NBAA Convention News

Global Jet Capital Sees Shift to Big Jets

 - October 18, 2018, 6:34 AM

Since 2016, more than 8,600 new and used business jets have been sold worldwide, with approximately $23 billion in financing used to support those transactions, according to industry financing provider Global Jet Capital (Booth 2251). Of that amount, more than 60 percent was applied to the purchase of new and used large-cabin jets, which the company noted has helped increase the proportion of larger aircraft within the global fleet.

In that same span, the total number of midsize business jets has declined by 8 percent, or 415 units. That shortfall has been replaced by 419 heavy/large aircraft, representing a 6 percent increase for that segment, according to the company.

“The figures provide a clear focus of where we are seeing expansion in the sector, and the importance of financing in supporting industry growth,” said Global Jet Capital COO David Labrozzi, adding there are significant long-term advantages in increasing the number of larger business jets in the global fleet. “These obviously provide greater capacity per aircraft and therefore offer the benefits of business aviation to a wider population, something which can be particularly important for corporate owners. In addition, the increasing importance of developing new international trade links is resulting in growing demand for aircraft able to undertake longer distances to destinations that might not currently be well served by commercial airlines.”

New aircraft in the large-cabin category had an average purchase value of more than $48.2 million between 2016 and 2018, compared with an average of $12.5 million for the remainder of the market. That translates to delivery values during this period of $26.4 billion for the large-cabin segment, versus $14.3 billion for the rest of the business jet market.

Global Jet Capital, which specializes in operating leases, estimates that more than $5 billion in that product are currently in effect for new and used aircraft transacted since 2016, and the company has seen a significant increase in enquires for them, with clients attracted by the reduction in aircraft residual risk and by their flexibility.

“The flexibility afforded by operating leases is especially beneficial in helping clients move on to higher value new model aircraft without having to remarket their existing aircraft,” explained Labrozzi. With North America home to more than 60 percent of the world’s business jet fleet, and with the region seeing the world's largest increase in its large and heavy fleet over the past two years through the addition of 317 aircraft, the company expects to see growth in operating leases over the next five years.