Jetcraft president and CEO Chad Anderson: "Inevitably, you’re going to see more 650s going to market because of the Gulfstream 700 deliveries."

With New Bizjets On the Runway, Preowned Inventory Loosens Up

Expert: Trying to buy an airplane is no longer 'a knife fight in a phone booth.'

Chad Anderson, the Minneapolis-based president and CEO of the global advisory Jetcraft, oversees the company’s sales, inventory, and corporate strategy. BJT asked him about the rollercoaster of demand in the last five years, the thriving preowned market, and the health of the bizjet industry in the U.S., South America, Europe, and Asia.

What are you seeing in the preowned market?

It has been very busy for us, in a good way, and I don't think it's just Jetcraft. I think similar industry counterparts are seeing plenty of activity in the same vein as we are. I was also looking at some figures recently and one number that surprised me was that in Q1 2024, our industry closed 253 deals and that's up from Q1 of 2023. If you step back and think about it, the obvious reason is that now we finally have some more supply. The demand, to me, is about the same this year as it was last year, but the benefit to the buyers is that there's more supply that allows us to fulfill their appetite through a bit more reasonable process, and a timeline that buyers can live with. Over the last two years, we had a real problem with that because there were too many buyers, or so few airplanes, that it was a bit of a knife fight in a phone booth, as I often say, and that was a challenge for a lot of us.

Is the preowned market suddenly healthier because new models are coming out finally, after a dearth of them during the COVID years?

That's definitely helping us. It’s releasing some of the younger preowned inventory into the marketplace. It's also giving a level of depreciation on those airplanes, which is to be expected by the buying public—it’s supportable by those of us who are representing buyers. Jetcraft represents buyers and sellers, depending on the projects. More younger inventory available, at prices that rationalize, under timelines that are manageable—those are three important ingredients that have enabled us to do more deals in the first quarter of this year than we did last year.

What new aircraft are being delivered that are freeing up the young preowned inventory?

Let's start with the Gulfstream series. Inevitably, you’re going to see more 650s going to market because of the Gulfstream 700 deliveries. The beauty of it is there's a lot of good demand for the Gulfstream 650, so I think you're going to see the sales of the Gulfstream 650 increase, just because more inventory is going to come to market.

The Gulfstream is a real market mover, all the way down the line.

Now it's the direct competitor with the Bombardier 7500; Gulfstream now has the answer to that competitor. Obviously, those airplanes will go transcontinental, and some people absolutely require those longer-range airplanes because you can no longer overfly Russia, depending on where you're going. There is a legitimate need now for some of that ultra-long-range capability that both the Bombardier 7500 and the Gulfstream 700 offer.

What else is driving demand in the U.S. and Europe? I’m guessing there are issues related to the pandemic.

Here’s where we’re at relative to the pandemic: 2019 was pre-pandemic. We’re in 2024. Five years later, demand in Europe and demand in the Americas is about the same as it was in 2019. Basically, you had the big dip and then you had the big spike—2022 was our industry high—and now we're kind of back to normal. What’s changed more than anything is the supply.

What are new bizjet buyers looking for, in terms of improvements and enhancements?

Wi-Fi is a constant evolution. As soon as you get the latest Wi-Fi system, you have the next Wi-Fi system coming along; people expect good Wi-Fi. And they expect good operating economics. You can have a very efficient Global 6500, but if you only need a Praetor 600, you should buy the Praetor 600. The latest cockpit is always an attraction, the latest cabin amenities. You're seeing each of the manufacturers continue to broaden their products, particularly that ultra-long range capable airplane, with different compartments where you can work, dine, and sleep. I think that’s why you're seeing Dassault, Gulfstream, and Bombardier—we'll call them the big three—all focusing on that large-cabin segment. 

What differentiates Jetcraft in the European market?

The main way we differentiate ourselves is we invest in the assets heavily in order to help primarily affect trades—so a lot of times we're an investor in an aircraft, not just representative of an aircraft. We currently have a Global 6000 owner who's going to go to a Global 7500; the 7500 can't happen without the 6000 trading in, so we're enabling the sale of the 7500 for a client overseas. That's a very common experience for us. Most of our counterparts overseas don't have the appetite to undertake that kind of a risk. It's not uncommon others for us to have anywhere from four to five airplanes at a time; we’ll always have aircraft coming in and out of our inventory that are helping us create trades for our listing clients.

Are there any specific countries or regions in Europe that are hot right now, that are growing in terms of demand and interest in business aviation?

Europe, from the demand perspective, is a little bit muted at the moment. The higher level of demand that we're seeing expand is in Southeast Asia; for us, it's been a bright spot. China is actually coming back with buyers. For a long period of time, they were only sellers. They're back to being a buyer of aircraft on occasion. The Americas—North and South America—have consistently been the buoy of demand. We still look at Europe as steady; I don't know of any European countries that are meaningfully increasing demand right now. I don't see them dwindling, either.

What cities in Southeast Asia are increasing demand?

It’s all about Singapore—and Jakarta. Singapore is the new financial center for Asia, just like Dubai is the financial center for the Middle East. A lot of the Chinese principals who were running into obstacles in China, in many cases, are moving some of their companies to Singapore and Malaysia in order to get a more free-trade-type, democratic-type approach to their business. And they’re buying airplanes.  

And in Latin America?

We've never been better in South America that we have been lately. We sell helicopters, light jets, long-range cabin aircraft, and it's all across the board. All roads lead to São Paulo, primarily. 

We just ran a piece on the highest-priced median homes across the U.S., and the New York metro was No. 1. Not surprisingly, Teterboro is the country’s busiest private jet hub. Is that where you’re seeing most of the demand?

The big segments for us are New York, South Florida, Texas. I could tell you that Texas is always consistently busy because you're seeing some clients and big companies move into Texas—both the Dallas metro and the Houston metro areas. And then as you move West you have Phoenix/Scottsdale and then the LA area. You can basically use those metros as your best barometer of the stable demand areas. The harder-to-get-to clients, though, are still out there. I live in the Midwest and there's a lot of wealth in North Dakota, of all places. Not a high-population area but there’s a high need for business aviation if you have a business there, because you have the oil fracking business and agriculture, sugar beets. They’re all buying airplanes.

What are some of the biggest mistakes people make when buying a bizjet?

Buying too big or buying too old, and usually it's both. Let’s say you need a Cessna Citation Sovereign—that's the right airplane for your mission, a $10 million airplane. But look, I could buy this Gulfstream IV for $5 million, and I can have a Gulfstream. Now you have an older Gulfstream that's probably way more than you're ever going to need that's going to limit where you can get into, and yes, you have a bigger airplane and it's smashing on the ramp in a good way, but it was not the right airplane for you.

And how do we educate prospective buyers?

What’s really good about our market now is that we have a healthy group of fleet operators that can help clients get used to how much it costs to fly private in the right type of aircraft. I'm a big advocate of taking advantage of chartering airplanes or buying fractional, up until the point when you're ready to purchase. Those fleet operators do a good job knowing what their clients need in terms of aircraft size, so you have a good variety of options out there. I'm a big champion of those programs overall because I think they do a good job of weaving clients into a whole aircraft ownership once they're ready to take that leap.