Used BizAv Market ‘Improving Dramatically,’ IADA Says
The preowned business aircraft market is improving dramatically with no large price drops, according to the International Aircraft Dealers Association (IADA).
“By and large, things are improving and improving pretty dramatically,” Paul Kirby, IADA chairman and executive vice president of QS Partners in Boulder, Colorado, said during a webinar replay hosted for IADA members. May is generally better than April, and June is expected to be significantly better than May, he said.
Prices for used aircraft, meanwhile, have been “thoughtful,” Kirby said. They have not been “completely out of whack” or cratered in any one specific market.
“For the first time we’ve heard sentiment from a couple of different buyers … saying ‘I’m afraid I’ve missed the bottom,’” Kirby said. “And I don’t know if they’re right or not. I hope they are.”
Used aircraft have not come onto the market in large numbers. This pandemic and economic downturn is not like the economic downturn of 2008 when inventory rose and prices dropped dramatically, said Joe Carfagna, with Leading Edge Aviation Solutions. Today, values for large business jets are off about 15-20%, Carfagna said. But for light jets, values are down about 10%.
Recovery will be complex, said Matt Bosco, founder of Axis Jet, based in Sacramento, California. First there must be a vaccine. The good news is, that may occur before the end of the year. Bosco has clients involved in that technology and the applications for a cure or vaccine, he said.
“We even know some people that have actually taken the vaccine here in California,” Bosco said. “We think that’s going to be key to the recovery.”
Clients are “fairly bullish about the activity coming back, he said. “I think there’s certainly some concern because a lot of industries aren’t going to turn right back on. They’re not going to be there immediately.”
Transactions have slowed, said Rolland Vincent of JetNet and Rolland Vincent Associates. The good news is “there’s no rush for the exits.” About 2,300 business jets are currently listed for sale—essentially a stable number. In 2009, that number would have grown substantially, he said. Financing has remained affordable.
Flight operations will return soonest—to about an 85% pre-pandemic level, followed by the used market then by new aircraft sales, Vincent said.
“The OEMs are going to have a tough year,” Vincent said. “It’ll be down 25-30 points in terms of their outputs from the factory, but they’ll pick it up. This will be the low point in their continued outlook. So, all in all, good products to sell. Not as much young inventory as we’d like to see out there for sale if you’re a broker/dealer. But I think it’s about nine percent of the inventory out there that’s younger, so that‘ll move pretty quickly.”