June 15 (Reuters) - A shortage of newer-model business jets is driving up prices of second-hand aircraft, a trend that is expected to deliver a windfall for luxury planemakers as new affluent buyers enter the market.
After a turbulent 2020 due to COVID-19, the rush toward private transport is so marked that some buyers are snapping up second-hand planes before fully inspecting the wares as the market shifts toward sellers, lawyers and brokers said.
That is expected to push up demand for new jets from planemakers like General Dynamics Corp’s Gulfstream, Textron Inc and Bombardier Inc since buyers have fewer pre-owned options, and the price gap between old and new narrows.
“There are virtually no young pre-owned aircraft available - good news for would-be sellers and for (planemakers),” said aviation analyst Rolland Vincent.
He recalled one trucking company’s recent search for a pre-owned Gulfstream jet: “There was one aircraft in the world that fit their requirements.”
Traffic from business jets, which carry roughly a handful to 19 travelers, has rebounded to pre-pandemic levels in the United States, the world’s largest market for private aviation, according to FlightAware data.
“On the pre-owned side, inventory appears to be fairly low, and that’s always a benefit to new aircraft sales,” said Scott Neal, senior vice president worldwide sales, Gulfstream.
“We are seeing strong interest across the board from first-time buyers and high net worth individuals as well as corporate customers with a desire to grow their fleets.”
Textron in April raised its full-year profit forecast, propelled by a rebound in business jet demand.
The trend could encourage some planemakers to increase production rates, although any ramp-up would hinge on supply chain capabilities, Vincent said.
Planemakers do not disclose total number of orders.
Preowned aircraft for sale in May accounted for 6.6% of the worldwide fleet, the lowest level recorded in 25 years by JETNET data, Vincent said.
He said 864 pre-owned business jets sold during the first four months of 2021, up 36% from the same period last year.
“There are multiple offers on planes,” said Florida-based aviation attorney Stewart Lapayowker, founder of Lapayowker Jet Counsel PA.
Amanda Applegate, a partner at Aerlex Law Group, said she handled more deals for new jets than usual in May, as buyers fail to secure popular pre-owned planes like the G650, raising prices.
Applegate said it’s a case of pent-up demand as some wealthy travelers previously avoided private jets due to concerns like “flight shaming” over the environment. Corporate planes burn more fuel per passenger than commercial.
But since COVID-19, buyers have been shifting to private aviation to avoid airport crowds and coronavirus variants. Applegate said some deals are so competitive she’s seen buyers give up pre-purchase inspections to win them.
Don Dwyer, managing partner at Guardian Jet, which does aircraft brokerage, appraisals, and consulting, recalled one case where a client didn’t undertake a pre-purchase inspection, which can take more than a month to complete.
It was a particular case since the plane was highly coveted, in good shape based on a visual inspection, and the seller was reputable, Dwyer said.
“I don’t recommend it, but in certain situations it can work.” (Reporting by Allison Lampert in Montreal Editing by Denny Thomas and Steve Orlofsky)