No more need to own a private jet
Owning a private jet has long been a symbol of wealth and success, but the market seems to be showing a rather drastic shift. According to JETNET, year over year, manufacturing companies are seeing decreases in the number of aircraft being purchased and newer models of aircraft especially are also seeing a significant drop in the number of aircraft being sold. In the first quarter of 2019, there were 620 fewer transactions, a 25% reduction, when compared to the first quarter of 2018. This decline was not expected, as the U.S. GDP increased 3.2%. According to AMSTAT figures, there are over 15,000 business jets in North America and Europe and JETNET has reported more than 22,000 business jets in operation worldwide and another 2,000 for sell as of March 2019. With numbers like that in the business sector alone, it is clear that finding a jet is not a tall order to fill. This oversaturation has ultimately brought about the decline of the market as cost efficient options have begun enticing more and more business owners.
Currently, purchasing a new aircraft will run in the range of USD $7.4 M for a Hawker 400 to upwards of USD $100 M for top of the line Boeing aircraft, with the average price running around USD $30 M. When looking at the numbers for the average business jet purchased, after just 3 years an aircraft will lose as much as 50-60% of its worth which leads to losses of about USD $5 M per year. To put that number in perspective, USD $5 M can purchase 250 hours of flight time in a fully serviced Boeing VIP 737 and more than 600 hours of flight time in a Bombardier CRJ, which can be purchased for around USD $30 M.
Losses like those make it is easy to see how owning business jets may become a thing of the past, especially when that same amount could be used to fly much further in perhaps even better quality aircraft. But loss of value is not the only cost that comes with owning a business jet comes. By the time you factor in all of the fees for insurance, crews, continual maintenance, and storage the sum needed to care for an aircraft can quickly become substantially burdensome.
Over the last decade, another form of transportation has begun to take hold in the aviation business industry. Where businesses were hiring companies to manage their aircraft, the reverse has started to catch on with businesses now hiring companies to provide them with aircraft. This option provides business and private owners a chance to step back from all the fees and costs that come with ownership and focus solely on their business while still utilizing high quality aircraft.
With the market trending in towards rental and hiring out services, throughout the next few years the business jet market could take an even bigger hit. As these cost efficient opportunities become increasingly popular, this new industry is poised perfectly to provide a type of flexibility that has previously been underutilized throughout the world.
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