Business aviation is not burdened by the uncompromising rules of economics in the way its commercial cousin is. While airline bosses fret about their equipment’s operating costs and depreciation rates, a business jet – especially a privately-owned, top-end model – is an aspirational product, where brand values may matter more than residual ones.
Nothing perhaps highlights this disconnect from the real world at EBACE than the vendor of luxury cabin accessories who admits to being regularly asked by clients: “What is your most expensive product?”
However, despite this money-no-object impression in the sector, there are times when harsh financial realities intrude. When the emergent billionaires of Asia and elsewhere were ordering more large-cabin jets than manufacturers were producing, depreciation was scarcely an issue. Now demand is falling, there is a growing glut of unwanted assets on the market, and this is hammering used values, as Flightglobal’s Ascend consultancy points out.
Sensibly, the airframers have reacted by reducing output (some would argue too late). Given the production rates of recent years, they have their work cut out.
Private jet owners may love brands. But little damages the reputation of an aircraft marque more than tumbling resale value – something Bombardier, Dassault and Gulfstream will be only too aware of.
Source: Flight International
