Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Cocooned
Slow Views

Cocooned

Friday 19 November 2021

The super-rich are escaping to yachts and private jets in ever greater numbers. But they may be in for a rude awakening


The Chronos is a splendid two-masted sailing yacht with 13 bedrooms, 54-metre teak decks and a charter price of $80,000 a week. She’s currently in the Cape Verde Islands, and by the look of things she’s making for the Caribbean. 

So are hundreds of other superyachts sailing and motoring (but mainly motoring) from the fleshpots of the Mediterranean to those of the Americas for the northern hemisphere’s winter boating season. 

Their owners and renters will fly in. Most won’t fly commercial, because the airports at places like the Turks and Caicos and the Virgin Islands are a squeeze for that sort of plane, and anyway PJs are more fun.

“First they came for the PJs, and I said nothing,” Roman Roy mutters in a new episode of Succession. As in private jets. He and his Murdoch-inspired siblings have to forego theirs in a deal to keep control of their company, but in real life PJs are the new electric bikes for anyone with $50 million spare.

There were 54 per cent more flights on private jets in and out of boutique airports in the first week of this month than in the same week last year, the FT reports. For Cop, 118 Bombardiers and Gulfstreams and lesser birds (and greater ones, like $80 million Airbus A220s kitted out like mini-Air Force Ones) were drawn up without irony on the aprons of Edinburgh and Glasgow airports, and of course Boris Johnson availed himself of one of them. But even before that spike, PJ flight numbers worldwide had broken records for six successive months this year.

This is not just a fad for bazillionaires. Second-hand private jets are selling out almost as fast as they can be refurbished. Netjets has stopped issuing its entry-level fractional ownership card (from $125,000) because it can’t guarantee you a plane when you want it. Biggin Hill – still Farnborough’s dowdy cousin in UK general aviation – is nonetheless picking up PJ business from people buying individual seats on jets that look and feel private even though you may not know whose mojito you’re clinking with your pisco sour. 

Superyacht sales are commensurately booming. The bounceback since Covid has been vertiginous, and the pink flashes that denote yachts on the Marine Traffic website don’t lie. Eight per cent more 30-metre-plus yachts were sold in the first nine months of this year than in the same period in 2019, never mind last year. Fraser Yachts, a broker, says 2021 has been its best year since the Crash. The Superyacht Group says 200 boats have been launched so far this year, and for those unclear what this means it’s roughly equivalent in deck space and raw engine power to two-and-a-half Royal Navies, with nearly as many helipads and a lot more marble inlay.

It’s as well not to dwell on the suede trim, the stained glass bedsteads and the multi-storey aquaria because superyachts are a rabbithole for droolers as well as the super-rich. They’re crass, kitsch, eco-cidal and often downright menacing, as Le Carré found when writing The Night Manager. But like the PJs shuttling between London, New York, Paris, Moscow and the yachts’ favoured marinas, they tell us something about the world.

They tell us the world is profoundly unequal and reeling from a pandemic that has put a costly premium on fresh air and private space. And each of these traits tends to exaggerate the other. 

Covid has cost governments dear but it’s also fuelled a tech-led bull run on the markets that Forbes says has created 600 new billionaires this year. Almost all billionaires – and there are 2,755 – are better off now than in 2020, and most of them are spending hard to insulate themselves from what the 99.99 per cent might call the exigencies of life.

There is no imminent sign of this trend stopping, and in fact it might be self-reinforcing. Thomas Piketty, the French economic historian, showed in Capital in the 21st Century how in most places, for most of the past 200 years, returns on capital have outpaced general economic growth. The exception was the generation after 1945. Two world wars had destroyed much of Europe’s inherited wealth and the politics bequeathed by the second war delayed the re-accumulation of really significant inherited wealth in private hands for a few decades. The period to the mid-1970s was one of relative equality within societies, although not between the US and Europe.

The US found it had the resources and the will to rebuild Europe with the Marshall Plan. A mobilisation of funds on a similar scale is now needed to tackle climate change. This is not a minority view. It’s shared by India’s prime minister, senior oil and gas executives and by XR activists who demonise them. The trouble is the emergency is not yet as vivid as a global war. There is plenty of inequality between regions as well as within them, but the will to act on the part of the haves – and especially the havalots – is missing. They still don’t care enough to change their behaviour in a meaningful way. Life on the Chronos is just too comfortable. 

For now. 

A few years ago, pre-Covid, a prosperous yacht broker explained to me that you don’t need to be a billionaire to live like one. More and more people, he said, were finding they could leverage as little as $10 million a year to accoutre themselves with the use of a jet and a superyacht more or less whenever they liked. With sufficient cash flow to service the loans and make the lease payments they could live like Gatsby himself. 

Two things could end the dream (on the supply side as well as the demand side): a financial crisis or a spike in inflation and interest rates. “Inflation is a major concern for shipyards,” says Stewart Campbell, editor-in-chief of Boat International. “But the industry is in such rude health currently that the volume of boats being sold is moderating people’s alarm [over current inflation]. If interest rates start rising, I do expect this to have a cooling effect on the market as many yachts are bought with finance.”

Does this mean a rate rise will unleash the energies of a thousand pampered tycoons to tackle the climate crisis? It does not. Could it let a little reality into their cocoon? It could, and as my broker friend said with some feeling, when the reality check comes, the boats are always the first things to go. When the fun stops, they stop. It’s worth keeping an eye on those pink flashes heading west for the winter.