The finance company is predicting transactions of new and pre-owned aircraft to rise 5.7% in number of deals and 10.7% in dollar value. This reflects increased deliveries of large cabin aircraft – including Gulfstream G700s.

Global Jet Capital says that transactions fell by 14.8% in 2023. But there were still more than 3,000 deals which is in line with pre-COVID levels.

It expects manufacturers to increase new aircraft deliveries to 777 in 2024, up 9.4% from 710 in 2023. Global Jet Capital expects them to keep rising until 862 deliveries in 2027 and then drop to 831.

“It is a confluence of things that happened post-pandemic,” says Kaushal. “You had this long period of supply overhang that went away because of the production slowdowns that happened and they you have replacement upgrades and new growth driven by wealth creation that just never stopped.”

 As a risk specialist, Kaushal accepts that an external shock could change the market. “We are all students of the market and you can look back to those historical periods where these things happened – and things can change quickly,” he says. “But you just have to realize that the industry is in a very different place today. It just has an installed base that is head and shoulders above what it was back in the 1980s where it was still a very nascent industry. It was still an industry that was kind of just coming into its own.”

Global Jet Capital expects North America to continue to be the largest market for both new and pre-owned business jets, making up 76.3% of the total market. Large fleet orders from NetJets and Flexjet are one reason for this. It also expects 77.3% of all pre-owned aircraft to be North American.

Their forecasts expects that Europe will be the second largest deal market with 9% of transactions. Latin America is next – although it will have a larger 9.8% share of pre-owned deals.

It uses a top-down linear regression model to create its forecast. In 2023 it forecast that the new aircraft market would be worth $18.5bn and that the pre-owned market would be worth $17.9bn. Supply chain difficulties meant that new aircraft were worth $16bn. Global Jet Capital says that pre-owned deals only accounted for $16.3bn.

“The tone in the market is very positive. When you look at this market, you feel like it’s just people doing what they do. People are planning ahead, placing orders. Demand for good high quality aircraft is still very much there. People want to get into those planes,” says Kaushal. “Yes, there’s been inventory built up but you would expect that coming off of the post Covid days, but the market’s stabilized. We are just not seeing anything that would suggest a serious sea state change here.”

You can download the report here.

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The offering consisted of a three-tranche structure, catering to investors with varying risk appetites.

The $459.9m Class A tranche, with a A/A rating, signifying a low-default investment. The $73m Class B tranche, with a BBB+/BBB rating, offering a bit more risk for a potentially higher return.

Rounding out the structure is the $42m Class C tranche, which carries the BB/BB rating, translating to the highest risk/reward proposition for yield-hungry investors.

“We are very pleased with the results of our latest successful issuance,” said Vivek Kaushal, CEO, Global Jet Capital. “It underscores the robustness of the BJETS securitisation program and the strong performance of the company’s previous ABS transactions. We continue to broaden our investor base, demonstrating the increasing appeal of the business aviation sector and our company.”

This is Global Jet Capital’s seventh ABS offering, bringing total assets securitised to approximately $5.1bn and bonds issued to approximately $4.2bn. The transaction successfully attracted 38 investors, with seven being fresh faces to the BJETS programme.

Citigroup served as the lead structuring agent and bookrunner, supported by Deutsche Bank Securities, Morgan Stanley, BofA Securities, and KKR Capital Markets acting as joint structuring agents and bookrunners.

Citizens Capital Markets also joined the party as a co-manager. Notably, Global Jet Capital will retain servicing rights on the securitised assets.

Under the hood of BJETS 2024-1 lies the securitisation of cash flows generated from a diversified pool of business jet loans and leases.

This offering encompasses 31 such leases and loans extended to corporations and prominent figures across 18 distinct industries. The underlying assets themselves showcase a variety of 21 different aircraft models, with a focus on mid-cabin to large-cabin business jets.

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It is expecting 2023 new deliveries to increase by 6.3% (up 12.2% in dollar terms) compared with 2022, but the number of pre-owned deals to fall by 2.6%. Combined, this works out as a 1% increase in the value of aircraft transactions.

“Anybody who’s is plugged into the marketplace understands that last year was a bit of a peak for pre-owned transactions and we’re obviously cooling off of those highs, but OEMs are starting to steadily increase deliveries,” says Vivek Kaushal, CEO, Global Jet Capital. “I don’t want to use the words ramping up because OEMs are being very measured and it’s very much supported by all the trends that we’re seeing.”

