A decade of low interest rates on aircraft loans continues to stimulate aircraft sales, but worries about inflation are pushing rates up, says Airfleet Capital, a leading aircraft lender. While no spikes are expected short term, the market is definitely headed higher, says Airfleet’s Jim Blessing.
In this podcast recorded last month at Sun ‘n Fun, Blessing told us the continuing bull market is driving modest demand for owner-flown aircraft, but there’s underlying pressure on low interest rates. “So far, they haven’t had a tremendous impact on the aircraft lending segment, but they have had on other segments, homes and automobiles. I suspect they will have an impact on aircraft this year. We’re expecting to see continued advances in rates,” Blessing says.
Average rates on aircraft loans have risen only slightly above historic lows of about 4 percent two years ago. Blessing says current averages are between 4.5 and 5.5 percent. “We haven’t had buyers see 7 percent interest rates in 10 years. What are they gonna do when they see that?” Blessing adds.
Until then, buyers are finding both airplanes to buy and the money to finance them. “There seems to be a positive attitude on the small business side. Our customers are entrepreneurs with owner-flown aircraft. They seem to have found a way to get their businesses more productive [using airplanes],” he says.