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Power brokers

Posted 26 June 2018 · Add Comment

Dave Calderwood catches up with Jetcraft president, Chad Anderson, to ask him to spill the beans on the broker’s remarkable success

Jetcraft is one of the world’s leading business aircraft brokers. In 2017, it completed 93 transactions – that’s eight a month or two a week when you take out time lost over Christmas.
It was a record year for the company, topping off a decade of growth that saw 550 transactions valued at more than $10 billion.
During that decade, Jetcraft has opened offices around the world – two in Dubai – to accelerate its global presence. This February it opened its first UK office in Mayfair, London, a district popular with high-net-worth individuals, especially from the Middle East.
The opening coincided with Jetcraft’s 10-year business aviation forecast, which paints an optimistic picture as the world shrugs off the lingering effects of the 2008 economic crash.

Q) Why open a London office now?
A) London is the financial mecca for many countries in Europe, the Middle East, Africa and India. We have a lot of clients from several continents who like to gather here, have homes here and businesses. Our business model is to be within a few hours of any of our clients.
As we looked at the improvements in North America and Europe, the number one and two markets worldwide, we couldn’t afford not to be in London.

Q) What’s driven the rapid growth of Jetcraft over the past decade?
A) The globalisation of our enterprise. You have to remember that Jetcraft was founded more than 55 years ago. A lot of our clients are repeat or referral clients. As they’ve grown, so have we. A client who bought a Citation One 20 years ago is probably today buying a G450.
Jetcraft made a momentous, strategic change to our business model back in the early 2000s, when Bucky Oliver, our founder, started the Jetcoast programme. We were buying factory-new Challenger 604s, green, and doing our own custom completions.
Up until then, Jetcraft had been a mid-size and under broker – that was our market, the smaller aircraft. But things changed once we got into the 604s, which became the 605 programme, and subsequently we’ve done numerous Globals on the factory-new side, in addition to other work with Dassault and Gulfstream.
We’re among the few dealers, brokers who are either crazy enough or smart enough to do factory-new aircraft at an ultra-high-end level where our presence makes a difference. That difference may be completion flexibility, it may be availability of supply, as well as tradeability.
The one thing manufacturers universally agree on is that none of them really like to do trades. They do trades when they have to, but that’s certainly not a strategic objective.
That’s our business model. We fit that mould. That’s exactly what I want to do. I want to take a new aircraft sale and turn it into two or three aircraft deals. I love trades and I’m OEM indifferent. I don’t care if it’s a Gulfstream, Bombardier, Dassault, we like them all.
The thing is, we care about the transaction structuring, being able to make a good deal for the client and a fair trade for Jetcraft. Our objectivity among the main OEMs has helped us stay in the face of the ultra-long-range buyers.

Q) How do you attract new customers?
A) Sometimes we attract a client through open marketing and our sales directors networking and so forth. At other times, it’s either inventory or relationship-driven. Thankfully, it’s a pretty good mix of both.
We love it when we can attract a new client through our expensive marketing, but a huge amount of our business is still client referrals. They really rely on us.

Q) How can you be so positive in your 10-year forecast?
A) Even as much as a year ago, we had a lot of market indications that were conflicting. Prices were still falling at a relatively rapid pace, nothing was agreeing. Now everything is pointing in the same direction.
North America, the largest installed base of current owners, has returned in a big way for several reasons. Number one, businesses are full of cash and now finally at a place where they’re comfortable doing fleet replacements or fleet right-sizing.
Europe has been growing nicely for us again, even in the form of it being a supply chain. So, even if Brexit is going to be confusing – people don’t have confidence yet to go ahead and buy an aircraft, they’ve said: “Heck, I’m going to get out of it for a bit until I know” – there’s more than enough demand in North America to take good-quality European aircraft, which most of them are.
The other thing we’ve seen is Asia, a market that didn’t exist 10 years ago and today it’s the number three market in the world.
So, of our seven continents, the top three are North America, Europe and Asia, all giving the same confident signals.

Q) What’s selling?
A) Some people will always take the three or four-year-old aircraft that has seen showroom depreciation. That’s what the market is favouring right now –- five years and under, young, bigger aircraft.
The other trend we’re seeing, and you’ll notice that in our forecast, big aircraft are not just in vogue, they’re meeting the desired mission of the buyers in today’s world.
They’re buying them because, while a trip from New York to Chicago is incidental, a trip from New York to Dubai, or New York to London, is now common. The need for the truly international abilities of the bigger aircraft is what the market’s telling us is the future.

Q) What are the most exciting aircraft?
A) It depends on the day! We’ve resold 14 G650s in the last two years. The G650 has been a hot model.
Lately the Falcon 7X – we have two 7Xs and have multiple offers of both. We did 50% of the Global 5000s and 80% of the 6000s last year.
I’m excited about the Global 7000, simply because so many of our clients have them on order. It’s not yet certified and we don’t want to see Bombardier miss that, because it’s important for the company’s success to hit its certification targets. It’s a beautiful aircraft with a four-cabin environment, an apartment in the sky. You can work in one cabin, sleep in another, dinner in another.
The Falcon 5X was cancelled but we know there’s something else coming. I’m excited to see it. Dassault builds a lovely aircraft; they’re efficient, they’re technologically advanced.
Gulfstream 500 and 600 are going to be logical successors to the 450 and 550. That upper end is fun, it’s sexy, it’s needed.

Q) Can Cessna move up to that bracket?
A) Yes, they can, they're trying. The thing about Cessna is they have incredible brand loyalty among their installed base of clients – and they have an incredible installed base of clients.
The only thing I’m a little guarded about is that a lot of their installed base are owner-pilots, the CJ series for example. The bigger aircraft, the Hemisphere, Longitude and Latitude, they aren’t owner-pilot aircraft so they’re going to have to make an impact in a different way.

Q) What’s your opinion of the Middle East market?
A) The Middle East has always been a good market for us. It’s a niche market in terms of size; it’s not huge, but the beauty of it is that the deals that are done are customarily big aircraft. They need to be able to go London to Dubai, or Riyadh to London.
I’d love it if oil prices were higher. If you look at the [business jet] market, it’s always been higher when the oil price is high and the dollar is weak. Well, the dollar is weakening and the oil price recovering.
The Middle East is an important market for sure, but we haven’t seen a major swing for better or for worse.

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