luxury jet buyers think resale value in tough market
Last Updated : GMT 06:49:16
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Last Updated : GMT 06:49:16
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Luxury jet buyers think resale value in tough market

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Arab Today, arab today Luxury jet buyers think resale value in tough market

Low prices of used aircraft have limited demand for new private jets
Los Angeles - Arab News

Members of the elite private jet set are customizing their planes with full-sized showers, beds and windows — but when it comes to decorating, an increasing number are steering clear of gold panels and gaudy features, opting instead for the airborne equivalent of beige.
The reason, industry executives said at a convention in Las Vegas this week, is fear of getting stuck with a highly personalized aircraft that will not fetch a good price in today’s competitive market for used business jets.
To win sales, planemakers like Brazil’s Embraer SA offer interchangeable seats and arm rests to make the planes easier to resell, but still have original design options for their elite clients with names like Sky Ranch and Kyoto Airship.
“If you make it Moulin-Rouge on the interior it’s going to be a (multimillion-dollar) refurb in the aftermarket, so that’s a problem,” said Jay Beever, an Embraer vice president for interior designs, referring to the historic Paris cabaret.
The low prices of used aircraft have limited demand for new jets, forecasters said. Deliveries of new planes are seen staying flat until 2019, even though profits on the S&P 500 have grown at a double-digit rate over the last two quarters.
“We see that customers are going toward a more simplified aesthetic when specifying their business jets because they are becoming savvy with respect to the residual or resale value of their aircraft,” said Anna Cristofaro, a spokeswoman for Bombardier Inc. business aircraft.
Financiers have a strong preference for generic aircraft without highly configured interiors or garish color schemes because they are easier to resell in the case of default, said Paul Sykes, director of FlyFunder, an online site dedicated to aircraft finance.
Ken Hill, chief executive of California-based Business Aircraft Sales Corp., which repossesses aircraft for banks, recalled how he once seized an all-black Cessna plane for a client that had to be repainted for about $65,000 before it could be sold.
While the market has taken a conservative turn, private jet company executives said there remains an elite cadre of wealthy customers who want it all — queen-sized beds, showers and, in one case, a holographic projection system.
Bedrooms are popular on Bombardier’s long-range Global 7000 jet, which lists for almost $73 million and is sold out until 2021.
Embraer offers versions of its Lineage aircraft that integrate wood and brass nautical accents for yacht lovers, and a Japanese-themed plane with a sushi table. The separate bedroom on an Embraer Lineage 1000, a business jet converted from an Embraer E190 regional jetliner that lists for $53 million, is an attraction for female chief executives who want to sleep apart from male coworkers, said Beever.
“There are certain individuals who don’t care because they just want what they want,” said Beever. “So the challenge is to come up with ways to personalize and customize (those jets) so they get what they want, but maybe make it easier to refurb later.”
Beever recalled how the availability of a 20-inch-by-36-inch (51 cm-by-91-cm) window helped persuade one customer to buy a Lineage after years of shopping around. Embraer makes the oversized window using borrowed technology from the jets it modified for search and rescue for the Brazilian coast guard.
“Not one of those conversations ever (focused on) resale value,” Beever said. “Though, what he has is resellable.”
One customer request Beever said he could not fulfill was the use of holographic technology on board that would produce the appearance of a ghostlike image similar to scenes from the “Star Wars” movies. “That was an exotic request for me.”

Source: Arab News

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