![]()
The number of preowned private jets for sale on the market at the end of the third quarter this year is more than double that from a year ago. The post-pandemic frenzy of demand gobbling up supply regardless of price looks to be over, and for those looking to buy an older business aircraft, the market is shifting in their favor.
Those are some of the conclusions from veteran aircraft broker Jim Donath and his company's Donath Aircraft Services quarterly market report. Donath is celebrating 15 years this month of compiling the reports, which he started as the bizjet market hit freefall in 2008 during the Great Recession. He uses a variety of sources for his data, including Aircraft Bluebook, AMSTAT, other market-intelligence providers and Donath Aircraft's proprietary research.
While the present aircraft market swirls in a sea change, Donath expects the balancing act to continue. However, he does not expect anything close to the sinking tide witnessed a decade-and-a-half ago.
"While the soft landing extends for the market in general, it's not as smooth for older models," he wrote. "The pre-owned market continues to adjust to its new footing, as buyers entering the market are expecting to pay less than the last comparable transaction, while sellers are trying to hold firm on pricing. Some have been reluctant to let go of 2022 values."
RELATED STORIES:Could 2023 produce the slowest market for preowned aircraft in a decade? A dive into the numbers shows the possibility War, Recession andamp; the Aircraft Market - JETNET's latest assessment of the business aviation world One quarter to go - How will the business aircraft market wrap up the year?The numbers for the third quarter itself show speed picking up a bit compared to the first half of the year, something Donath expects to continue toward the end of the year, chiefly due to tax incentives. But 2024 could again stumble out of the gate as aircraft for sale inventory builds.The percentage of active fleet on the market remains lower than it was before the pandemic, at 6.3%. Donath writes that transaction volume, while down from a year ago, is within the bounds of the average between 2017 and 2019. Meanwhile, the market absorption rate measured in the number of months it would take to deplete the market of available aircraft jumped slightly higher in the third quarter, opposite of a trend that emerged in early 2022.
The number of private jets on the market has now grown for seven consecutive quarters, but the past three quarters gained more slowly than at the end of 2022.
Courtesy: Donath Aircraft Sales"The market is not acting uniformly across models, however," Donath writes. "Older models are experiencing higher inventory growth rates than newer aircraft and their values are dropping more sharply as a result. But this is in part because they appreciated at a higher rate from 2021 to 2022, some models by more than double."
Preowned aircraft inventory has risen 111% over the past year and 249% from its post-pandemic low, when availability was barren. However, not all aircraft are weathering the same sort of storms. Older models, such as the Gulfstream G200 and GIV/SP, as well as the Bombardier Global Express and Hawker 900XP, are now "well into buyer's market category," Donath wrote. Other private jet models trending in that direction include the Falcon 2000, Gulfstream G550 and Challenger 604, while newer models remain in short supply.
Courtesy: Donath Aircraft Sales
As far as pricing, the most recent quarter shows aircraft book values stabilizing after a "relatively large drop" in the second quarter, Donath wrote. As could be expected, older-model aircraft with higher inventories are seeing a tighter pinch from the downward pressure.
Looking ahead, Donath expects macroeconomic and geopolitical forces, and their influence on the confidence levels of prospective buyers, to have more jurisdiction over the market. In the short term, that would mean "historic seasonal patterns with a bump in transactions before year-end, supported by bonus depreciation, followed by a significant drop in early ‘24."
With demand diminishing and values softening, it could provide buyers "with the most attractive market they've seen since mid-2020," he wrote. "Some have been reluctant to let go of 2022 values. The reality is, across most models, some price adjustment is required to sell an airplane without exposing it to the harmful effects of building days on (the) market. … Both buyers and sellers need to look at each model and segment of the market uniquely. Newer aircraft that are attractively equipped with strong pedigrees are going to retain their value much better than older aircraft that require updating."