Mesinger Jet Sales hosted Corporate Jet Investor Town Hall on Wednesday with Alasdair Whyte. In “The finish line in sight: How will 2022 look in the rear-view mirror?”, the speakers discussed the 2022 year for the industry as well as projected outcomes for the 2023 year.
Speakers included Jay Mesinger of Mesinger Jet Sales, David Best of Jet Aviation, Michael Anckner of Bombardier and Ford von Weise of Citi Private Bank.
The town hall meeting occurred just after the CJI event in Miami. Mesinger starts the discussion with retail sales numbers from the first ten months of the year from 2017 to 2022. Retail-to-retail sales jumped to 2,585 in 2021 from 1,796 in 2020. The sales dropped slightly in 2022, going down to 2,045, but were still up from pre-pandemic numbers.
“It has been a remarkable 18 months,” David Best, Senior VP and GM at Jet Aviation said.
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In 2022, demand remained consistent while supply decreased. Bombardier’s VP of sales Michael Anckner said that book-to-bill ratios went up significantly, adding that backlogs increased accordingly. Buyers have time frames of 18-24 months for a new aircraft due to low inventory and supply chain concerns. The market for pre-owned aircraft remained tight as the supply of pre-owned aircraft remains low. Anckner added that the individual customer moved quicker post-pandemic, coming first over corporate buyers.
The demand for aircraft from both individual and corporate buyers remained strong and stayed at an elevated level despite the drop after the pandemic. Since 2020, the market has seen an increase in first-time buyers. Anckner said that between 10% to 13% of people who could afford an aircraft before Covid have since moved into the market.
This influx of first-time buyers in the last 18 months will likely subside as many have an order placed already. Fear has not been a factor with new clients as many have chosen to stick with their choice to buy a private plane.
With new buyers, there is an education process. “It’s like teaching a new language,” Mesinger said. Management companies like Jet Aviation have had to steer new buyers to what decisions and aircraft will work best for them. Mesinger said another topic discussed at the recent CJI event in Miami is the average of buyers, which has dropped by about 20 years. “We need in our industry, for sustainability, a younger marketplace to grow us into the future.”
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Ford von Weise, global director of the aircraft finance group at Citi Private Bank addressed the increase in the value of aircraft. According to von Weise, banks had begun to discuss loan amortization and many have become more conservative when it comes to the underlying credit of the buyer. The increased cost of aircraft coincides with increased maintenance costs and wages for pilots. Mesinger said that the current profitability in the market lies in selling aircraft.
Speakers discussed the outlook for the coming year, many said that there would be a continuation of a lot of what was seen in 2022.
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The U.S. would likely lead the industry as the EU and other parts of the world have been dealt political blows like with sanctions in Russia and the war in Ukraine. Climate change protests have spiked at airports across the globe, mainly in parts of Europe, as sustainability has become an increasing trend in the aviation industry. This conflict could impact business and private aviation as the discussion of sustainability is on the rise in aviation.
Alasdair Whyte, Jay Mesinger, David Best, Michael Anckner, Ford von Weise
The U.S. could continue to be where most transactions will take place, despite demand across the globe. “Mathematically it’s the biggest market, it’s over 70% of the entire fleet,” Best said. The strength of the U.S. dollar has seen an increase of EU aircraft into the U.S. because of exchange rates and some aircraft are now worth more used than new.
The speakers were optimistic about the outlook of 2023.
“I believe that we are going to continue to strive and work toward a balanced market,” Mesinger said.
He said this would be a result of supply increases rather than demand decreases, which could lower the cost of aircraft. A reduced number of transactions is possible but inventory rates should increase. The changes should push the market to equilibrium.
“The fundamental demand shift is here to stay,” Anckner said.
As we continue to move away from the Covid era, numbers and trends remain relatively unpredictable. Reverting to the title of the talk, how did 2022 look in the rear-view mirror? According to the speakers and numbers collected, 2022 was a great year and 2023 will not be too far behind.
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