Pre-Owned Update: June 2005
Pre-owned jet sales activity by most measures is rolling through this year at a blistering pace. While there are signs that the gallop will slow during the summer (historically a slow season), it may come as a welcome relief to those who have been running at full pace.
This year’s tally is well ahead of the figures from the same period a year ago. In fact, through all of last year the inventory of used jets experienced a net drop of 65 aircraft, a figure likely to be reached this year at the end of this month–the halfway point of the year. The diminishing supply has shored up markets that had been rather soft and as a result has bolstered prices.
Even some markets that had flat-lined are again showing signs of life, seemingly resuscitated by palatable pricing perhaps a result of the positive outlook for the state of corporate aviation. The venerable Learjet 35A, for example, had stagnated around the century mark in terms of choices, but in the last 12 months has reduced availability to 80, a level it hasn’t seen in four years. Based on the surge in buying this year, the trend toward lowered availability of this model looks poised to continue. One might postulate that passing of the RVSM and TAWS compliance dates removed last year’s questions about what to pay or how much to reduce the price for an aircraft not ready for the then-upcoming requirements.
While this assumption seems to have merit, one has to question why the Citation II market hasn’t responded in a similar way. It seems to have languished, not once dropping below 100 choices in five years. It stands at 120 today, with most choices priced in the $1 million to $2 million range and only the latest touted above $2 million.
New Life for Learjet 55 Market
The health of the market is also breathing new life into another 20-plus-year-old Learjet, the model 55. In little more than a year the used market contracted from 33 to 18. That latter figure represents 15 percent of the active fleet of 120 Learjet 55s (excluding B and C models), which places it at least five percentage points above what is considered a normal supply, six if you account for the later variants.
Regardless, for sellers it’s one giant step in the right direction. Most of the Learjet 55s are priced from the low- to high-$3 million range, with a couple of examples penetrating both the high and low of that range. Keeping company with the Learjet 55 is the Citation III, serving up twice as many offerings, yet about the same in terms of percentage of its fleet based on the greater production run of the Citation III. Pricing is predominantly in the low-$3 million to upper-$4 million range.
The Hawker 800A, with a slightly greater production run than the Citation III and substantially more than the Learjet 55, is below both aircraft in terms of supply percentage. It had risen to nearly 40 about a year ago and had dropped to 26 as of mid-May, or slightly less than 11.5 percent of its active fleet. Typical pricing for Hawker 800As is in the $4 million to $5 million range.
In the larger category the Falcon 50 is getting its second wind. After amassing more than 50 (one-fifth of its fleet) for sale two years ago, it shed about 20 aircraft from that figure in the year that followed and then just held steady, at 30 for sale, throughout last year.
This year buyers have whittled down further the pool from which to select. In January there were 33 and currently the number stands at 22, a figure not seen since mid-2000, bringing choices to just under 10 percent of the active fleet, perhaps a precursor of upward price adjustments. Pricing runs from the mid-$5 million range for an early variant to the mid-$10 million range. The range could jump up a few pegs, but right now the used supply of post-s/n 200 Falcon 50s (newer than 1989) is nonexistent.
Six months ago the Challenger 601-3A market hit 24, but has since dropped to 14, and of those three have sales pending. If those three sales consummate and no new arrivals surface, the stock would return to levels of five years ago. Right now, the choices run from the high-$8 million range to $11.5 million.
The activity in the -3A market has in turn cast attention on the earlier and lower-priced variant, the 601-1A, which has seen a decrease in the number of choices available from 15 less than a year ago to nine at present, with one sale pending. Yet even with the recent rush, both models are at more than 10-percent availability. The -3A is presumably at the cusp and heading lower.
Just 3 Percent of Challenger 604s For Sale
While it may be refreshing to read about some of the aircraft that haven’t been mentioned in this column, at least not in such a favorable light, it should be pointed out that almost every late model current-production aircraft is continuing at warp speed. The Challenger 604, with more than 300 in service, gives up just 10, or 3 percent of its fleet to the used market, while the GIV/SP, which has a slightly smaller fleet, provides just about the same. Smaller still is the Falcon 900EX market; yet with five for sale its percentage of availability falls between its two counterparts in this superheated large-cabin segment.
Going forward, the pre-owned market is exhibiting signs of continued strength. New aircraft backlogs, the reasonable cost of borrowing money and perhaps even a growing awareness of the civility of corporate aviation as opposed to the commercial alternative have brought about a resurgence among the pre-owned ranks.
Source for statistics: Jetnet, Utica, N.Y.