Pilots walk out from a Bombardier Challenger 300 business jet at the 8th China International Aviation and Aerospace Exhibition (Zhuhai Airshow) in Zhuhai, southern coast of Guangdong province, China, Monday, Nov. 15, 2010.Kin Cheung/The Associated Press
Business jet purchasing activity is accelerating around the world, and for some Canadian companies, now might be the time to get a private set of wings.
More Canadian businesses who have never owned jets before are now looking to purchase them, according to Jamie Spears, founder of aircraft dealer and distributor J.A. Spears & Associates. Mr. Spears doesn't divulge his client list but says the financial and retail sectors have demonstrated increasing interest in jets. "We haven't seen that in a while," he said.
His comments come in response to Honeywell International Inc.'s recently released annual Global Business Aviation Forecast report. Honeywell estimates that 9,250 new business jets worth more than $250-billion (U.S.) will be delivered before 2022, a modest increase from last year's estimates.
According to the report, North America accounts for more than half of projected global demand for the jets, and that demand "has increased for the first time in recent history."
In the U.S., companies such as McDonald's Corp. and BlackRock Inc. have recently come back to the corporate jet market, according to Bloomberg. Both companies have aggressive international expansion plans that would support private travel.
Even though Mr. Spears is focused on lightly used planes, he said the demand should translate into more sales for jet makers such as Bombardier Inc.
In the company's second quarter earnings call in August, Bombardier's CEO Pierre Beaudoin said that "The pipeline is very healthy." He added that he measures business jet demand both by orders and the pipeline of expected orders, and that "what has taken more time this year is closing deals. I would say generally we're in a stable market if you look compared to last year with some growth in the larger aircraft."
Airplane prices took a nosedive in 2008 after the financial crisis caused new buyers to avoid big capital expenditures. Prices dropped low enough that some of the companies who actually did buy at that time were able to sell their planes for more than their initial purchase price a couple of years later.
But now that business conditions are more stable and Canadian buyers are benefiting from the stronger dollar, Mr. Spears said, interest in corporate jets has increased. It's also a good time to finance a big purchase like a plane because of low interest rates, according to Mr. Spears, who said "money's cheap" for prospective buyers right now. A client will likely budget between $10-million and $20-million for an aircraft, although planes can be had for as little as $2-million.
He has also noticed another trend that is in line with the Honeywell report: More large Canadian companies are upgrading their jets to newer models that can fly longer ranges, including overseas. "The globe is becoming very small," he said. An entry-level plane that can make these longer journeys would be something like a Dessault Falcon 900EX or a Bombardier Challenger 605.
But these popular, lightly used planes are becoming harder to get. Mr. Spears was looking for a plane for a Toronto-based company and found one for sale in the U.S. But when he contacted the seller, the company said that business had improved, and the firm decided to keep its plane.
"Newer airplanes are becoming harder to find because there's a global thirst. And when you buy and sell airplanes, you're dealing in the global market for low [flight] time, undamaged, fairly new airplanes," he said.
Mr. Spears added that there is less demand for older aircraft, due to their lack of up-to-date technologies such as wireless internet, or that simply don't meet the needs of increasingly globalized companies.