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Ever since the U.S. presidential election, Ed Dahlberg has pretty much had a smile on his face.
He brokers the sale of private jets, and already he’s seeing interest pick up and used-aircraft prices starting to firm up. The sale of a single-engine turboprop aircraft that he recently handled went for about 5 per cent more than anticipated.
“My phone is ringing off the hook” from people interested in buying used jets, said Dahlberg, president of Emerald Aviation in the Washington suburb of Manassas, Virginia. “Just the business climate feels like it’s getting better.”
The era of Donald Trump, a man long associated with conspicuous consumption, figures to be good to a whole range of luxury-goods industries. But perhaps nowhere is that excitement greater than in the private-aircraft business.
Not only is Trump, whose personal Boeing 757 became an iconic campaign image, seen as someone who will advocate for the industry, but he replaces a president who so often criticized private-air travel that he turned it into a taboo symbol of inequality and helped prolong an almost-decade-long sales slump.
“You’ll see more people not being gun shy or embarrassed or apologetic for operating a corporate jet,” said Steve Varsano, founder of broker The Jet Business.
Demand for private jets is far from the heady days of more than 1,000 deliveries in 2007 and 2008, before the recession hit.
In 2016, manufacturers were set to ship 655 jets, according to a JPMorgan Chase & Co. estimate, lower than 689 in both 2014 and 2015 after an oil boom that had boosted sales among drillers went bust. Used jet prices have tumbled 12 per cent since November 2015, the bank said.
It’s far too early to see any sales pickup, of course, and the industry buzz of a comeback is just that at the moment. But investors are encouraged. Shares of private jet manufacturers have soared on Trump’s victory.
Since Nov. 9, Textron gained 19 per cent, General Dynamics rose 12 per cent and Bombardier jumped 22 per cent. Aircraft sales amount to about 30 per cent of their revenue.
“The Trump win looks positive for bizjet demand given the post-election stock surge, economic stimulus from an expected lower tax rate and less regulation, and shift away from Obama’s anti-bizjet rhetoric,” Cai Von Rumohr, an analyst with Cowen and Co., wrote in a report earlier this month.
Alain Bellemare, chief executive officer of Canadian planemaker Bombardier, said in an interview that in Trump he sees “somebody understanding the value of business aircraft and what it creates.”
“Anybody who is pro-business, pro-growth, who will foster investment in infrastructure — it’s all good for our business,” he said. “So I hear the tone now and I’m optimistic.”
Most of the manufacturing jobs to produce corporate jets are in North America, Bellemare said. That fits in with Trump’s theme of keeping factory workers in the U.S.
Both Bombardier and Textron’s Cessna unit make aircraft in Wichita, Kansas. Bombardier also makes turboprop planes at its Downsview factory in Toronto. Gulfstream, the corporate jet unit of General Dynamics, has its factories in Savannah, Georgia. Even Brazilian jet producer Embraer SA manufactures planes in Melbourne, Florida.
Trade groups have long argued that private aircraft are business tools that help executives save time and make multi-city visits they otherwise couldn’t with commercial flights. For security, some companies mandate their top officers fly on the corporate plane.
That message was lost when auto executives flew to Washington in their private planes to request bailout money in November 2008, sparking a backlash as the economy careened into recession. A call from a Treasury Department official in 2009 persuaded Citigroup, which was getting U.S. government rescue funds, to drop plans to take delivery of a $ 50 million Falcon 7X aircraft manufactured by Dassault Aviation.
In a 2011 press conference, Obama called out private jet owners six times to bash a tax break that allows corporate planes to be depreciated over five years instead of seven years for commercial airliners. The National Business Aviation Association sent the president a letter expressing “disappointment with the way you mischaracterized and disparaged business aviation.”
But that was then, as broker Dahlberg sees it.
“I’ve noticed that while there’s still a huge amount of inventory, people just don’t keep dropping the price every week,” he said. “You can really feel the floor in the market right now.”