A super-heated used business aircraft market has had more jet-A thrown on it due to new tax law changes and looming FAA equipment mandate deadlines. The tax law changes, embodied in the federal Tax Cuts and Jobs Act of 2017, extends 100 percent bonus depreciation to used equipment, including used aircraft. Meanwhile, the 2020 deadline for ADS-B installation and an expensive airworthiness directive—estimated to cost up to $325,000 per engine—for certain Honeywell TFE731-4- and -5-powered aircraft could combine to purge up to 20 percent of the older bizjet fleet from the market in short order, according to the Dallas-based Engine Assurance Program (EAP).
EAP notes that the combined cost of ADS-B mandate, the engine AD, and related inspections, could collectively run upward of $800,000, an investment likely to be considered imprudent on aircraft with current market values of $1 million or $2 million. This in a market that is already thoroughly en fuego. At this year’s annual NBAA-BACE, members of the International Aircraft Dealers Association (IADA) brought 20 aircraft for the static display, consisting of many relatively new, high-ticket models including a Gulfstream G650 and a Bombardier Global 6000.
Even though the market is tight, there were more transactions in the first half of the year and more aircraft were coming to market, according to Amstat. The company notes that the percentage of the active fleet sold for the current half-year period compared with the year-ago period increased in key segments such as heavy jets and turboprops. The percentage of the heavy fleet that turned over increased among aircraft of all ages; from 4.2 percent to 5.7 percent among older aircraft, from 5 percent to 6 percent in the mid-age segment, and from 3.2 percent to 3.9 percent with recent aircraft.
Turboprops turning over as a percentage of the fleet increased slightly from 3.8 percent to 3.9 percent, while medium jets held steady at 5.1 percent and light jets declined from 5.1 percent to 4.8 percent. Not surprisingly, the largest reductions in aircraft for sale as a percentage of the fleet occurred in newer and mid-age aircraft across the board in all segments. But notably, mid-aged aircraft in particular are posting large reductions, as the percentage of the fleet for sale reflects a dearth of newer aircraft availability. The percentage of mid-age heavies available dropped from 9 percent to 6.3 percent, mid-age mediums fell from 11.6 percent to 9.6 percent, and mid-age turboprops declined from 7.5 percent to 5.7 percent.
This and myriad other data already paints a picture of a used jet market starving for quality inventory, with buyers forced to spend more and settle for less across all categories of business aircraft. Brokers are becoming “finders” as opposed to “sellers” according to Citi Research’s Jonathan Raviv. And buyers appear primed to lower expectations, willing to offload dreams of acquiring aircraft ready to fly with everything they want in favor of ones that need a little TLC, either in terms of cosmetics or actual cabin and cockpit upgrades.
“Even [Piaggio] Avantis are selling,” says Jason Zilberbrand, president of the aircraft valuation service Vref, referring to the Italian turboprop twin pusher that has sold poorly over the last 20 years. Zilberbrand said the inventory of desirable used aircraft across most makes and models has dwindled to less than 2 percent. Zilberbrand thinks used aircraft prices bottomed out this summer. “It’s tough to find good medium and super-medium jets that are less than 10 years old. If the aircraft is clean, 2020 [ADS-B]-compliant, and realistically priced, it’s going to move. And brokers are taking less in a lot of deals,” he said.
The large-cabin market is even tighter, Zilberbrand says, noting that one customer recently spent six months looking for a used Falcon 7X. And even after a long search, buyers are sometimes relegated to their second, third, or fourth pick, he said. Zilberbrand thinks the concern about a mass scrapping of TFE731-powered aircraft is overblown, noting that stand-alone, lower-cost ADS-B solutions have been devised for many of these aircraft and that many owners are willing to invest in upgrades to aircraft that, from a pure economics standpoint, seem irrational.
“The [TFE]731-powered fleet is not going to go away any time soon,” he counsels. “They’re too many out there and they’re great aircraft, but sometimes we look at deals and scratch our heads” when buyers invest heavily in upgrading older aircraft such as the Hawker 800A or Learjet 55. By way of exampl, he says that replacing the CRT cockpit screens in the Hawker alone can be a $250,000 event. However, Zilberbrand sees older large-cabin aircraft that are heavily chartered as more of an endangered species when deals do not support the necessary cabin upgrades.
Only 9 percent of the current in-service fleet is listed for sale, the lowest percentage in more than 20 years, and only 7 percent of the current for-sale fleet is three years or newer and under warranty, making the competition—and prices—for these aircraft intense. Compared to last year, the number of 10-year-old or newer business jets has declined by 30 percent with some models, including the Dassault Falcon 7X and Gulfstream G650, in extremely short supply. Amstat reports increasing values in select pre-owned sectors for newer aircraft including super-mediums, large cabin, and turboprops, with values in the former jumping by double-digit percentages: YTD increases include heavy jets up 17.7 percent, light jets up 4.8 percent, and turboprops up 11.1 percent.
