Press Release
Issued by JETNET.
October 28, 2011
JETNET LLC, the leading provider of corporate aviation information, has released September 2011 and the first nine months of 2011 results for the pre-owned business jet, business turboprop, and helicopter markets.
Market Summary
Highlighted in Table A are key worldwide trends across all pre-owned aircraft market sectors, comparing September 2011 to September 2010 as well as year-to-date (YTD) figures.
Key Metrics:
For Sale inventories continue to slowly decline (September, 2011 compared to 2010)
• Business jet inventory For Sale at 13.8% (down 1.3 points) from 15.1%
• Business turboprops For Sale at 10.1% (down .6 points) from 10.7%
• Turbine helicopters For Sale at 6.6% (down .4 points) from 7.0%
• Piston helicopters For Sale at 6.4% (down .2 points) from 6.6%
Full Sale Transactions show mixed results (YTD 2011 compared to 2010)
• Business jets (up 11.0%) showed double-digit percentage growth
• Business turboprops are down .9%
• Both turbine (down 11.6%) and piston helicopters (down 17.6%) show double-digit declines
Average Asking Prices show mixed results
• Piston helicopters are up 5.6%
• Business jets (down 19.7%), business turboprops (down 12.9%) and turbine helicopters (down 13.8%) all show double-digit percentage decreases
Average Days on the Market figures are at very high levels
• All market sectors are over 300 days average on the market before a sale
• All market sectors have increased the average days in September, except for business turboprops which took 25 fewer days
While the pre-owned market continues to show improvements, all indicators have been slow to recover in the first nine months of 2011. These figures are, however, much improved compared to the lows recorded over the past two years, as the For Sale inventories have declined and Full Sale Transactions have improved.
US Economy ("advance" estimate of the 3rd Quarter 2011)
Real gross domestic product (GDP)—the output of goods and services produced by labor and property located in the United States—increased at an annual rate of 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance"
estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent. The "advance" estimate of the US GDP is welcome news compared to the 2nd quarter's 1.3% percent, but still well below the 3.0% percent GDP growth mark (when business aviation does well).
Pre-Owned Business Jets For Sale and Full Sale Transactions
Table B shows business jet results for September 2011 compared to September 2010. The For Sale inventory continues to decline, and full sale transactions are down 7% in September 2011 compared to September 2010.
In the first nine months of 2011, asking prices remain soft (down 19.7%) compared to the same period in 2010. To determine if older business jets might be contributing more to the asking price decline, the fleet was split at "20 years and younger" and "21 years and older". The results were surprising; the "20 years and younger" age group contribution to declining average asking prices was significantly greater (down $1.5 million or 18.4%) than the "21 years and older" age group (down $206,000 or 13.6%) as shown on the last two lines in Table B compared to the same period in 2010.
12-Month Moving Trends - Tota l Retail Sale Tran sactions and Average Asking Price
The 12-Month Moving Total Trends for both Pre-owned Business Jet Aircraft Retail Sale Transactions and Average Asking Price from January 2004 to September 2011 are illustrated in Chart A.
As of September 2011 business jet retail transactions are 8.9% below the peak set in February 2008. These results are a sharp rebound from the 2009 lows and are good indicators that the correction process is in motion.
The past three or four years for the pre-owned business jet market have not been normal. Some sellers had unrealistic pricing expectations even as the market went into serious decline, and the
For Sale inventory grew to record levels as a result of the economic meltdown.
These differences are illustrated in Chart A as the sale transactions declined from 2,260 in June 2008 to 1,426 in June 2009. The Average Asking Price continued to increase, reaching a peak of $6.65 million in the later part of 2009. However, sale transactions only started improving when the average asking price started declining. In January 2011 the 12-month moving trend lines for each met for the first time since June 2008.
By the end of the 2nd quarter of 2011, the 12-month trend for average asking price had started to show signs that the bottom had been reached and had actually increased sharply.
However, this was a short-lived trend. The current quarter results have shown a flat trend line in the 12-month total sale transactions, and a reversal and sharp decline to $4.58 million in the 12- month average asking price trend line at the end of September 2011.
Pre-owned business jet asking prices are more in line than they were 18 months ago, but the current reversal in average asking price is a big concern for the seller (indicating that a correction is still underway).
From the buyer's point of view, the current market is a good time to buy a pre-owned business jet. It is still a buyer's market, with ample inventory of most business jets at near record low average asking prices.
