Thomas Black ARKANSAS DEMOCRAT-GAZETTE
Sales of Smaller Private Jets on Upswing
February 12, 2015
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  • The turnaround in the private-jet market is reaching the small- and medium-sized models that fell out of favor after the 2008-09 global financial crisis.

    Buyers in 2014 included a mozzarella maker, a seller of building materials and a pasta producer. With the U.S. economic rebound picking up steam, medium-sized companies are again feeling flush enough to invest in corporate planes, said Brian Foley, a Sparta, N.J.-based aviation consultant.

    “There’s pent-up demand out there,” Foley said. “Buyers of that smaller category had stayed on the sidelines until they regained confidence in the economy.”

    Aircraft makers shipped 480 midsize and light jets combined last year, a 12 percent increase from 2013 and the first gain since 2008, according to data from the General Aviation Manufacturers Association. Large-cabin aircraft, which are favored by big corporations and had spearheaded the rebound in private aircraft sales, fell by 7 planes to 242, the first decline since 2011. Total business jet shipments in 2014 rose 6.5 percent to 722.

    The rising demand for smaller jets reflects a rebound in the U.S. economy, which expanded 2.4 percent last year and is expected to grow 3.2 percent this year, according to estimates from economists surveyed by Bloomberg. That would be the fastest pace since 2005.

    Companies such as Denver-based Leprino Foods, American Builders & Contractors Supply Co., and Divine Pasta Co. have benefited from increased consumer spending, job growth, low interest rates and a housing rebound.

    Leprino, which is the world’s largest maker of mozzarella cheese according to its website, and Beloit, Wis.-based ABC Supply both purchased new Bombardier Inc. Challenger 300 jets in 2014, according to Federal Aviation Administration registry records. Burbank, Calif.-based Divine, which makes brands such as Pizza Romana, purchased a Phenom 300 made by Brazil’s Embraer SA, FAA records show.

    Kim DeVigil, a spokesman for Leprino, and Nancy Deptolla, a spokesman for ABC Supply, declined interview requests. Executives at Divine Pasta didn’t return telephone messages.

    “The overall trend is positive,” said Pete Bunce, president of the General Aviation Manufacturers Association. “As the U.S. economy improves and you combine that with new product offerings, that all helps the lighter jets.”

    New aircraft demand has been helped by a decline in the number of used jets for sale, Bunce said. A glut of pre-owned planes put on the market after the 2008-09 recession drove down prices and dissuaded buyers from purchasing new planes.

    Kenny Dichter, founder of the New York-based Wheels Up, has signed up 1,100 customers since he started the company 18 months ago. The company sells flying time on private aircraft to members. About half of the fliers come from corporations and are moving up from airline business class to private travel as the economy improves, he said. Wheels Up has purchased 10 Cessna Citation Excel/XLS jets and 27 King Air turboprop planes.

    “We haven’t seen this kind of robust demand in the U.S. since 2007,” said Dichter, who founded Marquis Jet in 2001 and sold it to Warren Buffett’s NetJets Inc. in 2010.

    This year, smaller private-plane shipments will gain more than 10 percent and large aircraft will post no — or even negative — growth, Foley said. A slowdown in emerging markets, including China and Russia, have crimped sales of big aircraft, such as the Gulfstream 550 and Dassault Aviation SA’s Falcon 7X.

    Weakening currencies in foreign countries also may drag on sales of large jets, which are sold in dollars no matter where they are made, Foley said.

    Gulfstream, a unit of General Dynamics Corp., delivered 117 of its large-cabin aircraft last year, down from 121 in 2013. Dassault’s 7X sales dropped to 27 from 43 in 2013.

    Dassault’s Falcon jets are assembled in France and many are flown to Little Rock, where they are finished at a facility at Bill and Hillary Clinton National Airport/Adams Field.

    Lower jet fuel prices may encourage more private flying and eventually encourage owners to purchase a new plane, Foley said. Private flight operations for aircraft under instrument flight rules, which had declined for the past 15 years, held steady in 2014 from the previous year, according to FAA records.

    “The buyers of small and midsize jets are very price sensitive,” Foley said. “They shy away when things are expensive, and they move back in when things get affordable.”

    http://www.arkansasonline.com/news/2015/feb/12/sales-of-smaller-private-jets-on-upswin/