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Pre-owned aircraft sales dip, but prices hold up
JETNET says that we are in a buyer's market, though just barely. The composition of what is selling has changed from this time last years, and is now ‘a bit older, a bit larger and less expensive’.

JETNET has released its review of the market for business aircraft in the first half of 2020 and amid the global COVID-19 crisis. VP of sales Paul Cardarelli says: “Make no mistake, the market for business aircraft is under stress, and this crisis is not helping. But many of the underlying reasons for this stress were in place prior to the crisis. So far this year brokers, dealers and sellers of business aircraft are showing restraint by not over-reacting to the negative stimuli that now surround the market. They are taking a short-term position on the crisis, viewing it as a temporary anomaly that can be waited out. As a result of this discipline many key market metrics have yet to turn exceedingly negative.

“There are at the time of this writing 2,264 business jets offered for sale, representing 10.07 per cent of the in-service fleet. This is technically a buyer's market but just barely so and has held steady between 10.1 per cent to 10.3 per cent since April. While there has been an increase of aircraft coming to market in 2020 it has not been so much as to move market into gross over supply and it is nowhere near the recessionary days of ten years ago when the inventory of business jets for sale swelled to nearly 18 per cent.

“Although softer than in 2019, there is no wholesale degradation of prices for aircraft listed for sale on JETNET in 2020. Retail sales are down 19 per cent (from 1169 to 947) for pre-owned business jets sold and leased in the first six months January to June YOY 2019 vs 2020. Certainly, that is substantial. But brokers and dealers report that phones have been ringing with calls from buyers. Therefore, the reduction in sales seems less about declining demand and more about sellers not yet capitulating to distressed market offers.

“What has changed this year is the composition of what's selling; a bit older, a bit larger and less expensive than last year. For January to June of 2019 the composite of pre-owned business jets sold was a 2004 model priced at $4.4 million USD with the light/super light jet category leading the market with nearly a 30% share of all pre-owned business jets sold. In 2020 the composite is two years older, a 2002 model priced at $3.7 million with mid/super mid-size jets as market leader at 27.25 per cent of all jet sales, up two per cent YoY. The light/super light and large/long categories are off in market share this year by 2.7 per cent and 0.5 per cent respectively.

“Bear in mind that the trajectory of the market today was in place going back to last autumn, well before COVID. 2019 was itself a year in decline. Compared to 2018, pre-owned sales were off last year by 12 per cent and inventory trended upward ultimately up by six per cent YoY. Demand softened because so much post-recession pent-up demand had been satiated in 2017-2018. We launched into 2020 already facing the headwinds of a market in cool down. To that were added two former market depressants becoming relevant again: Brexit was ratified in January and another contentious US presidential election was set for November. In this sense 2020 looks much like 2016 when inventory for sale and retail sales both trended unfavourably.”

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