While acknowledging the difficulties and uncertainties that have come with the global Covid-19 pandemic, industry leaders are upbeat about the prospects for business aviation given the new entrants and the fact that flight hours are climbing back even without business-focused flights.

During an AIN webinar Tuesday, “A Business Aviation Update from Trusted Advisors—Separating Fact from Fiction,” Jay Mesinger, president of Mesinger Jet Sales, said it is a fact that the pandemic has changed the business aircraft market. When people started to indicate in March and April that they would not fly commercial (on airlines), there was skepticism on whether that would translate into business aircraft sales.

“Actually, starting in June, it has translated,” he said. “We have never been as busy. We are working very hard to take those people…and help them buy their first airplane. [It’s] very, very exciting.” This has a ripple effect because these sales mean more insurance gets sold, hangars rented, pilots hired, and maintenance accomplished, Mesinger added.

Demand is increasing, but for individuals, he said, adding the corporate buyer has “pretty much retreated right now. Corporations are sitting back for the moment.”

Despite that increase in new buyers, Mesinger called “fiction” the belief that the new business is driving up prices. First-time buyers are looking for opportunity, he said. As a result, prices have softened anywhere between 5 percent and 20 percent. But that’s a vast improvement from the price drops of 50 percent to 70 percent experienced in 2008. He also called current rumors of the availability of huge discounting now “fiction.”

“I haven't seen a huge amount of supply coming in and, although we've got a huge amount of demand from the first-time buyer, the corporate buying has almost all stopped. So, it left the supply and demand ratio still fairly balanced.”

Because the corporate buyer is waiting in the wings, the market still is not stable, he said, saying rumors to the otherwise are fiction.

Also speaking during the webinar, GKG Law president Keith Swirsky said he too is seeing a lot of first-time buyers, particularly in the area of fractional ownership. “Those tend to be buyers that do not have business use for aircraft and they are specifically having conversations with me about not wanting to fly commercial.” The customers have not experienced much private aviation, he said.

“They're looking for other options such as block charter from a management and charter company or any other kind of products or derivative products that are in the marketplace today,” he said.

Also, he is seeing a lot of tax-, financing-, and pricing-motivated purchase decisions. “I'm seeing a lot of strategic buyers, trying to obtain a big write-off, low cost of financing, and an attractive pricing environment,” he said.

Swirsky said there have been incorrect assumptions associated with how quickly a deal can get done because, with much more financing ongoing, the process has slowed. “Financing has become the long pole in the tent,” he said.

In addition, Swirsky added he’s been surprised by the number of calls he’s gotten from new buyers looking for bonus depreciation—a business write-off—when they want the aircraft for personal use. “There is a big fiction, which of course has been prevalent for years and in particular now, which is I can buy a plane and write it all off.”

As far as the pace of recovery, Dan Drohan, chairman and CEO of Solairus Aviation, likened it to a checkmark model, giving the analogy of riding down the elevator and walking up stairs.

“Early on, we contemplated whether this was going to look more like September 11th or more like the 2008 financial crisis. As it turns out, I think it's really a whole new animal, something totally different for us,” he said. “I would say Covid has impacted us for longer than we expected, but probably not as deeply as we anticipated.”

Drohan estimated that following the April trough, activity has returned to roughly about 85 percent of what it was in 2019. The fleet development side of the business has been brisk, he said.

The types of flying have changed, he agreed. Most people are flying for leisure and traveling between homes as the trend in the virtual environment has been to leave metropolitan locations for homes in more vacation-like spots. As such, these executives now need to move between first, second, and third homes rather than business facilities.

While there’s no question that the pandemic is bringing new people into business aviation, the question is whether these people will become long-term customers. “I see a lot of what I'm going to call ‘one-hit-wonders’ right now, especially in the charter world,” Drohan said. “I think people are experimenting with this.”

The good news is this travel has offset some of the corporate travel that still hasn’t returned. “And hopefully for all of us, we capture some of them,” he said. The key, he added, will be to bring a high level of professionalism and service. He also stressed the need for the business aviation community to work together to ensure a consistent experience.

“I have always been a big believer in cooperation. Today, [with] my biggest, fiercest competitors, we're fighting like hell against each other for a client. Tomorrow I will need one of them to take care of the client I've already earned,” he said. “So, I think integrity, direct honesty, and working well with industry peers is a really critical key to that outcome [of retaining new customers].”

But he warned that charter companies should not race to the bottom on pricing to keep those customers. New clients should be brought in with proper expectations on pricing, Drohan said.

Mesinger agreed and said the same holds true with aircraft brokerage, noting some clients search out price first. “But if you're focused only on the price, you could get really caught up in the cost,” he said, and then lose on service. “I've had people get out of the airplane business because they've had a bad pilot experience. They've had a bad management company experience. It has nothing to do with the airplane or meeting the needs or meeting the mission. It was the ancillary services that just frustrated them and made them get out. And that's getting out for all the wrong reasons.” Those clients typically chose vendors because of price and walked away thinking the entire industry was bad.

“I absolutely believe in the team approach,” Swirsky further said. First-time buyers should have a team of advisors that “know each other well, that enjoy each other's professionalism, and can work together for the benefit of the client. High-quality service, caring for your client, and doing a good job for your client is a key to success for everyone involved in the transaction and primarily the client.”

As far as prospects for 2021, Mesinger said his anticipation and hope is that next year bests 2019. He noted that the industry was actually starting to see a slowdown then and pointed to December 2017 numbers when used sales reached 405 but then fell to 256 last year. He said that given the current environment where business is active even without corporate flying, there could be a boom in business once corporate flying returns. But, at the least, his hope is 2021 exceeds 2019 levels.

Swirsky was equally optimistic, saying his practice, in particular, saw a surge in business in August and added that business is appearing “analogous” with 2007.

Drohan also agreed, saying he is bullish about the current market dynamic. But in the meantime, he said, the company is remaining cautious in its approach to business because there are still so many unknowns that have come with the pandemic.