NAFA member, Aerlex Law Group President Stephen Hofer, discusses worldwide economic woes in the private aviation market.
Raging inflation. Tumbling stock prices. Plummeting portfolios. Rising interest rates. Fears of recession. Dramatic price increases for jet fuel. A stubborn pandemic that refuses to recede. Supply chain woes. War in Ukraine. Sanctions on Russian aircraft.
The domestic and international economic news through the first six months of 2022 has been, for the most part, discouraging, but its impact thus far has been minimal in the private aviation industry.
As an attorney who advises clients on the purchase and sale of business and corporate aircraft from our Aerlex offices in Los Angeles, I have to pay careful attention to what is going on both in the general economy and specifically the private aviation industry. The warning lights are flashing yellow and red for the overall economy, but they’re still blinking green in the corporate aircraft lane and probably will for the rest of the year – although 2023 could present a different story.
There are a number of factors that continue to buoy aircraft prices. Demand remains strong and both individual and corporate would-be buyers have the cash reserves to pay for their purchases, sparked in part by the $6 trillion in Covid relief stimulus that the United States government poured into the economy in 2020 and 2021. Although Covid-19 continues to present risks as the coronavirus mutates, the widespread introduction of vaccines and the lifting of many travel restrictions around the world has spurred a renewed interest in safe travel, both domestically and internationally.
This article was originally published in BusinessAir Magazine, July 2022, Volume 32, No. 7.
