Chancellor Rachel Reeves is rowing back on her plans, announced in the Budget in October, to crack down on non-doms. She was faced last week with the uncomfortable revelation that a net 10,800 millionaires left Britain last year – a 157% rise from 2023. Most of those tax exiles are heading for Italy and Switzerland, according to the data compiled by New World Wealth, an analytics firm, and investment migration advisers Henley & Partners.
One man who won’t be surprised is Jahid Fazal-Karim, the owner and chairman of private aviation specialist Jetcraft. He has been watching them leave, he tells me over lunch in Marylebone, close to Jetcraft’s head office, a couple of weeks after the Budget. “I know a lot of clients who were on that [non-dom tax] regime, they’re going to leave,” says Fazal-Karim.
“Some of the bankers, even some Indian high-net-worth individuals who are resident in London, they’re leaving… That’s for sure.” That will affect his customer base, he says, who come to him to buy and sell their private jets and commercial aircraft.
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“You take a country such as Italy, now Italy has this flat tax,” he says. “You can go to Italy, live anywhere you want, it’s a beautiful country, [you] can go to Milan, you can go to Rome, you can go to Florence, you pay €200,000 flat tax and that’s it. The thing is, it’s not like they don’t have alternatives.”
His clients love London, he says. But when you have a lot of money, the world is your oyster – all the more so if you have your own jet. “The point is, they will always find a solution.”
Reeves also announced in the Budget a 50% increase in air passenger duty for private jets. Does Fazal-Karim see that affecting his business? “I’m still wondering what the inherent reason for it was,” he says. “Was it to raise money for the environment? There are other ways to do it.” But, ultimately, he can’t see it making much difference to wealthy flyers.
“Frankly, if you own a Global [jet] and your flight costs you £100,000 and you have to pay a thousand pounds more or less… it’s not going to affect your decision to fly private.” Fazal-Karim stresses he would be happy to see the money go towards the environment. “I mean, you could almost do it voluntarily [asking people to pay], people will pay you. You say, ‘look, you want to give a thousand pounds every time you fly so that we can do better for the environment?’ Everybody is going to say, ‘yeah, sure’.” Many clients are doing things in the background anyway.
Jetcraft owner and chairman Jahid Fazal-Karim
(Image credit: Jetcraft)
He notes that when Microsoft’s co-founder Bill Gates was quizzed during an interview over the use of his private jets, Gates pointed to the vast financial contribution he has made over the years towards protecting the environment. “Everybody wants to save the planet,” says Fazal-Karim. “We all want to do the right thing. But what I say is, people just need to put things in perspective.”
For one, the private aviation industry contributes to the economy through job creation. “And frankly, if you look at our industry now, more and more people are using sustainable [aviation] fuel, for instance” [made from non-petroleum sources]. The trouble is, “there’s not enough [of it]”, but the industry would be prepared to pay up.
“I think people maybe [get] the impression… we don’t care [about the environment], but we do care… It helps us too. But should we be the black sheep? Probably not. We’ve been targeted sometimes a bit too much,” he says. When it comes to global aviation carbon emissions, private aviation contributes just a fraction of the total. “It was around 0.4%,” says Fazal-Karim. He compares flying private to the fashion industry, which is “one of the biggest contributors to CO2 emissions”.
That morning before lunch, the papers had reported on the criticism levelled at the world leaders who had flown to the Cop 29 summit in their private jets, then going on in Baku, Azerbaijan. What are his thoughts? Flying private is the safest, most time-efficient way to travel long distances. “Do you expect them to take the train?”
The advantages of flying private
Security and anonymity are big advantages of flying private and that makes the industry resilient to crises. Business in the US did suffer in the aftermath of the financial crisis, but a couple of years later, “people were buying jets again”, says Fazal-Karim.
“If you remember 9/11, we thought it was over, but then the industry actually took off, because people were like, ‘No, I’m not going to fly on commercial planes anymore’. It was the same story with the pandemic. So, it’s a pretty resilient industry and I think you can’t stop human beings from moving [around] and [questions of] time efficiencies are always going to be there.”
It was during the volatile years of the financial crisis, in early 2008, that Fazal-Karim left Canadian aircraft manufacturer Bombardier, where he was the head of sales, to buy Jetcraft – a primarily US-focused business.
“There are planes that I sold at the time when I was at Bombardier brand new… and then I resell [them through Jetcraft]. I think there’s one plane, it was like six times, same plane, around 20 years old, so it makes me feel old,” he jokes.
Fazal-Karim is French, but he was born in Madagascar in 1969 to a family of entrepreneurs. His great-grandfather, a trader, made the move from India to the African island and it was there that Fazal-Karim’s grandfather became a cotton producer. Fazal-Karim then spent time in the Comoros Islands with his father, who exported vanilla beans and flowers for the perfume industry.
