“Michael not only understands the commercial aspects of VIP jet operations but has a precision focus on safety and maintenance.  This hands-on experience is invaluable as it instils instinctive trust,” said Robin Dunlop, founding partner, ALTEA. 

Remarking on his appointment, the consulting firm said that in addition to his vast network within the VIP aviation industry, Michael Hoby Andersen brings extensive technical and operational experience to ALTEA, particularly in aircraft acquisitions and sales.

“ALTEA has the ability to engage with customers from all angles” said Andersen while commenting on why he joined the firm. “We offer one of the strongest support structures across asset management, financial solutions, design, and completions to guide and inspire owners and operators across the worldwide bizjet market.  This is what sets us apart, and it is what attracted me to join the business.”

Andersen recently facilitated the off-market sale of a Global 6000 for ALTEA.

Dunlop said that despite opportunities in sustainability initiatives, digital transformation, and market growth, the firm’s strength lies in personalized services for specific client needs.

We can help our customers – private individuals, banks, corporations and governments – navigate careful and strategic investments in the sourcing, purchase and completion of all sizes of aircraft, added Dunlop.

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The firm’s preliminary data from December last year suggested that more pre-owned business jets will come to market over the next 12 months (time period), said Jean Sémiramoth, partner, ALTEA.

Available inventory has grown from more than 1,175 units at the end of December 2022 to 1,325 at the end of April 2023, according to JETNET data. It is slow but steady growth, a trend that will continue, predicts the consultancy.  Further disruption in the banking sector could accelerate the trend.

In terms of transactions, there has been a mild shift whereby market conditions favour sellers a little less without moving to a buyer’s market, according to Sémiramoth. “In this “new normal”, more buyers are paying further attention to the condition of aircraft and matters such as damage history, complete records, pre-purchase inspection and delivery conditions,” he said.

Consolidated data also shows a decline in pre-owned transactions. There was a total of 3,560 transactions of pre-owned business jets in 2022, around 14% less than the previous year, with ALTEA expecting this to continue. 

With this, the average number of days aircraft spent on the market is expected to rise, with more sellers lowering their asking prices. According to JETNET data, the average number of days on the market rose from 291 days at the end of December 2022 to 320 by the end of April this year.

As for asking prices, whilst there have been more price reductions than last year, the average asking price of pre-owned business jets has risen, but at a lower rate. “[This is] a clear indication from our perspective of the market normalising and heading to balance,” Sémiramoth said.

Flight activity is predicted to fall too. ALTEA forecasts that some business aviation newcomers would return to airlines as they restore service to pre-Covid levels and above. Sémiramoth said that it may be too soon to know whether this is true. “However, recent reports indicate a small decline in worldwide business jet activity during the first four months of this year compared with the same period last year. So, it will be interesting to scrutinise business jet activity per region going forward,” he added.

Meanwhile, one area to watch is the ultra-long-haul sector; specifically Gulfstream aircraft, especially with deliveries about to begin on its new flagship G700. Andrew Butler, partner, ALTEA said that if the OEM delivers as planned and to the numbers expected, there could be a sharp increase in the availability of both G550 and G650/ER and prices fall.

“Whilst inventories of both types have been relatively stable over the last six months, a concerted effort to deliver G700 aircraft (given certification delays) could bring a change in this sector,” said Butler. “We recall that the numbers of G550 aircraft coming to market escalated once G650 deliveries began in earnest (an availability increase of over 300%), so we might see a similar occurrence in the market again – this time potentially affecting the G650/ER types.”

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Demand is expected to drop this year, with business aviation newcomers potentially having to cut travel and maintenance expenses in the case of an economic downturn, according to the report, ALTEA’S Perspective on the Pre-Owned Business Jet Marketplace in 2023.

It found that the average number of days on the market will rise in 2023 and more sellers will lower their asking prices, with more pre-owned business jets coming to the market on the supply side. Inventories will increase, with buyers benefiting from more choice and less pressure to close purchases quickly or wait for a downturn to buy for a lower price. But ALTEA said the shift is not a cause for concern, factoring in OEM backlogs.

“This shift away from a heavily biased demand-driven market is a blessing for most brokers given the rather extreme market conditions that existed post-COVID,” said Andrew Butler, partner, ALTEA. “Quality pre-owned aircraft did not come on to the open market very often, being snapped up before many discerning buyers even knew they were for sale.”

He said that this market, rather than going “back to normal”, represents a “new normal” post-pandemic. “The old normal had seen our industry plunge since the worldwide financial collapse of 2007/2008,” he said. “Inventory levels post the financial crisis reached nearly three times the inventory level of today. Whilst that was a short-lived experience admittedly, inventory levels remained at nearly twice today’s number right up until the pandemic of early 2020. Evidence shows that the business aircraft market had an oversupply of inventory for more than 10 years.”

Jean Sémiramoth, partner, ALTEA said that while the market is “undoubtedly narrowing, there remains a gap between supply and demand for now”. He said: “Rather than a disruption, we’re seeing a mild shift whereby, to the benefit of buyers, market conditions favour sellers a little less without moving to a buyer’s market, at least in the short term.”

Sémiramoth said buyers are more likely to want more pre-sale inspections and complete records and delivery conditions, adding that sellers and financiers alike should engage appraisers to get accurate estimates of aircraft values to insure additional costs aren’t incurred.

ALTEA said it has already seen a number of newly ordered aircraft become “quietly available” with some deliveries due in the third and fourth quarter of this year – another sign the market is cooling.

Read the full report here.

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Dunlop told Corporate Jet Investor: “We think in such uncertain times there could be more activity to come in terms of alternative financing and private investors. The market place holds some distressed organisations, they need alternative sources of cash and restructure. We can support those that are looking in on business aviation with a view to long-term investment.”

Fellow founding partner Andrew Butler said the Ares-Bombardier refinance is just one of a number of asset restructuring projects that ALTEA is working on “behind the scenes”.

Dunlop revealed to Corporate Jet Investor ALTEA is currently aiding a start-up OEM develop a new aircraft: “We can’t reveal too much but yes, we are supporting the activity with a start-up OEM who are developing a regional aircraft. It will support the move towards hybridisation of alternative propulsion fuel.”

Back with the Bombardier loan, Dunlop pointed to some unique challenges in working out the project. “There were challenges, so – yes, in the sense that there was very little transaction activity going on. We therefore needed to investigate previous downturns in the industry and look at the effects on asset values. We made assumptions that enabled our customer to move forward with confidence.”

Meanwhile, ALTEA has appointed Angus von Schoenberg as a new partner. Recognised as a regional aviation expert, von Schoenberg will work with ALTEA clients as well as continuing as industry officer with regional aircraft lessor TrueNoord.

Jean Sémiramoth, ALTEA co-founder, said, “More than ever, COVID-19 is forcing the industry to focus on finance, so it is critical that you have the knowledge, but also experience to navigate increasingly complex challenges. Bringing Angus onboard simplifies and substantiates our offer to the market and enables ALTEA to expand its aviation finance credentials significantly.”

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