Data Analytics
3. Tailored Marketing
4. Pre-Sale Due Diligence
5. Closing

President and CEO of OGARA, Johnny Foster, says: “We like the idea of it being a highway and us being able to help buyers and sellers navigate the bumpy roads of an aircraft transaction.”

OGARA has a thorough system for ensuring the safety of an aircraft transaction. Foster said the company’s prime closing agent has a 125-step checklist only for closing an aircraft sale.

While the company has not added anything new to its processes, Foster believes Five-1-Five will give it an edge of competitors. OGARA has invested “four and a half decades” in the processes it currently uses.

He added: “There are many pitfalls that are involved in any one of the buckets. Five-1-Five gives us an edge because we’re able to talk competently about all aspects of the transaction.” And this is especially important since transactions are increasingly complex and involve multiple parties in multiple (global) jurisdictions.

Foster stressed that irrespective of a buyer’s or seller’s experience, the risks associated with missing any number of critical steps can be significant.

“It is therefore incumbent for the engagement of an assembled team of professionals. If not through OGARAJETS, I highly encourage the engagement of another IADA Certified Broker.”

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The pre-owned market has been hot for the last few months. But at 89 F (32 C) the actual temperature on the tarmac at Orlando Executive Airport was even hotter.

“The pre-owned market is on fire,” says Bryan Comstock co-founder of Jeteffect. “The last 30 days have been the most productive in our 18-year history.”

Although a few brokers are saying that there may be signs that demand has peaked, the next 10 weeks are going to be frantic for OEMs, brokers, lawyers and financiers as they rush to close deals before year end. One private bank has 13 aircraft financings set to close by New Year.

“We are warning customers not to get too carried away chasing deals for the end of the year. There are benefits from closing before year end but it is always worth making sure you are getting the right aircraft,” says Jonny Foster, president of OGARAJETS (it was so hot that he was not wearing his trademark bow tie).

Anyone tempted by an aircraft on the static still has time to get the deal done before the end of December. Brokers say there are still some pre-buy slots available, but things are getting tight. There may not be time to import an aircraft into the US.

MENTE Group, which is also having a record year, today announced its first international expansion. It has signed a deal with German operator and management company ProAir Aviation.

“We are really excited about this,” said Brian Proctor, president and CEO of MENTE Group. The two companies met when ProAir Aviation bought a jet through MENTE a few months ago. “We got to know each other and realised that we have a similar way of looking at clients. Our strengths are really complimentary, and we believe Europe is well-positioned for a resurgence.”  Stuttgart where ProAir Aviation is headquartered was a relatively chilly 74F today.

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This year with the sun shining, the mountains are providing a stunning backdrop to the static display at EBACE. Whilst there have been fewer new aircraft sales than some past shows – the most high profile one being Air Hamburg’s order for three Embraer Legacy 650Es – a lot of the focus is on pre-owned aircraft. And there are some fantastic deals on offer.

Brokers – particularly US ones – had a strong start to the year. “The big question is it a bump or is it a trend,” says Johnny Foster, CEO, OGARAJETS. “The first quarter was phenomenal but things have maybe quietened down in the last few weeks but it typically gets quieter in the summer. We are all waiting to see if demand continues.”

But despite lots of transactions and occasional rises, prices are not rising for long periods. Different models are seeing short upticks and then falling as demand weakens. “Each market is acting independently and all of them are very value driven. Once a clear point is reached buyers move in rapidly and take all the better aircraft,” says Brian Proctor, CEO, Mente Group. “It is like when an animal falls into a piranha invested river. There is a frenzy at first but eventually the carcass sinks to the bottom.”

Maintenance and interiors are key drivers of what sells (especially as values fall making maintenance exposure of even greater importance) and what does not. There is a lot more focus on the 2020 NextGen mandate where aircraft need to be upgraded to fly in the US. It may not have yet hit transactions yet but people are talking about it a lot more.

It is not just brokers who are benefiting from the increase in transactions. Many buyers are investing in interiors and upgrades after buying. Aviation Partners Boeing is seeing owners add winglets after acquiring aircraft.

“Lower price points are bringing in new owners which is great for the industry,” says Neil Book, President and CEO of JSSI. “It is also great for us as people typically join programme sales after a major maintenance event or a purchase.”

The availability of so many pre-owned aircraft is making selling new ones harder, so everyone is keen that the bump keeps going.

This originally appeared as the editorial in our Corporate Jet Investor One Minute Week newsletter. To find out more, and sign up for free, please click here.

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