LABACE Convention News

Broker Has High Hopes For Latin America, Despite Barriers

 - August 13, 2014, 1:30 AM

 

Pre-owned aircraft broker Jetcraft has high hopes for the Latin American market and expects to double the number of transactions it handles this year. According to the U.S. group, demand for light and midsized jets has dominated the market in recent years, but it now sees growing interest in larger, longer-range aircraft as well.

Apart from economic growth, one factor driving demand for younger aircraft is the relatively high age of the region’s aircraft. According to Jetcraft, Brazil has the youngest business jet fleet in Latin America, and yet 45 percent of this fleet is more than 10 years old. Similarly, in Mexico, which after Brazil is now home to the world’s third largest business jet fleet, 70 percent of the aircraft are more than 10 years old. “Historically, we’ve seen a lot of [Cessna] Citations and Hawkers in Latin America,” Jetcraft president Chad Anderson told AIN. “But more recently, Gulfstream, Embraer and [Dassault] Falcon have been doing well there.”

In the past 12 months, Jetcraft has closed seven aircraft deals in Latin America, with all but one of these being for midsized jets. In one transaction the company brokered a complicated deal in which seven Hawker jets went from Macau to Mexico. “Other brokers are realizing that Jetcraft’s worldwide footprint means that it isn’t worth their time to try to learn all the steps that are involved and that, because of the size of the inventory we have, it is more important that they have us involved,” said Anderson.

According to Fabrice Roger, Jetcraft’s Latin America sales director, Brazil and Mexico still account for most of the demand for business aircraft in the region. Until the recent political upheaval in Venezuela, it was another strong center of sales activity, as was Argentina before its recent debt default. Now Roger sees Colombia rising in the ranks, having achieved a 10-percent increase in sales last year.

In his view, the key factors driving growth across the region, apart from overall gains in gross domestic product, are increasing levels of high-net, personal wealth and the larger international profile of companies and entrepreneurs from Latin America. “They have growing investments in Africa, Europe and the U.S., and they need to travel more often and farther,” he commented.

But bureaucracy and taxes continue to drag on the region’s growth potential. For instance, according to Roger, the taxes due on an aircraft imported into Brazil can amount to 18 percent of its value.

“We sold a Falcon 7X into Brazil last year,” Anderson said. “It went to a great buyer who did everything required as quickly as possible, but the transaction still took at least two months longer than the same deal would have taken outside Brazil.”

Limited infrastructure is another impediment to business aircraft sales. “Only two or three percent of airports in Brazil can accept business jets and every time there is a need to build a new airport it takes a long time,” said Roger, who is not optimistic about progress on any of these issues.