Over the next five years, new deliveries are forecast to grow at a compound annual growth rate (CAGR) of 4.6% and dollar volume should grow at a CAGR of 6.4%.

Pre-owned transactions are expected to continue declining in 2023 as they did in 2022. Unit volume is forecast to decline 4.8% while dollar volume is forecast to decline 8.5%. Continued market demand, however, should lead to more pre-owned deliveries over the next five years. Pre-owned transactions are expected to increase at a CAGR of 2.5%, with dollar volume remaining stable over that time.

Global Jet Capital expects North America to continue to be the dominant business jet market for the next five years – making up 77% of the total market. “Demand in Europe is very strong – we are seeing a lot of activity from our Zurich office,” says Kaushal. “I was in Asia last month and there is definitely pent up-demand and you can see the market coming back.”

He says that high profile bank failures have not yet hit aircraft finance. “Availability of credit is still OK for somebody who wants to finance an aircraft,” says Kaushal. “But as cash continues to drain out of the banking system, as rates continue to stay elevated, you’re going to see some tightening in market conditions. That’s only to be expected.”

Kaushal has not seen a sudden fall in demand. “We are seeing that customers still have intent to acquire. They are still going ahead with fleet planning upgrades – where a client of ours that’s been in a G550 for the last 10 years would like to move up into a G650,” says Kaushal. “They’re in the market looking for something. At the same time, the urgency to act is less. People see a market in which there are choices and where there will continue to be choices. They are OK waiting a little bit for prices to find a new level. But nothing that we’re seeing tells us anything other than a very natural pullback from a cyclical peak.”

See full market forecast here.

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Vivek Kaushal, CEO, Global Jet Capital told Corporate Jet Investor: “KBRA’s ratings actions reflect the result of years of hard work by the Global Jet Capital team and our strong customer base. It’s great to see the strong performance of our portfolio being recognised by the rating agencies.”

All tranches of notes issued in the Business Jet Securities (BJETS) 2020-1 and BJETS 2021-1 transactions were upgraded by one rating notch due to having received “timely interest and scheduled principal payments since the closing of such transactions”.

KBRA considered key performance metrics such as changes in delinquent or defaulted contracts, cumulative net loss utilisation and debt service coverage and loan-to-value ratios.

“We are extremely pleased with the recognition from KBRA and continue to focus on delivering strong value for both our clients and our investors,” added Kaushal.

The company has issued a total of $3.6bn of asset-backed security (ABS) notes through its BJETS securitisation programme. The collateral for the notes are business aircraft loans and leases. In February, the firm hit its $3.5bn financing milestone.

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“It is a big milestone for us,” Vivek Kaushal, CEO, Global Jet Capital, told Corporate Jet Investor. “It is a celebration of more than 200 happy customers and business partners in the business jet ecosystem. It also demonstrates our brand’s longevity.”

Global Jet Capital was first announced at Corporate Jet Investor Miami in 2014. In 2016 it acquired GE Capital’s business jet finance portfolio for $2.5bn – as well as many of GE’s team.

“Early signs for 2023 are strong. We are tracking factors like the interest rate environment and economic growth but are still seeing strong interest,” says Kaushal. “We are also optimistic about countries in Asia reopening after Covid.”

Global Jet Capital offers loans and finance leases, but specialises in operating leases where it owns the aircraft. Kaushal says that the majority of its portfolio are aircraft on operating leases.

“Hitting $3.5bn is validation of our original belief that operating leasing is a structure that fits business aviation well,” says Kaushal. “We have shown that there is demand for it all around the world. Last year we closed landmark operating leases in Singapore and Vietnam, for example, and we are already seeing interest following these.”

Global Jet Capital also offers pre-delivery payment financing. After paying a deposit, new aircraft customers are typically required to make two or three payments up to two years before delivery. Manufacturers use these to pay suppliers such as engine companies. “With backlogs growing we have seen strong interest in pre-delivery payment financing,” says Kaushal.

While he is keen to keep growing the portfolio, he is not looking at growth for the sake of it. He adds: “This is a great milestone, but we will always be focused on quality of transactions and grow at as sensible pace.”

Vivek Kaushal speaking at Corporate Jet Investor Miami 2022

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Inside, there was heat too, but this was confined to descriptions of the high-demand market for private jets. The key themes running through the 28 different sessions all touched on strong demand, supply chain issues and talent shortages, sustainability and a new influx of capital coming into the industry.

