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Steve Varsano

Resilient Interview

The Jet Business’ Steve Varsano - new bizav users will benefit us all

By Alison Chambers

 

Steve Varsano, founding owner of the Jet Business is sitting a bit more anxiously in his beautiful Mayfair business aviation showroom. He welcomed his team back to work last week after three months in lockdown, coinciding with the beginning of an upturn in pre-owned aircraft sales, from a low point in April.

Steve is confident of a slow increase to a more robust fourth quarter. The forthcoming election in America will likely have an impact and the EU restrictions currently in place for US travellers will hurt London-bound travellers further, he suggests. “Say what you like about Trump, he is a well-publicised business jet user. Prior to Covid-19 the US economy was strong, which kept the corporate jet trading activity very active,” he ventures.

Steve Varsano's unique The Jet Business showroom in London's Park Lane. The lights stayed on during the lockdown.

Steve Varsano's unique The Jet Business showroom in London's Park Lane. The lights stayed on during the lockdown.

When we spoke, Steve was pushing through three aircraft transactions, for a US and Latin American buyer - solid deals right through to Letter of Intent status and pre-inspection stage. “We are seeing less transactions, and notably all are to entrepreneurial-run companies and HNW individuals, versus the usual big corporates,” he said.

The recovery in business jet use is being driven by the high net worth market, Steve asserts. “There’s no question that there’s much more non-corporate flying now and, with the summer coming, that’s going to be exaggerated. The corporates aren’t really flying that much. They are working from home, using Zoom. There’s less motivation to travel internationally with all the travel restrictions, lack of open hotels, restaurants and quarantines and fears of a second spike.”

Typically, the sweet spot (at TJB) is the long range, large cabin aircraft, but such models coming on to the market are few and far between now. “Owners see the necessity to keep them with the lack of commercial airline availability. Business jet travel is less important right now - instead it’s flying to second homes; going on holiday, travelling back to Universities, if and when they re-open. The trend in the U.S. is reflected in the demand for smaller pre-owned business jets, mirroring the popularity in charter, Steve notes.

The Embraer Phenom 300, Embraer Legacy 450/500; Cessna XLS; Challenger 300/350, especially, are showing resilience.

pull quote Charter is really picking up, Steve said, pointing to NetJets and FlexJet having their best months in April and May (as good as December 2007, before the 2008 crisis struck). And almost 50% of the new jet cards sold were to new customers who haven’t used private charter before. “New blood coming into the industry is exactly what we need to propel our sector to a wider group.”

Steve first warned about the damaging, long lasting impact of coronavirus back at Corporate Jet Investor’s annual conference in London early February. “Unfortunately, this was one time I was right and I wish that I was wrong.”

He can’t say when international corporate business travel will return to its historical highs. “Right now, we have turned inward. Government and media generating attitudes have become nationalistic. The historical trend of businesses going global is slowing. Non-Americans can’t get work visas now to work in the US and in the UK we have got the Brexit problem separating from Europe and China reclaiming control over Hong Kong . . . and on and on it goes.”

Steve Varsano

New York Showroom still in his sights

“There must be some bright lights somewhere,” suggests Steve, confirming he still harbours plans to export The Jet Business to New York. “The city is for sure the next best market after London, but now is not the right time. Hong Kong has lost is relevance, Asia’s shift will be moving to Singapore and Dubai has its own issues to deal with as oil prices stagnate. For now I’ll probably focus on expanding here in London and increase our coverage in the US,” he said.

The Jet Business concept itself, now in its nineth year, likes to give opportunities to the next generation. It has had success with interns coming in on short-term secondments. It typically takes a couple each year for a short period. “Ideally we like individuals to come here with a passion for aviation, but we have been pleased to teach them about research and the sales process,” Steve adds.

Corporate Investor Town Hall

Last week, Steve participated in CJI’s virtual Town Hall, dedicated to aircraft values and transactions. He isn’t seeing sellers running to the exits and prices staying more stable than the rumours may have you believe.

He was joined by David Crick, MD of DavAir Group, who highlighted a dip in values in larger cabin aircraft - a direct result of reduced transactions and restrictions in global travel. Discounting is reducing values of course, he said. Smaller and mid-size aircraft are transacting with very little discount. David recommended appraisers contact the people involved with transactions to determine if the sale value was high or low for specific reasons, i.e.was it a distressed sale or were other factors involved?

Rene Banglesdorf, CEO of Charlie Bravo Aviation in the US also highlighted how travel restrictions as a result of Covid-19 have brought about a rapid downturn, because no one is travelling. As restrictions start to lift though her company too is seeing more first-time buyers. She is currently working with six, all of them HNW individuals, echoing Steve’s comments on where the market is headed.

 

The Jet Business

 


Alison Chambers Alison Chambers, Resilient Aviation Editor.

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BlueSky Business Aviation News | 2nd July 2020 | Issue #564

 

 

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