There is likely to be a significant increase in the number of business aircraft acquired on operating leases over the coming year as rates prove increasingly attractive, according to a study by Global Jet Capital.
Its research, with a panel of around 150 business aviation professionals, revealed that almost half (46%) of those surveyed expect to see growing demand for operating leases in corporate aircraft transactions over the next 12 months, while 8% say they are expecting this increase to be “dramatic”.
Only 13% think the percentage of transactions involving leases will fall over the same period.
As well as low rates, falling prices on pre-owned corporate aircraft is also making operating leases more attractive as buyers look to offset this risk and move away from cash.
Getting on for half (43%) of those interviewed expect this issue to lead to a growing demand for operating leases when buying corporate aircraft.
Across the industry, 17% of private aircraft transactions over the past 12 months have involved an operating lease, while 13% of business aviation professionals report that more than 30% of their aircraft transactions over the last year involved an operating lease.
Dave Labrozzi, chief operating officer at Global Jet Capital, said: “This research supports the trend we are seeing in activity uptick. There is a growing appreciation and understanding by clients of the benefits of an operating lease, especially as it relates to the potential risks associated with aircraft residual values.
“In markets where aircraft valuations are continuing to move, an operating lease is a way to guarantee certainty, while still accruing most of the advantages of full ownership.”
A quarter (25%) of the business leaders polled said more specialist lenders have recently come into the market, while 34% said they expect to see more specialist lenders entering the sector in the future, and a similar proportion (33%) think traditional lenders will want to increase their exposure to the business aviation market.
Overall, 32% of those interviewed believe that the growing size of the business aviation market over the next 12 months will naturally lead to an increase in the amount of finance available.
Labrozzi said: “This is an area where lenders who are not traditional banks have an advantage.
“Our mix of industry and financial expertise allows us to support the client in managing their asset throughout their lease period, and beyond, to ensure they get the best value from their aircraft.”