The demand for private jets is so high that manufacturers can’t keep up with demand, and purchasers are suffering lengthy delivery delays.
Even used business aircraft are rapidly disappearing from the market.
“If you look at today compared to 2019, the market has almost exploded,” John Schmidt, global aerospace and defense industry lead at consultancy Accenture, told CNBC at the Dubai Air Show.
The epidemic has pushed some passengers to private flights with many taking the journey for first time. But experts believe that the increase is mostly due to a boom in wealth in the past year and a halfof that is at the top of the social ladder as more companies are listed on the stock exchange and the market reaches new highs, and those who spend benefit from an extended duration of low-interest rates.
Business aircraft take-offs and landings across the U.S. are up 40 percent on a year-to-year basis — and are at their highest since prior to the financial crisis of 2008 according to Morgan Stanley.
Companies that have public listings within the U.S. have already hit records in 2021. The data taken from Jefferies Equity Research shows that as IPO activity increased as did the number of business jets delivered was also increasing in tandem with it.
This market also attracting consumers looking for safer and more exclusive travel options that provides greater safety than commercial flight which is impeded by the travel regulations of Covid-19.
With the increase in the market for high-end products and rising inflation, the prices of used and new jets are registering the highest level in recent years.
Used jet inventorythe proportion of jets available for sale versus the amount of aircraft currently in usehas reached record levels at or under 3 percent for all major manufacturers of jets, which include Cessna, Dassault, Gulfstream, Bombardier and Embraer, Jefferies states.
Private flights are not only increasing across the U.S. but also 20 percent higher within Europe, Schmidt said.
“Things are really tight in used business jet aircraft, inventories the lowest we’ve seen in years, and yet prices are 20 to 30% higher,” he added. “So it’s a really hot market right now.”
The first-time buyers to the market of private jets are now more than 30percent of the buyers according to a study published by Goldman Sachs. In the case of Embraer chief commercial officer Stephen Friedrich, what stands out is the increase in the number of customers.
“The addressable market right now for business jets has expanded. The pie has gotten bigger,” Friedrich said. “And the result is from continued wealth creation of over 12% when you take a look at the billionaires in the world, but also from what was traditionally Fortune 100 and large private companies.”
“People are looking for ways to become more productive, more certain in the missions that they have to perform,” he added, describing business aviation as a “productivity tool.”
“Can you fly direct from New York City to Muscle Shoals, Alabama, on a commercial flight? No,” Friedrich said. For the companies or individuals with the wealth to own a business jet, journeys that would take a full day of travel are reduced to a few hours.
Business jet cabin pressurization is significantly smaller than that of commercial airliners. For certain models, it’s less than half. The difference in pressurization means that passengers feel much less tired after landing, which makes multiple city stops and meetings more manageable. Embraer’s top model Praetor 600 has a cabin altitude of 5,800 feet. Dassault’s Falcon 6X comes with an elevation of 3900 feet. Compare this to an altitude range of of up to 8000 feet on commercial jets.
Private jet charter firm VistaJet has reported an increase of 29% in the number of new members it has added over the last year with 71% of new inquiries were from customers who did not normally utilize private aircraft before.
It also found than half of the new private aviation passengers (53%)will continue to fly regularly following the pandemic.
The rise in wealth creation following the pandemic has been extremely uneven in the United States, and U.S. billionaires getting approximately 62% more richer and gaining an estimated $1.8 trillion in the month of March, 2020 in the report of U.S. think tank the Institute for Policy Studies.
(Adapted from MSN.com)