Has the pre-owned jet market really turned the corner? Recently there have been several articles and the press quoting brokers about how strong the market is right now. Is this fake news or is it real?
For light jets up and through ultra long range jets, the transactions for the first quarter of 2017 and the first quarter of 2018 are within 1 percentage point. That is much different than what we are hearing in terms of how active the market is.
On the flip side of the coin, the number of aircraft for sale is continuing to decline so with a similar number of transactions, it appears the pace is faster. In my opinion this does not equate to demand as much as it does that buyers know they must move quicker as there are less choices if they miss this aircraft.
The question always comes back to supply/demand. Supply has been reduced, however how much more demand is there? Similar transaction volumes would indicate that demand is relatively stable.
The next question is as inventory of good pedigree planes continue to get smaller, will buyers pay higher prices, or settle for a lower quality aircraft, or buy new or just keep what they have? OEM’s certainly are banking on buyers deciding to buy new.
This leads us back to the question in the title of this article. Theory #1 says if demand stays relatively constant, the number of transactions are going to continue to be very similar. We feel the pace of sales will be quicker thus making the market feel more robust than it actually is.
Theory #2 says there could be a dip in transactions as there are less suitable aircraft to purchase. This should raise prices on good aircraft. The question will become, if your current aircraft isn’t in the category of all boats rising on a full tide of a price increase, will you pay a premium for the model that the tide has risen?
We feel the market has made a nice gentle bend in the road. We do not see any sharp corner upticks. I hope I am wrong and the uptick is a wicked hairpin.
Hawkeye Aircraft Acquisitions
As published in BusinessAir Issue #7 2018