While everyone expects the US economy to worsen, almost all delegates were confident there will be no big fall in the next 12 months at least, with 33% of attendees very optimistic and 66% fairly optimistic. Brokers, too, were confident demand will remain strong into 2023.

Bankers shared their cautious optimism, with business expected to stay strong over the next year. “Senior executives do anticipate some level of recession, but the number one takeaway is that the banks are still open for business,” said Keith Hayes, senior vice president of PNC Aviation Finance. He added: “We’re not in fear of recession, we’re lending very prudently and we’re still doing business.”Global Jet Capital’s CEO Vivek Kaushal agreed:“We’re doing probably 50% more volume this year than we did last year, so we’re still very much in business.”

Another reason for optimism was OEMs’ strict supply chain management – aided by supply chain disruptions. However, keeping up with the demand was a worry for many. Maintenance was a particular concern. Speaking about backlogs in the sector, Christopher Jordan, Operations director, Global Engine Service Sales, Honeywell said: “Have you ever played whackamole? That’s what it’s like right now. It’s triage.”

Hiring (and keeping) the right people also dominated lots of conversations. Many attributed this to the industry’s image and commercial airlines’ polished recruitment campaigns. “Let’s be honest, we’re getting our tails kicked by the airlines,” said Andy Priester, chairman and CEO, Priester Aviation. “That’s where [the students’] mentality is. As an industry, we need to figure out how to engage and recruit people to get them involved in our organisations at the high school and university levels. If we do it together, we’re going to be able to make a difference, if we all do it separately it’s going to be really hard to fix.”

FAA staff shortages are also delaying some jet sales. Chris Rocheleau, chief operating officer, NBAA said the challenge is that companies in business aviation are “trying to move at the speed of Silicon Valley versus moving at the speed of government”. He said: “There’s always a little bit more work to do than there is the time and resources to do it, and the FAA faces the same challenges.

“As you have a lot of people rotating in the senior positions, it’s challenging for the agency to pick a path, there’s a lot of competing interests. Permanent leadership in a direction that’s important to the industry is going to make a difference.”

Sustainability offered both a challenge and an opportunity. While it remains the focus of industry criticism, Eve Laurier, vice president of Communications, Marketing and Public Affairs, Bombardier said it could be key to recruiting more talent. The same young people who are critical of aviation could be attracted by the promised opportunities to make it more sustainable. “They can test the solutions[to sustainability]with us. They can’t test them with commercial aviation”, she said.  

More than half (58%) of the 500 delegates thought the industry has seen a permanent shift in demand. The remaining 42% thought the industry was experiencing cyclical changes. So, even if demand dips in the short term, it will come back around.

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If you have a TikTok account, you probably are worried that the US rate has had three consecutive rate hikes of 0.75%. Today’s US job figures – with unemployment down to 3.5% from 3.7% – also mean that another 75 basis point rise is likely.

Most business jet owners are in the first category. “Interest rate rises have had zero impact so far,” says one international private banker, who typically focuses on larger aircraft. “This is partly because rates are not that high if you look back at the last 40 years.”

Financiers say that they are still seeing strong demand for finance – partly driven by US buyers wanting to close transactions before they lose 100% bonus depreciation at the end of the year.

It may seem odd, but higher rates could also encourage people to use more aircraft financing.

“Interest rates should be a factor in purchase decisions, but because they have been so low recently, they really have not been. People have been happy writing cheques for aircraft and using private bank facilities or general corporate credit lines, this could change now,” said Vivek Kaushal, CEO, Global Jet Capital. “As Bridgewater’s Ray Dalio said this week, ‘cash is no longer trash.’ We may see even more people wanting to put their cash to work getting returns rather than being tied up in what is ultimately a depreciating asset.”

Global Jet Capital funds itself through securitisations typically with fixed rate interest and already has warehouse financing arranged. Kaushal is also optimistic that higher rates will encourage buyers to use operating leases as well as loans.

The private banker agrees. “We are seeing buyers looking at the spread between money costs and opportunity costs. Most large aircraft buyers do not need financing to buy an aircraft but it makes sense to finance it if you can get a better return elsewhere.”

Andy Blundell, managing director, Close Brothers Aviation and Marine, which focuses on UK aircraft buyers, agrees. (At a time when many UK banks are withdrawing home loans he also stressed that Close Brothers is very much open for aircraft finance.)

“The effects of interest rates are felt in different ways. Some people may decide not to buy or replace because of rates, while others will prefer to wait to see what happens. But those who were going to pay cash for aircraft may now borrow instead to ensure the have additional liquidity,” says Blundell. “You will also see a number of owners refinancing to strategically release liquidity to get a ‘war chest’ for opportunities they know are coming rather than having it tied up in an asset.”