“The increase in estimated values reflects recent increases in market demand and a tightening market with fewer options for buyers,” according to Amstat general manager Andrew Young. Worldwide, 2,700 pre-owned business jets changed hands last year; approximately 1,900 are on the market now. According to JetNet, during the first half of the year, 1,344 business jets changed hands and the average time on the market dropped by 26 days to 297.
Within this tight market, popular models of newer aircraft are getting even scarcer, according to a recent market analysis by Vref. The company notes that the supply of used single-engine turboprops for sale, such as the Pilatus PC-12, has dropped below 5 percent of the installed fleet as have some popular jets including the Bombardier Challenger 300, while others are nearing that level, including the Gulfstream G450 (less than 5 percent), the Cessna Citation Mustang (less than 5.5 percent), and the Cessna Citation CJ2 (less than 5.9 percent). These dynamics are beginning to restore pricing power either by slowing the depreciation of some models or outright increasing prices. Zilberbrand thinks, despite the recent price increases, there is room for more, as it is unlikely that OEMs are fully prepared for a surge of new buyers. “You have to wait nine months right now for even a new legacy aircraft such as a Global 5000,” he notes. “And that is going to continue to put pressure on the need for interim lift—either charter or buying a used aircraft while you wait for the new one.” The OEMs, perhaps snake bit by the go-go new jet market and rapid crash of same a decade ago, appear more sanguine when it comes to spooling up production rates, and that is keeping pressure on the used market.
It’s a market where robust used business aircraft sales are also driving record activity at lenders such as PNC Aviation Finance. The firm’s senior vice president and national sales manager, Keith Hayes, said the red hot used market is going to make 2018 the most active for the firm since 2009. “Activity is as high as it has ever been since the downturn [of 2008],” he said. Used sales activity is also driving record business in the completion, maintenance, and modification businesses. Blackhawk Modifications reports business is up nearly 40 percent from a year ago, driven by a turboprop market that is even tighter than jets, with only 6.6 percent of the installed fleet cumulatively on the market.
Duncan Aviation, which does more late-model mid- to large-cabin jets, reports record sales compared to 2017. Steve Gade, Duncan vice president of marketing, noted that the company is “significantly busier and with a stronger backlog going into next year.” He added, “Current activity is very robust and a lot of it is being driven by transactions” with customers looking to upgrade aircraft with newer satellite communications, cabin management systems, and avionics with no one activity particularly standing out, but “there’s just more of it.” Gade said most customers are savvy to the crunch and reserving maintenance and modification slots earlier than in years past.
Likewise, higher resale and residual values of used business jets have led to STC upgrades being developed for aircraft that might have made sense to upgrade only a few years ago. By way of example, Garmin is now offering (beginning in 2019) a G5000 avionics upgrade for Cessna Citation Excel/XLS aircraft for approximately $550,000 while Tamarack continues to expand the list of Citation CJs approved for its $200,000 active winglets. This despite the fact that used copies of the former trade in the $2.3 million to $5.1 million range (1998-2009 models), and models in the latter trade anywhere from $850,000 (1993 CJ) to $5.6 million for a 2013 CJ3, according to Vref. Tamarack already has installed winglets on 63 CJ series aircraft. Amstat notes that overall, the average price for an older light jet has slid below $700,000, but the asking price for a mid-age one is up 9.8 percent year to date.
All this said, there are still a number of relative bargains available for those willing to consider older aircraft and move fast to close on the deal. Here’s what AIN found scouring the latest brokerage listings that included prices for a representative sampling of various makes and models across all size classes.
Strong pricing can be found throughout the category. Prices for used Pilatus PC-12s range from $4.6 million for a 2017 PC-12 NG down to $1.9 million for a 1996 PC-12/45. Asks for TBMs vary from $4.3 million for a 2018 TBM 930 down to $700,000 for a 1991 Model 700. There is a fair sampling of 850s on the market in the $2.1 million to $2.3 million range. Piper singles are offered between $675,000 for a 2001 Meridian and $2.6 million for a lightly used 2017 M600. Quest Kodiaks are relatively plentiful with asks beginning at $1.5 million for a 2010 model up to $2.4 million for a 2017 model. Decent Cessna Grand Caravans command anywhere from $700,000 for a 1993 208B to $2.8 million for a barely flown 2018 Grand Caravan EX. Overall, you can find a good selection of 208Bs available in the $1 million “sweet spot” for vintages that are around 15 years old.
