The market for business jets–both new and used–has taken on a decidedly more global complexion in the past three years in the estimation of Jay and Josh Mesinger, CEO and vice president, respectively, of Boulder, Colorado-based J.Mesinger Corporate Jet Sales. “It used to be when the U.S. sneezed the rest of the world caught a cold,” said Jay Mesinger. “That’s not so much the case anymore, and we think that’s a good thing.”
In business for 34 years, Mesinger has seen a sharp rise in business in places such as Russia, the Far East, India and the Middle East. In the past year alone, Dassault, for example, has seen its share of business outside the U.S. rise from 60 percent to 75 percent, reflecting the much broader distribution of wealth around the world. More and more billionaires from Russia, for one, have driven the demand for new business jets to record levels, to the point where backlogs now extend out, not unusually, to five or six years and, in the case of the Boeing Business Jet, a full decade.
That means more work for the likes of the Mesingers, and more demand for low-time airplanes that can serve as interim lift while buyers wait their turn for their new equipment. “Yes, we are seeing more demand in the pre-owned side right now,” Josh Mesinger said. “But there’s been a segmentation of the used market. There’s a thin veneer of like-new aircraft filling the need for interim lift, and driving the prices up.”
Meanwhile, the softening of the market for older airplanes continues as the economy slumps in the U.S. due largely to a credit crisis that has certainly made life more challenging for the Mesingers’ clients. Transactions that used to require a 10-percent down payment now more often demand 20- to 30-percent down, and with less money available in the credit markets, borrowers less often can get 100-percent financing.
“Lenders have less money to lend in general,” said Jay Mesinger. “As a result, the basis over Libor is higher, and in a weakening economic environment, buyers want to pay less. The mindset creates a wait-and-see attitude, and people are reluctant to jump into the market.”
While long lead times for new airplanes don’t turn individuals any less reluctant, the weakening economy in the U.S. has opened more opportunities for the Mesingers’ to broker delivery positions. However, they’ve found that even with record backlogs, people want discounts on delivery positions for which their owners might have paid a 10-percent premium.
Still, the phenomenon hasn’t effected the backlog situation and the more global nature of the business in general–as well as the weak U.S. dollar–has truly heightened the status of European, Asian and Middle Eastern buyers. “The weak dollar is putting the foreign buyer ahead of the U.S. buyer,” Josh Mesinger said.
Hear Mesinger's interview in our story of the day at AINtv.com