Wayne Starling, executive director, IADA – and a former banker – says that most existing US owners are insulated from rises. “Because rates have been so low, less than 25% of US deals in the last few years have been floating rate,” he says. “Very few lenders have been pushing fixed rates. This is very different from five years ago so right now there is not a big exposure.”

The private banker says that larger aircraft loans are typically floating rate, but they are also seeing increased demand for interest rate collars (where buyers can protect themselves from interest rate rises using swaps). Swap collars also give buyers the ability to repay loans without the expensive pre-payment costs you typically get with fixed rate loans.

Some owners – particularly newer ones dealing with maintenance costs for the first time – may feel that a rise in interest payments is enough to make them sell. But few bankers expect this to happen quickly.

Kaushal adds that rising interest rates may encourage more people to buy aircraft. “The value proposition for business aviation is very clear. When things get uncertain people see this even more,” he says. Something worth raising your oat milk flat white to.

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* With this, its sixth deal, Global Jet Capital has now issued $3.6bn backed by business jets worth $3.6bn.

Global Jet Capital has closed a $609m securitisation with BJETS 2022-1.

Global Jet Capital is one of the two main issuers of business jet paper along with Stonebriar Commercial Finance which issues bonds backed by a range of asset classes including aircraft.

The bonds were bough by 27 different investors, including eight who bought BJETS bonds for the first time.

BJETS 2022-1 was backed by 25 different aircraft types – mainly mid sized and large aircraft -financed for 37 corporations and individuals.

“We completed yet another successful issuance despite turbulent market conditions. This demonstrates the maturity of the BJETS securitization program and thestrong performance of the company’s previous ABS transactions, which have shown remarkable resilience largely attributable to the strong performance of Global Jet Capital’s highly diversified portfolio and relative strength in the business aviation sector,” said Vivek Kaushal, CEO of Global Jet Capital.

BJETS 2022-1

A Note: $512.8m
Rated: A (S&P)/A-(Kroll)

B Note: $60.3m
Rated: BBB(S&P)/BBB(Kroll)

C Note: $35.8m
Rated: BB (S&P)/BB (Kroll)

Deutsche Bank Securities was the
Lead structuring agent and lead bookrunner: Deutsche Bank
Joint structuring agents and joint bookrunners: Citigroup, Morgan Stanley, BofA Securities, TCG Capital Markets LLC and KKR Co-manager: Citizens Capital Markets
Servicer: Global Jet Capital will continue to service the securitized assets.

Press release:

Danbury, CT – May 17, 2022 – Global Jet Capital, a global leader in financial solutions for business aircraft, announced today the closing of its BJETS 2022-1 securitization, raising approximately $609 million. BJETS 2022-1 is Global Jet Capital’s sixth asset-backed security (ABS) offering, bringing total assets securitized to approximately $4.4 billion and bonds issued to approximately $3.6 billion.

The BJETS 2022-1 offering contained three tranches of notes: a $512.8 million Class A tranche, a $60.3 million Class B tranche, and a $35.8 million Class C tranche. It is notable that S&P Global Ratings and Kroll Bond Rating Agency LLC assigned BJETS 2022-1 ratings of A/A-, BBB/BBB and BB/BB on the Class A, B and C tranches, respectively. The transaction attracted 27 investors, 8 of which were new to BJETS.

As with previous BJETS transactions, this deal consists of a collection of business aircraft loans and leases representing a diverse group of obligors and assets. BJETS 2022-1 comprises over 37 corporations and global business leaders representing over 23 different industry segments, with the largest segment only making up around 12 percent. Over 25 different aircraft models – primarily mid- to large-cabin business aircraft – are represented in the transaction.

Deutsche Bank Securities was the lead structuring agent and lead bookrunner and Citigroup, Morgan Stanley, BofA Securities, TCG Capital Markets LLC and KKR Capital Markets were joint structuring agents and joint bookrunners for the BJETS 2022-1 transaction. In addition, Citizens Capital Markets was a co-manager. Global Jet Capital will continue to service the securitized assets.

Vivek Kaushal, CEO of Global Jet Capital, stated, “We completed yet another successful issuance despite turbulent market conditions. This demonstrates the maturity of the BJETS securitization program and thestrong performance of the company’s previous ABS transactions, which have shown remarkable resilience largely attributable to the strong performance of Global Jet Capital’s highly diversified portfolio and relative strength in the business aviation sector.”

