Chad Anderson serves as CEO of Jetcraft, a business aircraft sales, acquisitions and trading firm. He joined the company as president in 2005 after spending five years  managing corporate aircraft sales and leasing with Bank of America. In addition, Anderson held positions with Regent Aviation and Cessna Finance Corporation. A licensed commercial pilot and certified flight instructor, he lives in Minneapolis, Minnesota. 

Q: The business aircraft sales market seems to have cooled down somewhat from record increases during the pandemic. What is your perception on what has happened in the last couple of years, and why? 

A: In 2021, when things were in an extraordinary fashion, a huge percentage of the buyers were [from] the ultra-high-net-worth-individual segment. Very few of the buyers were the standard, analytical, planning-type corporate buyer. It was a bit more personal, a bit more efficient, and that I think is what was creating all of that excitement and demand around the business aircraft segment in general. So, in ‘21 and ‘22 saw that, but ‘22 and into ‘23, we started to see the more rational corporate type of mentality, where they analyze fleet replacements, they plan their purchases years in advance—they’re not making decisions to purchase aircraft in the next 60 or 90 days, they’re making decisions to purchase aircraft in 18 or 24 months. It’s just back to normal, is the way I would really categorize it. And now we don’t have as many of the emotional buyers. It’s a far more rational process. The high-net-worth segment is now well balanced out with the corporate segment, and the manufacturer backlogs are what I would call sustainable and rational—[things] aren’t so extraordinary in backlog that we would see pre-owned values run up to levels that are unsustainable. 

Q: What needs to happen—or to not happen—to maintain this normality for a while? 

A: We’re not going to be able to maintain it. I guarantee you, our market’s going to ebb and flow. What we need to have happen, though, is there just needs to be—and I would say we’re seeing it now—a proper level of utilization of the right class of aircraft for whatever the design and mission is. We need a healthy mix of charter and fractional providers that survive and do well, because those are the ... easiest point of entrance for somebody to get a taste of the tool. So, you need success in the charter and fractional market. You need rational use of the aircraft across the spectrum, via light jets on up to the ultra-long range. And in general, you’re going to always have some economies doing well, others not so much. Even in a challenging market like what we see in the U.S., what you’re seeing over in Europe, people still run their business. 

Q: The industry saw a significant influx of new customers during the pandemic. While many of them were buying jet cards or ad-hoc charter, some bought aircraft. Are they staying in private aviation now that commercial services have largely returned?  

A: There were several airplanes we sold in the upturn, [where we thought], ‘This guy’s going to be out in two years.’ We could pretty well predict those players that weren’t going to be long-term, because their reasons for buying [aircraft] were just purely emotional. At some point, rational comes into play and they’re like, ‘Yeah, these things are pretty expensive. I’m only flying 50 hours a year. I don’t need a whole airplane to do that. There’s a better solution over here, and now there are other solutions that are better armed to fulfill that requirement.’ There’s several clients and several examples I have in our own portfolio that are like, ‘This is amazing, and I’ll never go back.’ Those who really, really, want that ultimate control are still going to own whole aircraft for a good, long time to come.

Q: Is the departure of those more emotional, less rational owners the main reason for the market calming down? 

A: It was most certainly an ingredient of that, yes. But ... when you hear supply is climbing, remember it’s climbing from 2% to maybe 5%. We only really get worried when it’s north of 10 or 12%, you know? When I say ‘worried,’ then you’re going to expect more squishy pricing, et cetera. At the point we’re at, supply is doubled—but it doubled from 2%. And so that’s why we’re just back to a pace of action that is perfectly normal. So, the answer to your question is ‘yes’, some of that is that. [But also] we have several examples of clients that said, ‘I’m going to buy a Challenger 604, but I need a Hawker 900,’ [and] right now what’s happening is we’re getting them out of the Challenger and into the Hawker. They’re just right sizing the airplane. They thought they had to have a Challenger because their friend had one, and this one was available, so they took it. Well, now they’re coming back to a more proper-sized airplane for the mission. So, there’s a lot of that going on, too.

Q: We’ve recently seen Wheels Up appoint restructuring lawyers and questions raised over the financials underpinning VistaJet. Do these developments give any cause for concern?

A: I would say we’re in a watch-and-see mode at this point. Each product that those two examples fulfill are very different [and] the class of airplanes that would get brought to market would be very different in both cases. If you look at VistaJet, for instance, they have young Globals and Challengers and so on and they’re very sustainable airplanes, more fuel efficient, et cetera. And then [with] Wheels Up [it’s] going to be King Air 350s and Citation Xs, and there’s still a market demand for any of those. The market can take it. 

Q: Jetcraft’s recent market forecast reports a levelling-out in the light-jet sector. Can you explain that a little bit, please?

A: Whenever we’re doing an acquisition for a client, you identify the design and mission. And if the design and mission is appropriate for a light jet, then that’s the airplane you target. I’m an owner-pilot. You see a lot of owner-pilots that go up to the light-jet segment and then they’ll have an owner-pilot flying with a co-pilot, for instance, so that’s a part of your design and mission criteria. In the Americas, the light jets service the geography very well. Same in Europe, and both regions are very well-supported by the MROs. It’s just also easier. You’re going to have more people who can afford a $5 million airplane versus a $25 million dollar airplane. And we have people that are being cautious about when they fly, smarter about how they use their airplanes, and a light jet is a pretty versatile tool. So, you have good support, and you have the top two markets in the world that are very well-situated to handle the light-jet segment. 

Q: Are the OEMs developing the right aircraft, or are there some gaps out there that you would like to have somebody come in with a new type to fill? 

A: I’m not a good critic of the OEMs. I’m a big supporter of them. I have to compliment how much energy and dollars they put in to studying the client requirements before they ever go to certify an airplane. If you take a look at their order books, that would tell you they’re doing the right thing. But what’s missing? We know we’re going to see electric lift. We know we’re going to see eVTOL. It’s not ‘if,’ it’s ‘when,’ and which one or two survive. It’ll be fun for us to be a participant in that—we’re not a manufacturer, so it’ll be fun. 

I still see the obstacles for most of those new product entrants ... It’s incredibly hard to be a new upstart company, and in some of those products, they’re going to buck the trend in terms of getting support from the governments in how they’re going to have air traffic control work these aircraft into the system and so forth. I’m a little-airplane owner. I have a Cirrus. I’m trying to picture little battery-operated helicopters around my airport here, and how am I going to avoid them? I don’t think they’re going to dot the skies and be like what we used to hear about. 

Q: It sounds as though eVTOL is an area Jetcraft is going to be keeping a watchful eye on, at least. 

A: Oh, for sure. Our clients are going to be operating in it, and they’re going to want to know, and they’re going to want to be able to bounce questions off of us. They may not be just users of it, they may be owners of it. So, I think the quality of the product and who survives in this process will drive that direction, but I think it’ll be fun to see. ... We’re taking a very logical eye on it, and excited to see what’s next.