Used Aircraft Markets – A Year in Review

As 2019 came to end, used aircraft inventory levels were fairly stable, but we noticed a bifurcation starting to form within several key markets. Inventory levels for newer aircraft (age 0-10 years) began to increase while pricing remained relatively flat, and inventories of older aircraft (age 10 years and more) increased with declining prices. In addition, a report by Barclays Business Jet Survey indicated that the last half of 2019 came with a 12-percent drop in overall market confidence. Across all business jet markets, we could see it starting.

By Brian Hammer, Vice President of Transactions

Given the inherent lag in values with pricing guides, Mente utilizes and combines various listing services primarily for “ask’ prices and historical sales data. We then combine this with our in-house proprietary database intelligence which contains over 300,000 rows of data tracking more than 250 unique fields, and are uniquely able to drill down to look at individual aircraft models within overall markets.

To get a sense of the market in 2020, consider these five specific aircraft markets below; Gulfstream G650/G650ER, G550, Bombardier CL605, CL650 and the Falcon 7X.

Gulfstream G650 and G650ER
  19Q4 20Q1 20Q2 20Q3 20Q4
Asking Price  $47.17M  $46.65M  $45.28M  $41.98M  $41.26M
Number  For Sale  16 13 16 20 19
Days on Market 276 240 64 177 230
Added to Market 8 7 9 7 4
Gulfstream G550
  19Q4 20Q1 20Q2 20Q3 20Q4
Asking Price  $21.87M  $20.49M  $18.44M  $17.32M  $16.10M
Number For Sale 36 40 48 44 46
Days on Market 176 252 120 216 257
Added to Market 42 24 4 15 15
Challenger 605
  19Q4 20Q1 20Q2 20Q3 20Q4
Asking Price  $10.94M  $9.90M  $9.26M  $8.83M  $8.68M
Number For Sale 24 27 30 32 30
Days on Market 156 235 191 206 193
Added to Market 14 13 8 9 28
Challenger 650
  19Q4 20Q1 20Q2 20Q3 20Q4
Asking Price  $17.37M  $17.27M  $16.95M  $16.95M  $16.97M
Number For Sale 6 5 6 6 5
Days on Market 138 209 375 287 348
Added to Market 2.33 2 1 1 4
Falcon 7X
  19Q4 20Q1 20Q2 20Q3 20Q4
Asking Price  $22.80M  $21.86M  $20.95M  $20.32M  $20.18M
Number For-Sale 16 21 18 20 18
Days on Market 242 247 392 164 282
Added to Market 13 7 11 6 14

 

Notice the market changes last year – largely due to the impact of COVID-19. Following a 2.5% percent drop in “ask” and “sale” price drop in 4Q2019, we saw inventory levels increase in 1Q2020 by 3% with “ask” and “sale” pricing relatively unchanged at less than 1% – but we began to see Average Days on Market increase.  In addition, we saw For Sale on Market numbers increase by 120%, while Aircraft Added to the Market decrease by 44%.

By the end of the first quarter in 2020, it was apparent that hold times and inventory levels would continue to increase with sales prices continuing a steady decline.  Aircraft sold and pricing averages continued to decline by 4.3%, followed by declines of 5%, 4.2% for the second and third quarters and finally ending the fourth quarter with another decline of 2.2%.  By the end of 2020, the aggregate value of aircraft sales prices across key markets suffered loss in value of 18.4%, while experiencing a 5% increase in inventory levels.

Not surprisingly, the last two months of 2020 were a busy time for most aircraft brokerage firms, seeing inquiry levels pick-up substantially and (for several reasons) aircraft purchase levels increasing.  Of the 205 retail transactions occurring in the key aircraft markets last year, 6% occurred in the first quarter (some of which had begun in 4Q2019).  The next two quarters comprise 14% and 22% of the annual transactions, but we witnessed 44% of the 2020 transactions come together in 4Q2020.  To make matters a bit sportier, Pre-Buy slots disappeared, insurance became much more difficult and financing issues continued to make matters more challenging.  Oh yes…there was an election.  In an election year, EVERYTHING is about the election.

We look ahead to 2021 with some optimism, hoping that most of the big market-drivers we saw in 2020 have either occurred, or have already been factored into the markets.  Changes to the tax codes remain to be seen, but there is a decent chance the markets have been “right sized” and “right priced”.  Stay with us… we will keep you posted!

 

About the Author:

Brian Hammer is Vice President of Transactions at Mente Group, LLC.

In his role, he is involved in business aircraft acquisitions, sales and leasing activity, basically all aspects of aircraft transactions.  Previously, he was Vice President overseeing the technical aspects of aircraft transactions, including inspections, pre-buy inspections, completions, and aircraft modifications.

Hammer has a broad-based background in aviation and has been involved in many transactions since joining the company in 2009.  Prior to Mente, he was a technical consultant at another aircraft brokerage and consulting firm.

Hammer’s 28-year aviation career includes serving as an Aircraft Technician in the United States Air Force, in corporate aviation as a maintenance supervisor for a leading 135 certificate holder and Director of Maintenance for a Fortune 200 flight department.  Hammer holds a B.S. in Business Management from the University of Phoenix.  He is located at the company’s headquarters in Dallas.

 

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