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Speaking during the Asian Business Aviation Conference & Exhibition, Vivek Kaushal, the firm’s chief risk officer, said that China has overtaken Europe as the second most important region, with activity increasing over the course of the past 12 months.

For Global Jet Capital, which specialises in financing large-cabin aircraft, the Chinese market is ideal, as it is known as a large-cabin, long-range market.

Although Mr Kaushal does not see this changing significantly in the near term, he does see this eventually changing as Chinese buyers look not only for value in their aircraft purchases but also at more-mission-specific aircraft.

For many years there was a sense of one-upmanship in Chinese business-aircraft purchases, with Ultra High Net Worth Individuals trying to go one up on their peers. So, for example, if they saw that a friend had bought a G450, they would buy a G550. If they saw somebody had bought a G550, they would buy a G650. Pretty much all of the aircraft coming in were new.

But a recent shift in attitudes has seen Chinese buyers not only accepting pre-owned aircraft but also beginning to look at smaller aircraft too.

Mr Kaushal sees two types of Chinese buyers. The first is a group whose members’ business interests are truly global and who need to globe-hop all of the time. For this group, a long-range, large-cabin business jet makes sense, as its true capability is used often.

But for the second group, whose members’ business interests are largely regional, Mr Kaushal says that a large-cabin business jet is largely an oversell. This group of owners fly mainly regional missions, with just the occasional long-range flight.

This second group is beginning to become more educated on business aviation, and its members are starting to realise that for 90% of their usual flights a large cabin business jet is not needed.

This is partly due to the costs involved. Aside from the initial purchase cost, the monthly and flight costs of a larger aircraft are more expensive. As the Chinese market has begun to mature, more owners and potential owners are beginning to understand that they could purchase an aircraft based on their usual mission profile, and use commercial first-class flights for long-range travel.

The shift towards smaller aircraft won’t be happening overnight, but Mr Kaushal says that we will see what he calls a ‘reality check’ happening over the course of the next few years.

“Aircraft size still matters, we’ll see more in the next few years with a reality check. For China, there is a certain type of aircraft that you need, and a certain type of aircraft that can meet that range. From what we have been looking at, there is a certain amount of oversell on the capability of the aircraft for the region. As the market matures and people start looking more closely at operating costs and what they really need, I think we will see more purpose-built aircraft specific for that region.”

For Asia, not just China, an aircraft with a maximum range of 4,000nm seems to be the sweet spot. Even one of the region’s longest city pairings — Tokyo to Jakarta — fits within this range in normal operating conditions.
That puts the Challenger 650 and Falcon 2000LXS as perfect fits for Asia, although aircraft with less range but still with large cabins could fly most missions.

Aircraft of this size were sadly missing from the ABACE static display, though Bombardier did display a Challenger 650, and Cessna showed a smaller Citation Latitude.

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Back in 2017, there were tentative signs that the market was beginning turn. People were at the time seeing encouraging signs, but a full year later, things have changed for the better. In the intervening year China’s executive jet market grew impressively, both in terms of the amount of charter flights completed as well as in the size of the business aircraft fleet.

The charter market had fallen off the map in 2014 after the introduction of the government’s anti-graft crackdown. Chinese charter operators had long relied on government officials using their services to get between meetings, but this stopped almost overnight. During the Corporate Jet Investor Asia 2014 conference in Hong Kong we were told that over 90% of Chinese charter companies would lose money that year.

The government’s measures also influenced aircraft coming into the country, both old and new. The fleet had grown by 21% during 2013 according to the Asian Sky Group (ASG) figures. But following the introduction of the anti-graft drive, growth dropped to 16% in 2014, and slid further in 2015 to just 4%.

One of the main themes of ABACE this year was the continued acceptance of pre-owned aircraft into the Chinese market.

China’s adoption of business aviation had taken place several years previous with the introduction of midsize-cabin aircraft into the charter market. For years there was just a small fleet of Hawker 800s and Gulfstream G200s which were used primarily by Chinese government officials. These were joined in 1997 with the introduction of the first privately owned business jet in China, a Cessna Citation Jet owned by Guangzhou-based Broad Air Conditioning. Although this aircraft is still in China, it has since been replaced by a 2000-build Cessna Citation Excel.

The fleet grew especially in the early years of the new century with the introduction of mostly new large long-range business jets. According to ASG this had been given rise to a compound annual growth rate (CGAR) of 34%, which it says is much higher than the 5% global growth rate.