As previously noted, Piaggio Avantis are moving again with prices between $1 million for a 1992 P.180 to $6 million for a like-new 2016 Evo. Model P.180 Avanti IIs in the 2005-2009 range are priced between $1.5 million and $2.9 million. King Airs continue to dominate the category with the model 350s produced between 1991 and 2007 trading at prices between $1.2 million and $3.8 million; the newer 350i models are priced in the range of $3.9 million to $5.25 million for years between 2010 and 2017. There is still plenty of inventory for the ubiquitous 200 series; 1997-2006 B200s are priced between $1.5 million and $2.85 million, 2008-2011 200GT models trade in the range between $2.5 million and $3.5 million, and 250s are changing hands for amounts between $3.25 million and $4.35 million. The smaller 90 series continues to draw attention with prices between $675,000 for a 1997 C90B and $2.3 million for a 2010 C90GTx. Ten- to 12-year-old GT and GTi models trade in the range between $1.3 million and $1.7 million.
There’s no shortage of deals here. Eclipse 500s, spurred on by the company’s recent bankruptcy, are pouring onto the market at prices starting at $775,000 for 2008 models. Beechjets of all flavors including the Hawker 400XP and the rebuilt/re-engined Nextant 400 XTi continue to sell well, with prices starting at $525,000 for a 1990 Model 400A with 10,000 hours. Prices vary widely based on model year, hours, and equipment, with rebuilt Nextant 400XTi models selling from $2 million to $3.35 million, while a 3,300-hour, 1998 400A retrofitted with the Garmin G5000 avionics system commands an ask of $2.5 million. Speedy Beechcraft Premiers (RB 390) are available at prices between $1.7 million and $2.4 million for 2007-2011 model year Premier 1As, while older 2003-2005 Premier Is are trading at between $1.28 million and $1.45 million.
Newer generation aircraft, such as the Honda HA-420 and Embraer Phenom 100E, are also priced to move. A two-year-old Honda with just 180 hours is discounted to $3.94 million while a 2012 year 100E with only 400 hours is listed for $3.5 million. The ask for an older, 2010 Phenom 100 with 1,441 TT is $1.95 million. Used Cessna Citation CJ/525 aircraft (all models) range in price from $925,000 for a 1995 CJ with 6,400 TT to $6.9 million for a 2016 CJ4. Aftermarket modifications can raise values on older CJs substantially; the ask for a 1993 model with winglets and updated Garmin G1000 avionics is $1.65 million. Late model M2s appear to be holding values well with the list price for a 2015 model with 1,300 TT set at $3.25 million and newer, low-time Citation Mustangs, 2009-2016, bumping along between $1.85 and $2.5 million. Comparable deals can also be had on first generation Citation I and IIs, with older low-time, stock ISPs trading at prices starting at $695,000 and newer vintages with popular modifications, such as the Eagle II package, commanding $1.25 million. And you can still find a few 1970s vintage Citation 500s on the market for around $300,000.
The market is flooded with Citation 550s; 1970s-1980s vintage IISPs are listing from $300,000 to $700,000, while for lower-time Bravos circa 2000, prices start at $950,000. Older Learjets, for those willing to sign onto the adventure in product support, offer some of the best speed if not bang for the buck: Vintage 1970s Model 25s are priced under $200,000, 1980s Model 35As for prices starting at $500,000, and late 1990s and early 2000s Model 31As beginning at $600,000. Newer Model 40XRs start at $2 million, while the slightly larger 45 and 45XR range from $1.5 million to $4.9 million depending on model year. The Embraer Phenom 300 remains one of the most sought after aircraft in the category, with the ask on a 2017 model with 700 hours at the virtual new airplane price of $8.4 million. Vref calculates that a six-year-old Phenom 300 has depreciated a mere 32 percent since new compared to a same year Learjet 40XR that dropped 63 percent. For those seeking speed and nostalgia, a handful of 1970s-era Falcon 10s are on the market at prices between $300,000 and $600,000.
Pricewise, this is one of the softest spots on the current market. Decade-old, low-time Cessna Citation XLS and Encore+ models are trading near $4 million while older Citation V Ultras and Citation Vs are priced between $1.1 million and $1.6 million. The older Citations III, VI, and VII models can be had for cheap, at prices ranging from $500,000 to $1.5 million. Citation X speedsters are priced at between $2.7 million and $11 million depending on model year, while the refreshed Citation X+ which officially went out of production earlier this year, commands asks of between $14 million and $15 million for airplanes that are three to four years old. Citation Sovereigns are rare to market and priced accordingly, with a 2007 model priced at $6.3 million and a gently flown 2014 Sovereign+ given an ask of $11.95 million. Older Learjet 60 and 55 models can easily be had for $1 million or less—sometimes a lot less.
