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Marsh Brothers Aviation
Marsh Brothers Aviation
The monthly news publication for aviation professionals.
Pre-owned business aircraft market stable in 2023
IADA dealers closed 1,422 pre-owned transactions in 2023 compared to 1,399 in 2022. They expect mid-size and larger jet pricing to fall and inventories to rise over the next six months. Supply chains remain problematic.
IADA chairman Phil Winters, vice president, aircraft sales and charter management at Western Aircraft.

Members of the International Aircraft Dealers Association report that during 2023, the pre-owned business aircraft market continued to stabilise, as predicted per the organisation's Fourth Quarter 2023 Market Report. There was a subtle shift towards becoming a buyers' market, with higher inventory and more reasonable prices, leading to expectations for a steady start to 2024.

The year-end report combines the qualitative perspectives of members from around the globe, and the quantitative sales data from IADA-accredited dealers and certified brokers, who buy and sell more business aircraft by dollar volume than the rest of the world's dealers combined.

"IADA members have been predicting a more stable marketplace for over a year, and the 2023 market performed as expected," says chairman Phil Winters, the vice president, aircraft sales and charter management at Western Aircraft. "Our quantitative and proprietary sales data shows that buyers and sellers are coming together with regard to asking and offering prices, a positive change from the overheated conditions we've seen since the onset of the pandemic."

"While annual business jet resale volume for IADA dealers was about one and a half per cent higher in 2023, a more telling statistic showed an increase of 123 agreements to sell exclusively and 149 fewer new acquisition agreements, compared to 2022, reflecting more sellers than buyers," adds executive director Wayne Starling. "Overall, our dealers closed 1,422 pre-owned business aircraft transactions in 2023 compared to 1,399 in 2022."

An IADA member survey indicated that about three quarters of respondents expect mid-size and larger jet pricing to fall and inventories to continue to rise over the next six months. The most pronounced changes likely will occur at the top of the market in the large and ultra-long-range jet category. A similar pattern is anticipated regarding dealer willingness-to-inventory, with more than half expecting a decrease in willingness in the mid-size and larger jet segments. About 85 per cent of respondents believe that demand across the various aircraft size categories will remain relatively stable to slightly down.

While it was a solid fourth quarter for IADA dealers and brokers with 554 pre-owned aircraft transactions, supply chains remain problematic. Additionally, some transactions are on hold because of a shortage of parts and lack of pre-buy inspection slots, though the openings are growing. This could affect first quarter transactions. Projections for the next six months could also be affected by disruptions caused by global unrest, coupled with the traditional uncertainty associated with a US presidential election year.

Insights from IADA-accredited dealers and verified products and services members:

"Inventory levels began to level off in early fourth quarter, and we also saw an uptick in buyer demand which is typical for this time of year. I believe we will enter 2024 with fairly low levels of inventory and stable aircraft values, presenting a good dynamic for sellers in the first half," says Emily Deaton at JetAviva.

"Elections always cause buying paralysis. This one will be no different," says Jim Worrell at Jet Access.

"As forecast, the lack of a robust fourth quarter is allowing inventories to rise. While I am not expecting a precipitous drop in pricing, I do expect an increased pace of asset depreciation as the industry gives back some of the gains from recent years," says David Monacell at CFS Jets.

"Brokers/consultants are as busy as ever working to put together deals, now we just need buyers willing to pull the trigger and buy. In short, we have a pricing chasm between most buyers and most sellers. Most buyers are not in a hurry because they are waiting for lower prices or even the big 'correction', and most sellers are not in a hurry because they are under no financial duress to sell and don't feel the need to lower their expectations," says Frank Janik at Leading Edge Aviation Solutions.

"After 2022, when the industry saw an unsustainable number of business and transactions, we have begun to shift back to a normal market. The market is teetering on whether it's a buyers' or a sellers' market. However, instability doesn't help our business either," says Kyle Wagman at Leading Edge Aviation Solutions.

"We expect demand to stabilise near 2023 levels next year. OEMs are having only limited success in increasing production rates due to supply network constraints, largely driven by limited experienced manpower," says Rollie Vincent at Rolland Vincent Associates.

"Steady, but deals are harder to close. The aircraft purchase agreements are driving aircraft deals to unrealistic expectations for pre-owned aircraft," says David Foster at QS Partners.

"Isolated 'legacy' markets have slowed and thus supply is building; however, prices are not diluting at a corresponding pace … but falling. This segment will likely lead to a pull-back in market. We have a very full pipeline through year-end and are carrying an additional 25 per cent of 2023 total business into the first quarter. However, new business feels like it is slowing, especially on the acquisition side. That said, this is typical of first quarters; I am not concerned," says Johnny Foster at OGaraJets.

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