“He did everything,” says Fazal-Karim. “He went from building small boats to having a chicken farm to exporting vanilla beans. For me, it was just aviation. My passion was aviation. I didn’t want to be doing anything else… so I studied aerospace engineering.” After a stint at Airbus, he left Canada, where he was at Bombardier, aged 38 for family reasons. “I’d figured I’d take a bit of time off,” he says. But his former clients had other ideas. Before the financial crisis “the market was crazy”.
Such was the backlog at aircraft manufacturers that if you had wanted to order a new aeroplane from Bombardier, you would have had to wait three years before you could have taken delivery of it.
“I was getting calls from a lot of my clients saying ‘Hey, Jay, we need a plane, like, now… Of course, I knew who was taking deliveries of some of these planes and so I went to [them] and said, ‘Look, you have an old Global… I have a buyer who’s going to give you ten million [dollars] premium [for you] to keep your [old] plane for another three years. Let’s go order you another one from Bombardier’. You’d be surprised how many people said ‘No, I want my new plane’. But I used to do some pretty good deals.” Almost too many good deals, in fact.
“I was getting swamped. I went from having 200 people [at Bombardier] to doing everything myself [and] I was working 20 hours a day. That’s when I realised the gap in the [market], because it was messy, and then, in the meantime, the owner at Jetcraft contacted me to be the CEO of the company.”
Fazal-Karim wasn’t interested in that role, but he understood the owner, Charles “Bucky” Oliver, was looking for an exit and he offered to buy half the company, with options to the rest later. I suggest that he got lucky with the timing, the market being so buoyant. “We did the deal in June [2008],” he points out. Then, markets tanked. “We had some interesting times,” he says. “It was a bit tricky.” But the industry is resilient and by 2016, he had bought Oliver out. Today, Fazal-Karim owns 95% of Jetcraft, having handed 5% to his management team.
He also moved Jetcraft’s headquarters to London. “We had choices,” he says. He looked at Switzerland. But London is “a place where people want to come and work, a city where you can meet your clients, it’s one of the best locations [between the US and Asia], but we have subsidiaries everywhere”.
London is still the place to be
Does he still think London is “perfect”? “It’s still a good place to be right now,” he says. “The corporate taxes are relatively fair, it went up but it’s not so bad. I still think it’s a good location. There’s always something going on here.” A pre-owned jet stays on the books for 90-120 days and Jetcraft handles around 150 transactions a year.
But before each sale, there are maintenance checks.“It’s a complicated equation,” he says. “You have to really look at the plane as a whole, the technical side is very important. If you make a mistake, it can cost you, so process and expertise are very important. You need to have the right people to do that.” That’s why Jetcraft calls itself an aviation specialist, rather than a broker.
Fazal-Karim aims to get the number of transactions up to 250-300 a year. But, as he points out, you can either grow a business organically, or you can grow it through acquisitions. “If a good acquisition is available, yeah, I would do it,” he says. “There are a lot of potential companies, a lot of good, smaller companies.”
And you can never rest on your laurels. “You always have to find something that keeps you ahead of everybody else. A lot of people want to copy us and they can’t keep copying us… they are the Zara and we’re the Guccis.” In fact, Fazal-Karim is even working on a “big project” related to artificial intelligence.
For now, it’s confidential. He won’t be drawn on the particulars, but it will be a tool he can sell to others in other industries, he says. “The point is, we’re investing.”
An expanding market
The US market accounts for 70% of transactions at Jetcraft, but Africa “will grow”, Asia “still [has] a lot of growth potential” and “you can’t forget Latin America”, says Fazal-Karim. “You have two big markets [there], Brazil and Mexico, and these are always active.” Britain is “a pretty big market. It’s probably one of the biggest markets in Europe” along with Germany and France.
I ask what effect, if any, Donald Trump’s presidency in the US will have. He doesn’t think it will make a “huge difference”, but high-net-worth individuals and corporations tend to feel “a bit more confident” with a Republican government.
Buyers are also getting younger. In 2015, 15% of buyers of pre-owned private jets were aged under 45, a percentage that had grown to 28% by 2023, according to Jetcraft’s annual market report. On average, these customers spend $13m a time.
What’s driving the trend? Younger people are making huge sums from industries such as technology and finance. “A lot of young people, they’re in their 20s, and they sell their company for $200m, $300m, $400m. It’s not even uncommon anymore.”
There is also a transfer of generational wealth underway. “I think it will continue… and let’s say I have a buyer and he’s 30 years old and we take good care of him, he’s going to be a Jetcraft client for a long time and these guys change planes… every four or five years.” What a private jet is not, however, is a financial investment.
“Very often, I talk to clients and they tell me, ‘yes, I can buy a plane and I can do some charter and lower my costs’. They’re trying to justify the economics of owning a jet and I tell them, ‘look, if you’re going to buy a plane and you think it’s going to be cheap, that’s not a cheap solution. And you will never make money out of an aeroplane’. It’s a depreciating asset. If you buy a plane today, in 15 years’ time it will be worth less. That’s it.”
A private jet is mainly a time-saving solution, says Fazal-Karim. “We sell time. If there’s a better time solution, then that’s going to be the solution for our clients. Efficiency is there.”
