Anyone seeking signs that the pre-owned business jet market is bouncing back has reason for optimism.
Amstat, which tracks business jets of all sizes and vintages in its 22,000-aircraft dataset, noted that this year's first half closed with many segments "at or close to" their lowest inventory levels as a percentage of the active fleet "in some time." The figure for active business jets, it added, was at its lowest since early 2008.
UBS, crunching JetNet data, reported that among 44 newer models it tracks on the used-jet market, 28 had year-over-year inventory declines in June, while 13 saw increases. Overall inventory was down 5 percent.
Embraer CEO and president Paulo Cesar de Souza e Silva expressed cautious optimism about the used-jet market during a July earnings call. "We have seen some signs of improvement on the used markets," he said. "There is some stability in prices, [and] no further deceleration in general in the value of the aircraft."
Such data snapshots and informed viewpoints suggest that the long, pronounced used business-jet market slump might be turning around. But a macro view of transaction data from the last decade and a detailed look at specific metrics within that dataset underscore how much momentum the slump has, and suggests that it might not be over.
Data analyzed by AircraftPost shows that while available inventory as a percentage of the fleet declined in this year's first half, it is nowhere near 2008 levels. More troubling is that while inventory levels have generally been climbing year-over-year, the number of aircraft sold as a percentage of the overall fleet has stalled. This is having a predictable effect on values: they continue to fall sharply.
More Models Come on Market
AircraftPost tracks fleet statistics and aircraft transactions within the worldwide business jet fleet's core. Its database contains 11,000 current-generation business jets ranging from the Learjet 70, CJ4 and Phenom 300 up through the Global 6000, Falcon 8X and G650. A look at key metrics back to 2008 shows few bright spots. The percentage of the AircraftPost-tracked fleet available for sale doubled from 2008 to 2016, from 8.7 percent to 17.6 percent. While it dipped a bit in the first eight months of this year, to 14.7 percent, the percentage of the fleet changing hands fell as well. Stalled at 6.2 percent from 2012 to 2016—even as the percentage of the fleet on the market climbed from 14.2 percent in 2012—the sold-inventory percentage dropped to 4.6 percent in the first eight months of this year.
"A higher percentage of the fleet is coming onto the market year over year, yet we're not seeing much movement in the percentage being sold, particularly with in-production models," said Dennis Rousseau, AircraftPost's founder and president.
The percentage of in-production aircraft on the market was 11.3 percent through mid-August, down from 13.2 percent in full-year 2016. But the percentage sold fell too, to 3.7 percent, from 4.3 percent last year.
Sales of out-of-production (OOP) models have fared somewhat better, hovering around 7.5 percent of the OOP fleet for the last four years. But they too slowed in the first part of this year, falling to 5.2 percent.
Rousseau acknowledges that the short-term figures reveal a few bright spots. But the overall picture, he contends, remains mostly cloudy. And that's before examining transaction prices. Among the data AircraftPost gathers where it can are dollar figures that change hands between buyers and sellers. These, Rousseau says, show few signs of sellers clawing back some of the value lost in recent years.
A 2008 Gulfstream G550 can now be had for just under $20 million, based on approximately 25 sold this year. The average price is down 12 percent from last year, when 27 changed hands. Prices have fallen every year since 2011; the average year-over-year decline is 11.5 percent.
The four 2013 G650s sold in the first eight months of this year fetched an average for $49.1 million, down 2 percent from last year's figure. That follows declines of 24 percent and 10 percentin 2016 and 2015, respectively.
Falcon 7Xs built in 2013 are selling in the region of $49.1 million, based on four transactions this year. The 6 percent drop from 2016 prices is hardly alarming, but it follows full-year dips of 25 percent in 2016 and 11 percent in 2015.
"It doesn't matter what aircraft type you look at," Rousseau said. "These trends are consistent across the board."
The big picture: values are still declining at rates that belie hard evidence of a significant recovery. Preliminary 2017 data shows better year-over-year value retention on many models, but the precipitous declines in recent years make it hard to get excited about less-sharp dips this year.
Aircraft are hard assets that depreciate over time, so year-over-year declines in stable markets are expected. Of course, markets are rarely stable, so prices bob up and down. Business jets lost significant value coming out of the 2008-2009 Great Recession—hardly a newsflash to anyone involved in buying or selling them. But while markets have bounced back, AircraftPost's data suggests that used business-jet prices have not.
"Where do we go from here?" Rousseau asks. "That's a big question." The destination is uncertain, but the data will mark the way.