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Analysts Expect Growth in Asia's Pre-Owned Aircraft Market

Februrary 20, 2012

Asia’s market for pre-owned business aircraft is expected to grow substantially in three to five years as today’s buyers of new business jets put their aircraft on the market and trade up to newer models, according to several consultants who operate in the region. The trend is predicted to be most dramatic in Southeast Asia and China, where business aviation now is just taking hold.

Already, Jetcraft Corporation, which handles sales of new and used business aircraft worldwide, is increasing its presence in the region in anticipation of an emerging and growing pre-owned market. Mirroring today’s sales of new business jets, Jetcraft predicts that most of the future demand for used aircraft will be for longer range, large-cabin models.

“The trend in that region is being driven primarily by geography and the operational requirements for people traveling in and out of there,” said Chad Anderson, Jetcraft president. “It’s very consistently 3,000 to 4,000-plus miles per trip.”

Most of the buyers in the region – as many as 90 percent, according to Anderson - have been first-time buyers of new business aviation aircraft.

“The regulatory environment in those countries is relatively new,” he said. “The operating authorities have almost mandated a consideration of new aircraft because, frankly, they’re not as knowledgeable as or experienced in importing pre-owned aircraft from other countries.”

However, that is expected to change as these fledgling business aviation markets mature. The growing demand for pre-owned aircraft probably will surface first in Malaysia, Indonesia and Singapore; but probably won’t be strong in China until the later part of the decade.  

“Southeast Asia, outside of China, I view to already be a good marketplace for five years and younger aircraft,” Anderson said. “There are fewer obstacles and more experience in some of the pre-owned models than what China is going to be able to offer for a while.”

As China’s market matures, Anderson predicts more management companies will set up shop, helping drive the market for used business jets. “The more educated those companies get, as well as educating buyers in the terms of a pre-owned [aircraft], then I think you will see people getting more lenient and buying [them],” he said.

At present, China’s business aviation market is small. “Only half of those are used by companies or by the airlines chartering out to people,” said Christopher Jackson, co-founder and managing partner of Jackson Rosenberg Ltd, a China-based aviation consulting firm.

Jackson added that the lack of an adequate service network that can handle the needs of business aviation users also will slow the growth of a pre-owned market in the country. “You can only have a market that’s so big when you have no infrastructure to support it,” he said.

Jackson adds that it will take several years for business aviation operators to develop the relationships and trust with Chinese prospects that are so necessary for success in the country. “Right now is the time to get established in the region so that you are the partner and the company with the knowledge and contacts, and can maximize the returns once the expected growth occurs.” he said.