Aug, 11, 2022
In an August 10 edition of NBAA News Hour, four of the industry’s top analysts discussed the factors driving the still-robust market for business aircraft, while also pointing to trends emerging on the horizon that could impact sales and flight activity.
Panel moderator Jay Mesinger, founder and CEO of session sponsor Mesinger Jet Sales, said the market for pre-owned aircraft has slowed somewhat over last year’s frenzied pace, when some jets sold on their first day on the market.
“We aren’t talking about 300 days [on the market],” he said during the webinar. “Very often, we’re talking about day 20, 30 or 40 for a transaction to occur, [which] allows for a more traditional sales process,” including additional time for pre-buy inspections with available slots at a premium.
“We are seeing indicators of change,” agreed Anthony Kioussis, president and CEO of Asset Insight. “Sellers are advertising ‘reduced price’ [and] ‘motivated seller,’ things we haven’t seen in a while.”
Alasdair Whyte, co-founder of Corporate Jet Investor, noted declines in the Standard & Poor’s 500 and other market indices have led to “a few people coming out” of the market. “The big card we’re all waiting [for] is accelerated depreciation,” which drops to 80% in 2023, he said. “Will that be enough to boost the market again?”
Even at a somewhat slower pace, sizable backlogs for new aircraft – driven in part by the industry’s ongoing recovery from the COVID-19 pandemic, when many suppliers and production lines sat idle – continue to drive healthy demand for pre-owned aircraft.
“OEMs are booking two sales to every delivery, [but] supply chains are frustrating everyone,” said Rollie Vincent, president of Rolland Vincent Associates. “Suppliers are not performing to expectations or requirements, and logistics are still a bit of a nightmare.”
With many of the most desirable used aircraft already in the hands of new buyers, “we’ve been at the bottom of the barrel [of available stock] for a little while,” Vincent added. “It takes tremendous talent and oh, by the way, a checkbook to pry [those] aircraft out of buyers’ hands.”
Despite these indicators, and ongoing economic concerns around the globe, “I don’t anticipate a hard landing,” Kioussis said. “There are people claiming they’re cutting back … because of the cost of fuel, [but] the numbers have not shown that yet.”
“You’ve got so many negative things out there, but it doesn’t seem to be hitting the market yet,” agreed Whyte. “You could [even] argue that aircraft values could go up in the next year.”
Vincent advised buyers to weather the coming highs and lows. “We do see a leveling of the market and then an acceleration of the market,” he said. “It may get a little rough for a couple of years, but we’ll be fine.”
International Business Aviation Council Ltd.