More than 500 delegates met online for CJI Americas 2020. This year, the intention is to return to Miami on November 2nd and 3rd.
CJI Americas 2020 Conference Report
An influx of first-time buyers is the silver lining that is lightening the darkening clouds of Covid-19, according to our CJI Americas conference. Words: Mike Stones
A rising tide of High-Net Worth Individuals and Ultra-High Net Worth Individuals is emerging to re-energise business aircraft sales, Michael Amalfitano, president and CEO, Embraer Executive Jets, told more than 500 conference delegates in his keynote address at our CJI Americas conference.
“This is leading to much stronger than usual first-time buyer activity,” he said. “Before, [Covid-19] first-time buyers used to represent 10% to 15% of business jet deliveries. Now it’s approaching 50% in some classes – especially for entry level jet categories.” A clear trend was buyers’ interest in smaller aircraft. “We have also seen pre-owned customers active and this market is heating up, particularly for smaller class aircraft – at least for now.”
The arrival of new clients meant NetJets and business aviation in general can look forward to “a nice long runway ahead”, according to Patrick Gallagher, NetJets president, Sales and Marketing.
“We will continue to see new customers coming into this space driven by commercial airline schedule reductions and some persistent health concerns post Covid,” Gallagher told delegates. “So, we think we have a nice long runway of an increase in new business.”
In addition to health concerns and thwarted airline schedules, a key reason for optimism was that private aviation had failed to keep pace with wealth creation in the US and worldwide since the Great Recession of 2008.
“So many people who have joined us in the past few months have said: ‘I wish I had done this sooner’. That’s a reason for optimism for all of us,” said Gallagher. “Those people will stick in the industry because we know how addictive the product is that we all sell.”
The prospect of a vast addressable market also excited Kenny Dichter, founder and CEO, Wheels Up. “We have roughly 100,000 to 200,000 people who are considered hard private flyers in the Americas,” said Dichter. “But the addressable market laid out by McKinsey [in a much-quoted webinar based on a UBS report last year] is that there are 1.5m people who can afford to do it. That’s without adding sharing, social [flying] and by-the-seat, which adds another 10m who can afford to fly privately.”
New entrants rejuvenate the market
Equally upbeat about the rejuvenating effects of new entrants was Garett Jerde, founder and MD, JetHQ. “I don’t think we have even scratched the surface,” he said. “There are so many people who can afford private aviation and now they’re coming out.” Jerde also detected interest in smaller-sized aircraft. “Everybody thinks of G550 or a G650 or a Global 5000, but you can start a lot smaller to serve your purposes.” New entrants could buy a 400XP for $1.5m, he added.
Hamish Harding, Action Aviation chairman, confirmed: “Most of our buyers are new buyers – the corporates aren’t buying at the moment – but there are exceptions,” he said. Harding confirmed buyers’ interest in smaller jets worldwide, if not in the Middle East. “People do want a private jet, so they don’t have to travel with other people. The concept of buying a smaller jet, just to be on your own, is driving the light jet market.”
Gregory Ryan, senior sales director, GE Aviation, joined the throng of voices over the two days of the conference predicting new clients would select small business aircraft as their first purchase. “Over the next 12 months you are going to see a demographic shift concerning those are who are first-time buyers or moving up from fractional ownership or jet cards. And they are going to need folks like the Mente Group or Global Jet Capital to steer them not only to the right aircraft, but also the right amount that they need to invest into that structure.” Smaller entry level aircraft will see the fastest growth because “new buyers are not yet ready to step into a $56m aircraft”.
CJI Americas 2020 conference took place on November 17th and 18th.
“Wealth [acquisition] is coming down in age and digital fluency coming up.”
Andrew Collins, President and CEO Sentient Jet and lead executive, OneSky
‘E-commerce advances 10 years in just 10 weeks’
Covid-19 has rapidly accelerated the uptake of e-commerce in business aviation, according to Andrew Collins, president and CEO, Sentient Jet and lead executive, OneSky. “In 10 weeks, we saw e-commerce adoption that would normally have taken 10 years,” Collins told delegates.
“With wealth [acquisition] coming down in age and digital fluency coming up and permeating across the generations, e-commerce is here to stay,” he said. “E-commerce is a new way of selling and transacting removing friction from the customer journey and it is here to stay.”
Digital bookings were likely to account for 20% of total bookings last year, with the company’s mobile app accounting for “north of $50m” worth of business. This year, digital bookings are predicted to account for 25% of all bookings.
A multi-platform approach of mobile devices and desktops – plus fixed pricing, meant the company was well-placed to benefit from e-commerce. “I recently put out a note to the company entitled “A Seven-Year Overnight Success,” he quipped.
CJI Americas 2020 sponsors:
Stonebriar Commercial Finance
AIC Title Service
Clay Lacy Aviation
Embraer Executive Jets
Gilchrist Aviation Law
The Air Law Firm LLP
Conklin & de Decker
Leading Edge Aviation Solutions
McAfee & Taft
Pratt & Whitney Canada
American Society of Appraisers
National Aircraft Finance Association
International Aircraft Dealers Association