Market Insights: Steve Varsano, The Jet Business

Past mid-way in 2021, how is the pre-owned business jet market looking? Steve Varsano, founder of The Jet Business, shares his perspectives with Matt Harris…

Matt Harris  |  06th July 2021
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Matt Harris
Matt Harris

Matt Harris is Commissioning Editor for AvBuyer. He is an experienced General and Business Aviation journalist...

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With its headquarters located on Park Lane in London’s West End, The Jet Business is an aircraft brokerage with a difference, being the world’s first street-level showroom for the marketing and purchase of business jets.

Though it specializes in the Super Mid-Size, Large, Ultra-Long-Range Jet and VVIP Airliner markets, The Jet Business will – on special request – look at smaller aircraft for customers, since it keeps on top of all market segments.

The company represents its clients at every stage of the acquisition or sale process, priding itself on providing the most up-to-date product information, global market data, and world-class expertise. For this, it relies on its extensive industry relationships.

The company was founded by Steve Varsano in 2011 at a time new markets for business jets were emerging around the world, with less growth being seen in the United States.

“This made it more difficult to financially and logistically visit potential clients face-to-face – so I decided to try a new concept, and get some potential clients to come and see me,” he recalls.

Steve’s involvement in aviation goes back to when he was 14 years old and he started learning to fly in a Grumman Tiger at Teterboro Airport. “At that age it was a bit overwhelming being told by approach that you are number 18 for landing behind a Learjet.”

Eventually, after internships at the American Association of Airport Executives and the St. Petersburg Clearwater International Airport, he went to Embry Riddle Aeronautical University and graduated with a BS in Aeronautical Studies, and with commercial/instrument ratings.

Initially Steve worked at the General Aviation Manufacturers Association (GAMA) in Washington D.C. as a Special Assistant to the President, and he headed up the Statistical Forecasting and Airport and Airways Committees. By the time he was in his early 20s, he had moved into aircraft brokerage.

After selling a few jets to a private equity billionaire, he was asked to join their team to look after a flight department consisting of several jets and a helicopter. Rising through the ranks there, he become a Senior Vice President of the firm and other private equity corporate acquisition positions – but the corporate jet trading bug had already bitten…

Realizing he wanted to be back in the corporate jet trading business, the stage was set for Steve to found the first street-front showroom of The Jet Business. “It was quite a ridiculous idea at the time, and I was told more than a few times that I should seek medical help for thinking of such an idea.

"But ten years later, here we are,” he smiles as he takes time to share some market insights with AvBuyer.

Steve Varsano, Founder of The Jet Business

AvBuyer: Moving past the mid-point of 2021, what are your main ‘takeaways’ on the first half of the year for pre-owned business jets?

SV: I think most of us in the industry were taken by surprise that the increased demand – which started in July 2020 and peaked in December – actually stayed fairly strong for what is traditionally a slower first quarter.

The inventories in a number of aircraft have really been reduced and we have seen prices actually rise for certain aircraft models, due to the increased demand and gradual reduction in supply.

AvBuyer: So sales have exceeded your expectations...

SV: For sure. It was an unexpected market surge; a combination of Trump losing the Presidential Election (the US market became concerned that the 100% tax depreciation allowance could be repealed under a Biden Administration), and the markets getting more comfortable the world is not going to end with the Covid pandemic.

There was light at the end of the tunnel in that regard.

AvBuyer: Is there a particular market that’s surprised you this year? If so, why?

SV: I think a lot of the markets have shown strength, across the board. This also made a larger number of potential US buyers and sellers take a more serious look at non-US based or registered aircraft.

It has also made buyers consider some slightly older aircraft, which has put a huge demand on the MRO facilities for pre-buy inspections, upgrades, and refurbishments.

However, there will come a point where aircraft for clients seeking nearly-new jets are just not available, which I expect will positively affect the OEMs, helping them to sell more new aircraft. 

AvBuyer: What are your hopes for the coming months in pre-owned aircraft sales – and what needs to happen to see those hopes realized?

SV: I don’t think the corporate flight departments have been fully re-engaged, yet. There are a lot of companies still having their people work from home and using videoconferencing, for example.

This is starting to change, though. Some of the bigger companies are instructing employees to start returning to the office. I expect this will put an additional layer of demand on the aircraft sales markets, and we will probably see a further reduction in inventory of pre-owned jets.

We’ve heard much about demand in the jet card market hitting record sales, too, but the most positive news is the statistic that almost half of these clients had never chartered a corporate jet before.

This is great news for Business Aviation if we can hold their interest after Covid-19 becomes a memory.

Bombardier Challenger 604 private jet lands near mountains

AvBuyer: As you’ve alluded to a couple of times, the market has been threadbare for a while now, with very little new inventory available. Are there any signs of hope for owners of older aircraft of a positive knock on effect?

SV: In short, yes. However, buyers should be aware of the increased maintenance costs and upgrades that eventually get difficult to justify when owning and operating an older jet.

As the cost of money is still so reasonable, it makes more sense for many buyers to finance a little more and get a newer aircraft. This may cost more in interest-carrying costs, but in the long-run it more-than makes up for the savings you can make in maintaining a very old aircraft, and the associated lower dispatch reliability.

AvBuyer: Finally, what one piece of advice would you offer to a) prospective buyers, and b) sellers trying to extract value from today’s pre-owned aircraft sales market?

SV: I hate to say it because it sounds so self-serving, but the truth of the matter is that the markets are incredibly active, so if you’re a seller get your airplane out there right away. After all, “no tree grows to the sky”, as the saying goes...

As a buyer, if you need an airplane, you need an airplane. To wait for the right market conditions to find the exact jet that you want, hope that inflation doesn’t kick, and hope interest rates don’t go up... well good luck with waiting for that moment! Savvy buyers aren’t waiting, even with a thin inventory.

More information from www.thejetbusiness.com

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