Although this growth was impressive, the balance between new and pre-owned aircraft entering the country was heavily weighted in favour of new aircraft. In 2017, this had swung in the favour of pre-owned aircraft for the first time. The swing was quite dramatic. In 2016, only 36% of the aircraft that joined the Chinese fleet were pre-owned, it jumped to 57% in 2017.

This was partly due to Chinese buyers seeking more value from their purchases. One aircraft manager at ABACE said that there were some great deals available six months ago, but these were quickly snapped up. This has influenced pre-owned aircraft values as well. With fewer aircraft available the prices of those still on the market moved ahead.

One thing that has not changed is how long decisions to purchase a pre-owned aircraft are taking Chinese buyers. This, according to several brokers familiar with the region, has led to frustration from both sides, as aircraft that were under consideration were sold to other buyers by the time the final decision has been taken.

For Jetcraft, one of the largest brokers for pre-owned and new aircraft in the region, Asia and Europe are almost side-by-side when it comes to transaction volumes. “The biggest change in the last year has been the absolute shift towards the acceptance of pre-owned aircraft.” says David Dixon, president, Jetcraft Asia.

“In the last four to five years, its shifted significantly, its producing far more, and that’s why its challenging Europe, because of the acceptance of preowned product.” Adds Dixon. There were several reasons, including the increasing build-up of maintenance and support in the region.

For Global Jet Capital, China has become its second biggest market. This, says Vivek Kaushal, chief risk officer, Global Jet Capital, has grown especially over the course of the last 12 months.

“Aircraft size still matters, we’ll see more in the next few years with a reality check. For China, there is a certain type of aircraft that you need, and a certain type of aircraft that can meet that range. From what we have been looking at, there is a certain amount of oversell on the capability of the aircraft for the region. As the market matures and people start looking closer at operating costs and what they really need, I think we will see more purpose-built aircraft specific for that region.” Said Mr Kaushal.

Currently he sees two types of business aircraft owners in China. The first group includes those who need an aircraft with trans-Pacific range, whose businesses stretch from China internationally, and who want to be able to fly from Beijing, or Shenzhen, directly to Los Angeles, London or Paris.

For this group of owners, a large cabin, long-range jet is essential. But for the second group of owners who largely have business interests regionally, a large-cabin, long-range jet is only used to its full capability for a few times a year. So, for this group of owners, the acquisition of a smaller aircraft makes more sense.

Mr Kaushal says that we could see more of the smaller, but not small, cabin aircraft entering the Chinese market soon.

Looking outside in the ABACE aircraft static display you would be forgiven for thinking that Asia was only interested in large aircraft. Cessna brought two aircraft with for the show, a Citation XLS and a Citation Latitude. Embraer, in contrast, only had a Legacy 650 and Lineage 1000 on display.

Honda, on the other hand, did bring a Thailand-based HondaJet for display. Since the aircraft’s ABACE debut in 2017, Honda has signed an agreement with Guangzhou-based Honsan General Aviation to market and sell the HondaJet in China.

During the show Honda announced that it is already expanding this agreement and will build a facility at Guangzhou’s Baiyun Airport that can accommodate and service up to 20 HondaJets at a time. The company also signed an agreement with start-up charter operator Flightjoy Aviation, which will provide HondaJet management as well as charter services.

The HondaJet is one of the aircraft that would not be subject to the new import tariffs proposed by China in its ongoing trade war with the US, one of the hot topics at the show.

China had proposed increased import tariffs US-built aircraft weighing between 15,000kg and 45,000kg. Whilst this would largely affect aircraft in the Boeing 737 family, it would also have a significant impact on the large-cabin Gulfstream family.

Whilst this was one of the hot topics at ABACE, the overwhelming consensus is that these tariffs will not get past the proposal stage and will be dropped.

If they should go ahead, the US would stand to lose the most. Boeing has secured orders for over 200 737 MAX family aircraft, with only around 30 aircraft delivered so far. If the proposed tariffs do come into place it would affect all remaining deliveries, although to what extent is currently unclear. One lawyer said at ABACE that there could be ways around the tariffs, including the use of offshore registries.

Offshore registries have enjoyed increasing success in Asia, and particularly in Greater China, which includes Hong Kong, Macau and Taiwan. During 2017 the number of business jets registered in the Cayman Islands, but operating in Greater China, increased by 40%, although in real terms this was a jump from 10 to 14 aircraft.

Other registries are growing as well, although at a slower rate.

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