Hawker 700-900XP series remain the sleeper of the category, with prices of 1980s-era 700s at well less than $500,000 in some cases and a 700-hour 2012 model 900XP “priced to move” as they say, at $6 million, while 800 series are plentiful and cheap, with a 1995 800A commanding only $1.02 million. Falcon 50EX trijets circa 1998-2003 can be had for $2.95 million to $3.95 million; older Falcon 50s from the mid-late 1980s are priced at $879,000 to $1.6 million. Gulfstream G150s from 2006-2008 run in the range of $3.8 million to $4.8 million, while its ancient progenitor, the 1980s Westwind 1124 is priced from $300,000 to $700,000 in many cases.
The half-dozen 2008-2010 Hawker 4000s on the market are basically priced at the engines’ scrap value—around $4 million. Gulfstream G200s do only slightly better, with model-year 1999-2007 aircraft priced at $2.395 million to $6.25 million for aircraft with TTs of between 2,600 and 6,700 hours. Newer—and better—G280s are priced higher but in short supply; a 2013 model with 2,200 TT lists for $16 million. Falcon 2000s are priced at $3.1 million to $7.2 million for 1996-2002 models, while newer variants such as the 2007 Falcon 2000EX EASy lists for $10.35 million, and the market for these newer 2000s is very thin. Asks for Embraer Legacy 600s range from $4.75 million to $8 million for 2005 to 2008 models with a newer 2010 Model 650 with under 4,000 hours listed for $9.5 million. Bombardier Challenger 300s and 350s continue to be extremely strong; 2007 to 2012 model 300s with times between 2,300 and 3,300 hours listing for $7.75 million to $11.95 million, while late-model-year 350s from 2014 and 2015 with low times have asks of between $16 million and $17 million.
There are plenty of older Bombardier Challenger 600-series aircraft out there and they continue to be popular in the charter market. Prices for early 1980s 600s start at $895,000; a late-decade model with fresh major inspections and new paint and interior can bust through the $2 million ceiling. Challenger 601s from the mid-1980s to the early 1990s generally run in the $1.5 million to $2 million range, while newer 604s from the late 1990s to mid-2000s are trading in the $4 million to $6 million range. Models newer than that tend to be scarce, with a five-year-old 605 recently listed for $9.9 million.
Dassault Falcon 900 trijets of various flavors from model years 1987 to 2006 trade in the range of $3 million to $13 million, with a heavy premium assigned to later model years equipped with the EASy II avionics package; model year 2004-2006 of those aircraft are all priced around $13 million. Model 900s newer than that are a market rarity. So are Bombardier Global 5000s. A low-time 2016 vintage recently priced out at $32 million. Like the Challenger 600 and 601s, there is no shortage of older Gulfstreams for sale, with prices starting at $695,000 for a 1982 GIII with 11,600 hours; GIVs made between 1990 and 1992 are trading in the $1.6 million to $4.4 million range, while GIVSPs produced between 1992 and 1999 are listed from between $1.25 million and $5.2 million. There are a few G300s and G400s available, and the ask on 15-year-old models of those runs between $4.5 million and $7 million. Meanwhile, G450s continue to be scarce, with prices on 2006 to 2016 models running in the range between $9.95 million and $23.75 million.
Large-cabin, Long-range Jets
Again, there is no shortage of older airframes available, but late-model aircraft are few and far between and increasing in price. Buyers willing to accept aircraft at/near the 20-year age can keep their budgets close to $10 million or less. Gulfstream GVs produced between 1997 and 1999 are trading between $8.8 million and $10.25 million, while Bombardier Global Express model years 1999-2001 are priced between $6.5 million and $9.8 million. Prices go up rather dramatically from there with the next iteration of those aircraft; Gulfstream G550s model years 2009-2013 are listed for $22.95 million to $27.75 million, while the ask for Global XRS model years 2007-2009 is around $18 million. Gulfstream G650/G650ERs made between 2013-2015 with relatively low times are listed at between $48 million and $50 million, while the ask for a model-year 2014-2017 Global 6000 ranges between $34 million and $45 million. Buyers looking for Dassault Falcon 7Xs and 8Xs will be looking for a long time, as inventory for both models is very slim. That is reflected in prices for 2010-2013 model 7Xs at $20 million to $27 million; and it's rare for a late-model 8X to pops onto the market, with 2016 model years of those trading for a spendy $52 million.