Pre-Owned Update: Pre-owned aircraft market remains strong

Aviation International News » April 2005
January 31, 2007, 9:44 AM

Activity in the used jet sector continues to thrust ahead as another year-over-year decline in inventory served to strengthen prices among a number of models and appears poised to continue. During the last two years the used inventory averaged a 155 net decline and stands at 1,730 as AIN goes to press, a figure it hasn’t seen in four years.

It’s no secret that late-model and current production aircraft accounted for much of that activity, but with many of these models in scarce supply and with prices tilting higher, a number of buyers are considering some of the older alternatives. Various regulation compliance deadlines for requirements such as RVSM and TAWS may have also revived interest in some older models, as the unknowns of cost and the hassle of downtime have been resolved for much of the fleet with the passage of these deadlines.

Examples of these are easy to find. Consider the Learjet 55, which has nearly halved its choices during the last 12 months, as has the Gulfstream IV. Last November there were 40 Hawker 800As for sale; today there are 29 and prices range from about $4 million to $6 million. While all these markets have experienced significant moves to the downside, they have basically come in line with or begun to approach levels generally considered normal.

GIV availability stands at 10 percent of the total number in service. Pricing currently runs from about $15 million to $18 million. Based on the same criteria, the Hawker 800A and Learjet 55 are in slight oversupply, currently ranging from 13- to 15-percent availability. Right now the Learjet 55 is priced between $3 and $4 million, with the later B and C variants priced above that range.

Buyers looking for potential upside value have zeroed in on some of these choices after witnessing their prices get battered over the last few years. With the perception that prices have bottomed out, buyers are stepping into the market with a confidence not seen since the late 1990s. The three model types above were produced as early as 1981 in the case of the Learjet 55 and as recently as 1993, which is when the 800A bowed out to its 800XP successor and the GIV-SP replaced the GIV.

Late-model Popularity
Late models such as the GIV-SP continue to attract the attention of many buyers, some of whom have lost patience with the growing manufacturer backlogs for new aircraft. This has kept pricing firm to appreciating, which many believe will continue throughout the year. Right now the GIV-SP is among a growing number of desirable aircraft in unusually short supply.

In fact, only eight GIV-SPs were available for sale in mid-March, representing fewer than three percent of the 286 that were built. Prices range from a low of $20.5 million for an early variant up to nearly $28 million for the latest offering. As tight as the used supply is for the GIV-SP, other airplanes, such as the Falcon 2000, are in even tighter supply, with only three of more than 200 currently for sale. Prices among the trio range between $17.5 million and $20 million.

Then there are others that, while they are in average supply (generally considered to be about 10-percent availability based on the total number in a given fleet), have made sizeable moves to the downside in terms of aircraft offerings. The Beechjet 400A is a case in point, reducing its availability by nearly 60 percent during the last year-and-a-half, from 51 to 21. Pricing begins in the low $2 million range for a 1991 model and climbs to around $5 million for a late model.

Then there are others that appear to be getting a little ahead of themselves as sellers try to “push the market,” raising prices, perhaps a bit more aggressively than the market will support, and often bogging down the trading pace and thereby increasing inventory. The Learjet 45 might be a case in point. Indisputably one of the hottest pre-owned jets last year, it began to command higher prices and the number of choices has nearly tripled since last August.

Among some other model types, a tripling of inventory might very well signal a market crash, but in the case of the super-heated Learjet 45 market the increase brought availability to about 5 percent of a current production fleet that is fast approaching 300. Pricing runs from the low $7 million range for a 1999 model up to $11.1 million for an out-of-the-box 2005 model that delivers this month.

It’s not just aircraft priced below the $10 million mark garnering the attention. In fact, the list of aircraft with renewed or increased popularity or perennial favorites runs the price gamut. These aircraft include the Challenger 604 and Global Express, the Falcon 900EX and Falcon 50EX and the Gulfstream V.

The used aircraft trade has definitely hit a sweet spot, with a good number of buyers and sellers engaging each other. Prices are not out of control, and for the most part there are still plenty of quality used offerings to satisfy what appears to be a growing demand. As always, any number of outside forces could short-circuit the market’s amped-up state, but right now the factors favoring continued forward momentum seem to far outweigh any factors that have the potential to stymie the market.

FILED UNDER: 
Share this...

Please Register

In order to leave comments you will now need to be a registered user. This change in policy is to protect our site from an increased number of spam comments. Additionally, in the near future you will be able to better manage your AIN subscriptions via this registration system. If you already have an account, click here to log in. Otherwise, click here to register.

 
X