In a troubling sign that economic inequality continues to widen in the pandemic recession and recovery, the luxury-jet market is taking off as millions of working-poor Americans face food and housing insecurities.
The Federal Reserve's wealth effect of boosting stocks and housing prices, along with shifting travel trends due to the pandemic, has not just produced a "K-shaped" recovery for the rich but also allowed them to splurge on used private jets.
Credit Suisse Group AG, BNP Paribas SA, and other bankers told Bloomberg that used private jet demand in the second half of 2020 increased. Momentum in the market is expected to roll into 2021 as vaccination efforts drive corporate demand.
Werner Slavik, chief of aviation for the equipment-finance unit of Societe Generale SA, told attendees at a virtual Corporate Jet Investor conference last week that "the smaller jet market has strong demand." He was surprised that 2020 was a "very good year."
Bankers said international travel restrictions had reduced the need for larger corporate jets. They reported an increase in first-time purchasers at the lower end of the market.
Virtual meetings and remote working for white-collar workers have reduced the need for business travel and private jet demand, though leisure travel among the wealthy using private jets surged. U.S. business-jet flight operations plunged by nearly a quarter last year.
More on the shifting travel trends is Airbnb Chief Executive Officer Brian Chesky who told Reuters last month domestic travel trends will never be going back to the way it was before the virus pandemic. He said business travel is shifting to leisure travel because technologies like Zoom can make teleconferencing possible.
A JETNET iQ Market Report showed used private jet sales rose slightly in 2020 from the previous year to 2,598 transactions.
While demand for private planes built within the last decade is increasing, sales for new jets have declined, forcing jet manufacturers to slash production.
Textron delivered 132 in 2020, down from 206 a year before. General Dynamics Corp. delivered 127 Gulfstream jets, 20 fewer than in 2019.
JetHQ, which brokers private jet sales worldwide, said deals for aircraft surged in the fourth quarter of 2020. Rebecca Johnson, president of the broker's operations in Europe, the Middle East, and Africa, expects sales will increase through 2021.
"We have a lot of first-time buyers," Johnson said. "Covid has just seemed to drive most people over the edge."
Those with economic mobility appear to be dipping their toes in the used private jet market as they want to travel for leisure. The pandemic is expected to keep commercial airlines in a state of depression for a few years.
Rich people need to get to their vacation homes somehow - and certainly, they're not flying commercial.