Attractive pricing persists on many popular models despite a continued tightening of inventory to its lowest level since peaking less than two years ago.
CRS Jet Spares reports a 25-percent decrease in customer additional billings (billbacks) over the past 18 months as a result of its Option 2 pricing program.
When an operator needs a part, an exchange transaction is the common method of handling the purchase. The problem with that type of transaction is there’s the chance of a billback to the operator at a later date based upon the actual condition of the core.
For more than a year, recovery mode in the pre-owned aircraft market has meant more an outflow than intake. Although the number of choices has decreased, there has been no corresponding increase in prices, making it extremely attractive for buyers. Currently, purchasing an aircraft is more about operating cost than it is about acquisition costs.
The eye-popping total of 2,750 pre-owned aircraft for sale today is a lot based on historical standards, but it is well below the peak reached a little more than a year ago. The broker community and OEMs monitor the total number of aircraft for sale because it is an important measurement on which to gauge the health of the used aircraft market, but when you scratch beneath the surface you realize that the sky is not falling.
While a year ago it seemed as if buyers were beginning to emerge from harsh winter hibernation, in fact inventory was still a few months away from reaching its all-time peak. At the same juncture this year, we find inventory a couple of hundred aircraft below its 12-month moving average, yet still a couple of hundred above the pre-Lehman collapse figure.
Used aircraft prices have gone parabolic since last year, first launching to lofty heights only to arc back down to earth. While the drop began just before last year’s NBAA Convention, at the show aircraft purveyors had that deer-in-the-headlights look as they shook their heads in disbelief as the Dow Jones Industrial Average plunged 1,000 points during the three-day event, punctuating the beginning of a year-long correction in pricing.
The good news is that the bad news seems to have subsided for the time being and business aviation’s recent negative publicity served to make aircraft that much more affordable.
After a grueling quarter of massive price destruction, a wave of opportunistic buyers has begun to surface and infiltrate the pre-owned jet market. The current economic environment coupled with the public flogging of private jets and their owners has created a sea of discounted jets in all shapes and sizes. There is a growing perception by many that now is the time to buy.
Last year demand for pre-owned business jets and turboprops remained strong. High oil prices and financial turmoil, however, have applied the brakes and inventories are reaching new highs. Buyers are waiting for the deals to come to them, leaving airplanes languishing on the market longer and sellers accepting less just to get out of the market.
CRS Jet Spares has announced a new pricing option for exchange transactions
to reduce the stress level of operators concerned about the extra charges associated with exchanging components. The company now offers its special Option 2 fixed pricing for exchange transactions on many component items.