Launch of online aviation funding marketplace

The business jet and helicopter financier AirFinance has launched FlyFunder, an online marketplace which aims to effectively and efficiently connect buyers of business jets and helicopters with aviation financiers that match their borrowing profiles.

AirFinance says the new platform will help existing aviation finance companies find potential appropriate clients, and will attract new lenders including hedge funds and family offices.

The company says the move has been motivated by the increasing difficulty of securing finance in this market, as some traditional lenders have pulled out. There are currently around 2,400 pre-owned business jets on the market for sale, collectively worth $15.6 billion. AirFinance estimates that the combined addressable market for financing new and pre-owned business jets and helicopters is around $44 billion annually.

Kirsten Bartok Touw, FlyFunder co-founder and AirFinance managing partner, said: “The current process for obtaining aircraft financing is a tedious and labor-intensive process that requires a large number of phone calls and emails. Aircraft buyers or their representatives must reach out individually to multiple financial institutions to determine if they are interested in their specific deal. Each financial institution has a list of very specific attributes that they will finance including: deal size, age of aircraft, domicile of buyer, region of operation, registration of aircraft and type of structure.”

“With FlyFunder, we are offering the first digital platform to bring financiers and aircraft buyers together, and because there are no start-up costs involved for those looking to lend, we have been in talks with a number of hedge funds and family offices who are looking at this as a very efficient way to enter the business jet and helicopter finance market.”

The model

Bartok Touw described FlyFunder as a kind of online dating agency for aviation lending, by matching financiers with aircraft buyers who meet their lending criteria. The process is completely anonymous, and funders declare their interest based on deal criteria rather than the identity of the customer.

“FlyFunder will give financiers greater visibility into a larger number of aircraft financing opportunities than they would typically see through their origination teams. It is a great platform for buyers looking to access financing, and financiers looking for potential deals they might otherwise not have been exposed to.” said Chris Miller, managing partner, Shearwater Aero Capital.

The site is free for all users to join, and the financiers only pay FlyFunder a small commission upon the successful closing of a transaction sourced from the platform. If the deal is launched by a broker/consultant, FlyFunder will share with the broker/consultant half of the fee the financier pays to it if the funding is consummated.

“We see significant growth potential in both mature and emerging markets,” said Paul Sykes, FlyFunder co-founder and director. “We believe that a transparent, easy-to-use, online marketplace will provide aircraft buyers globally with greater access to financing and more options to choose from.”

The market

AirFunder points to research by AvBuyer which estimates that 75% of aircraft in the US are financed, while in emerging economies that number is only 25%, suggesting there are significant opportunities.

A recent survey from UBS in its business jet report found 50% of their Asia Pacific participants felt the availability of financing had deteriorated, and 29% of Latin America participants expressed negativity. No Asia Pacific or Latin American respondents expressed optimism around the availability of financing. In addition, 18% of aircraft manufacturers felt the availability of financing had decreased, as had 27% of financiers.

“It has been demonstrated, that when financing exists, sales of assets increase when they don’t need to be purchased with 100% equity. It is our hope that FlyFunder can help increase aircraft sales by working to fill the financing void that has only grown in the last few years,” Bartok Touw said.

Air Finance says that since its beta launch in early fall, FlyFunder has had significant traction from aircraft buyers and brokers with more than a dozen deals launched from the US, South Africa and Sri Lanka.

New entrants

In a separate move Global Jet Capital, a global provider of financing solutions for corporate aircraft, has announced it is moving into the business jet financing market, in response to research showing the number of business jets being delivered globally fell by 4.7% in the first quarter of this year when compared to the same period in 2015.

Research from Global Jet Capital, found that 16% of business aviation professionals believe funding difficulties have contributed significantly to this decline. A further 41% believe this has had a slight negative impact on deliveries, while only 36% believe it has had no influence.

Dave Labrozzi, chief operating officer of Global Jet Capital, said: “A lack of available finance for those looking to buy mid to heavy business jets was one of the main reasons we entered this market. Some of the traditional lenders were not in a position to meet demand, despite many of the requests for finance being attractive for lenders.

“We have over $1 billion to lend and with a positive long term outlook for the business aviation market, we are optimistic for the future.”