The world's ultra-wealthy are crowding into the private jet market, driving an unusual phenomenon in which used aircraft trade at higher prices than new ones. Because buyers who order a new jet must wait years for delivery, demand is surging for used aircraft that can be used immediately, even at a premium. Some buyers are now taking delivery of new jets and reselling them right away for gains running into the billions of won.
Private jet prices are soaring in the used market as a jump in demand collides with delivery delays, Britain's The Times reported on the 25th. Aircraft built only one or two years ago are drawing especially high prices, since they differ little in performance from new models and can be handed over immediately.
Barbara Pansadoro, a partner at aviation finance law firm Addleshaw Goddard, said that ordering a new private jet can mean a wait of three to four years for delivery, and that wealthy buyers who do not want to wait are turning to used jets.
Supply Choked, Demand Exploding: Used Jet Prices Take Off
The shortage of private jets is attributed to a combination of supply chain disruptions that have persisted since the COVID-19 pandemic, production delays and a lack of skilled workers. Manufacturers have struggled to keep up output amid shortages of cast and forged components needed to build aircraft and a lack of labor, while purchase demand has risen quickly.
Newly rich buyers who have amassed large fortunes in artificial intelligence, information technology and cryptocurrency have emerged as a new source of demand. For buyers seeking to cut travel time for business and move quickly on their own schedules, a private jet has become more than a luxury item — it is a tool for working more efficiently, analysts say.
Pansadoro said demand from wealthy buyers who view private jets as a business necessity is driving prices higher. With supply unable to keep pace with demand, the scarcity of aircraft available for immediate use has pushed even the used market into overheated territory.
Reselling Right After Delivery: Jet "Flipping" Emerges
As prices keep climbing, some buyers are engaging in so-called flipping — reselling a jet immediately after taking delivery to pocket the difference. Even buyers who can afford to order a new aircraft are shopping the used market to avoid the long wait, which means securing a new jet and reselling it to such buyers can turn a profit.
Oliver Tebbit, a partner at aerospace law firm HFW, said anyone taking delivery of a new large private jet has a good chance of finding a buyer on the resale market. A person familiar with the industry also said demand for private jets is very strong and that the trend is especially pronounced in the used market.
Mike Francis, head of aviation finance at Citigroup, told the Financial Times that there would be no reason to pass up a chance to make $10 million (about 13.2 billion won) with no effort at all. Private jet prices vary widely by model and specification, but top-end aircraft exceed 50 million pounds (about 88.5 billion won). Long-range models such as the Gulfstream G500, G650 and G800 are among the most sought-after.
The United States is the largest market, home to about two-thirds of the world's private jets. Britain has more than 500 registered private jets, the sixth-largest fleet in the world.