Trump’s Tax Overhaul will Positively Affect the Business Aviation Sector
On December 22nd, 2017 President Donald Trump announced the new US tax reform, planning to bring the corporate tax down to 20% from its previous 30%. This decrease in corporate taxes will encourage all the billions of dollars American corporations are keeping overseas, to flow back into America, allowing these companies to expand and create new business opportunities. There is also the potential that this money will encourage companies to make new jobs, bringing money into people’s pockets. What will happen then? Well, they’ll spend it, of course.
What does this mean for Business Aviation and the private jet market?
NEXA Advisors has just released a 2017 research paper called; ‘Business Aviation and Top Performing Companies 2017 S&P 500 Companies: Using Business Aircraft to Create Enterprise Value.’
In the paper, NEXA analyzed the financial performance of the S&P 500 between 2013 and 2017. The S&P represents America’s 500 largest publicly traded companies, and reflects every sector in the economy.
There were two groups of companies at the center of the research; the users of private jets and those non-users. The ‘Users’ outperformed the non-users by a whopping 70% over the last five years. We’ve made the claim before that business aircraft usage increases employee productivity, hastens deal closings, and boosts customer interaction, and this data seems to agree.
At Miami Jet, we have witnessed an exponential increase in business aircraft operations over the past five years, and NEXA forecasts doubling of flight hours over the next 20 years, confirming that top companies increasingly realize the undeniable advantages provided by business aircraft.
With this new data, over 150 private jets worth over $5bn (£3.5bn) are expected to be delivered to Europe this year, with demand on the rise, according to analysis by Global Jet Capital. The firm said 13% of the 150 new business aircraft being delivered to Europe this year will go to the UK. The positive outlook for global economic growth, along with tax changes in the US under President Donald Trump have been cited as key to sky-rocketing demand.
According to Shawn Vick, chief executive at Global Jet Capital, an expansion in the business aviation sector is expected over the next few years. The factors behind this include growth economically in most of the major economies, significant investment and strong corporate earnings.
This will lead to a greater utilization of aircraft, a decline in used aircraft inventory and a growing order book for new business jets.
This prediction comes as new research from Corporate Jet Investor found that a majority of business aviation professionals are expecting a rise in the number of business aircraft flights in 2018. Over 60% of the 103 surveyed by CJI said they expect more corporate aircraft delivered this year, with a surprising focus on larger, more expensive jets as opposed to smaller ones.
Reasons for the optimism surrounding the business jet sector were the prospects for global economic growth, as well as President Trump’s new tax overhaul. The National Business Aviation Association has said the US tax bill will allow corporate buyers to expense new and pre-owned business jets. Around 77% of those surveyed said they felt the Trump administration would be a positive influence on the business aviation economy. The sector has been struggling in recent years but it definitely feels like a recovery is on the way.
With the advent of the digital age, many thought air travel would decrease but it has actually done the opposite. Because nothing beats a face to face meeting. It is apparent that high performing companies see the value business jet travel adds to their business. However, private jet sales have been slower since the 2008 market crash and we’re still seeing a strong number of larger pre-owned jets up for sale. But we can certainly see companies taking advantage of that 15% tax cut, and using that money to purchase a used business jet to increase productivity.
Over the last 12 months we’ve heard concerns from many entrepreneurs who were waiting to see if President Trump would actually do what he claimed he would (reduce corporation taxes).
So, if you are one of these entrepreneurs sitting on the fence, now is the time to buy a private jet! Miami Jet will help you do just that. We have a huge inventory of sharp business jets and our full-time sales team is personally involved in every aspect of the process.
This growth will not happen overnight, but getting in early is a great way to guarantee a better deal than your competition. After all, in the aviation business it’s all about speed…