- 18 Feb 2021
- Tony Kioussis
- Market Insight
With thirty years’ experience in aircraft sales behind him, Alireza Ittihadieh shares insights with Matt Harris on the white-hot pre-owned aircraft sales market that is carrying momentum from Q4 2020 into this year…Back to Articles
With 30 years’ experience in Business Aviation, Freestream Aircraft is headquartered in London, UK, but has a team of 15 aviation consultants located strategically around the world, and offices in six countries.
The company aims to offer buyers and sellers of business aircraft “agility across markets, efficiency and discretion” – a kept promise reflected in an impressive portfolio of clients, including international and multinational corporations, private individuals, royalty, heads of state, and artists.
Freestream was founded by CEO, Alireza Ittihadieh, a business school graduate who enjoyed a successful career as a banker specializing in foreign exchange before he quit the banking world to pursue his passion of aviation.
Already holding a pilot’s license, “I thought it would be a walk in the park,” he told AvBuyer, but he soon found that wasn’t the case. Right from the start, Ittihadieh intended Freestream to approach aircraft sales from a different angle.
The strategy was to see what was missing in the market, and then seek to offer services filling those gaps. Ittihadieh took an approach he’d honed during his banking career, targeting and approaching corporate clients initially (Freestream’s first three clients were Mobil, Shell, and Ford, he recalls).
Then, having built a strong portfolio of corporate clients, and with momentum growing, Freestream set its sights on assisting High-Net-Worth Individuals with their aircraft acquisition needs.
Over time, the company became a “multi-faceted business”, to use Ittihadieh’s words, and today offers aircraft interior design and completion management services, charter brokerage, broker-dealer services (having its own inventory aircraft), and providing services such as specialists for pre-buy inspections in specific aircraft makes and models.
Developing affiliations with aircraft brokerage firms worldwide, and with collateral buying power with the leading aircraft OEMs, Freestream has achieve more than $10 billion-worth of sales since it began operations.
The company averages 60 aircraft transactions annually, with sales spread across a wide range of business jet types – from Mid-Size up to Ultra-Long-Range, including various Gulfstream types, Dassault Falcons, Bombardier Learjets and Globals, and an impressive number of VVIP Boeings. And activity isn’t limited to private jets – the company has also overseen several helicopter transactions.
AvBuyer: Tell us about pre-owned aircraft sales from a Freestream perspective – how did 2020 unfold, and how is business looking in the first quarter of 2021?
Ittihadieh: The market came to a screeching halt in March 2020 with the impact of Covid-19, and it seemed like there was no light in the market until the end of May or the beginning of June.
We closed on four transactions in Q3, and 14 in Q4 – so everything sprung to life in Q4 last year. The momentum hasn’t stopped with the New Year. We’ve seen huge levels of activity in Q1 2021 – though I should hasten to add that there are no premiums being paid.
Personally, I’ve never had my hands so full. The level of activity we are seeing is so high that we’re actually turning business away if prospective clients are unwilling to cooperate on exclusive acquisition agreements, etc.
AvBuyer: Looking at AMSTAT data, Light, Mid-Size and Large Jet sales were up, year-over-year in 2020, which is remarkable considering all that happened to hinder the market. Which segments look the most promising in 2021, and why do you think this is?
Ittihadieh: The high levels of activity certainly haven’t been confined to just the top end. We recently scoured the market to buy a Cessna Citation CJ2 for a client, and all we got was ‘headwind’ on availability.
With the burgeoning activity towards the end of 2020, other markets were shaken up, too. Those who I tend to call academic buyers – the tire kickers – became real buyers.
That’s partly down to personal safety. Many people felt that flying privately would help avoid unnecessary exposure to the virus they were more at risk from when flying aboard scheduled airlines.
I would say the safety-driven market activity was actually a notch higher than what we saw happen following 9/11. But the message is the same. The safety Business Aviation travel offers clearly matters to those who use it.
Activity at the top-end of the market stood out in Q4, for sure. I have never seen so many Gulfstream G550s trade. I’ve never seen so many Large Cabin aircraft transact, generally – including Gulfstream G650s and Bombardier Globals.
What’s driving those transactions? Value for money, pure and simple. People are buying G650s and Globals at half price. They’re getting G550s at a 70% discount. And, further fuelling the frenzied activity we’re experiencing, people want their aircraft now, there’s no appetite to wait.
AvBuyer: Finally, what advice would you offer both buyers and sellers entering the pre-owned marketplace today? How can they leverage market conditions to ensure they get the best deal possible?
Ittihadieh: Both buyers and sellers should take care to pick the right broker from within the establishment of the used market. And, when picking the best broker to represent you, don’t focus on how much to pay – focus on paying them for what they are doing. A cheaper fee doesn’t mean you’re getting value for the money.
Also, while sellers may find the offers their (larger) jets attract painful to digest, it’s essential to remember the market is ultimately bigger than us. In some cases, the aircraft being sold are considered obsolete by buyers, with many new models replacing them at the top end of the market.
So, if you’re a seller in today’s market you have to go in with your eyes wide open to facts, and with a healthy dose of reality. It’s all about reality versus illusion.
What we’re seeing now is what I’ve come to recognize as a seven-year cycle within Business Aviation. Every seven years we see a cyclical pattern in the market – pre-owned aircraft sales go down, they bottom out, and they rise again. We reached the bottom last year, and in Q3 aircraft sales shot back up again.
I’ve noticed that aviation as a whole seems to work in these seven-year cycles.
We were in the valley and now we’re coming up from the valley floor. Those buyers who were biding their time before, waiting for market adjustment, are now actively buying.
But that doesn’t mean prices are coming up, too. Inventory is down, but so are prices. So whether you are a buyer or a seller, you need to keep a real perspective of the market. A big part of that will be to hire a good broker to guide you.
More information from www.freestream.com