Pre-Owned Business Jets: A Tale of Two Markets

Credit: Dassault Aviation/A. Paringaux

The pre-owned business jet market is surging with inventories at record lows and prices rising.

“This is not your grandfather’s recession,” says Rolland Vincent, a consultant and cocreator of JetNet iQ. During the recession of 2008-09, business jet owners rushed to put their aircraft up for sale. More than 3,000 business jets were on the market, or close to 19% of the fleet.

Today, the business jet inventory is about 1,100 business jets, or about 5% of the fleet, as users turn increasingly to private aviation during the COVID-19 pandemic.

“I’ve never seen anything like this,” Vincent said during NBAA-BACE. “The depletion of inventory is unheard of.”

Many aircraft are sold before they officially hit the market, says Vivek Kaushal, Global Jet Capital CEO. “We’re seeing fewer and fewer people list their planes on the market,” Kaushal says. “If you look at the pace of transactions, it’s never been higher. We think of this as a highly efficient market.”

For buyers, it is about being patient.

If you read a sales listing and call, you will find out the aircraft has been sold already, says Janine Iannarelli, founder and president of Houston-based Par Avion. “I think the light bulb should come on and [you] say, [I] probably need a broker” who is well-networked. “Most are not getting listed.”

Buyers have been used to an abundance of inventory being on the market, Kaushal says. “People are adjusting their expectations.” They are waiting and watching pricing. “At the same time, they will not hesitate to pay the right price if it is for the right plane,” he says.

Joe Zuleta, Aeronautical Systems managing partner, says that the pricing on some models is changing quickly, especially for small-cabin business jets. “They last as long as the ink is wet,” Zuleta said about pricing during a panel discussion at a recent JetNet Summit in New York City. “It could change from one day to the next.”

Tony Kioussis, Asset Insight president and CEO, calls the pre-owned industry a tale of two markets. On one hand, the availability of young, low-time business jets is nearly nonexistent; on the other hand, there are plenty of older aircraft available. The number of days older aircraft are on the market is climbing.

How about newer business jets? “Finding one is going to be your biggest problem,” Kioussis says. Buyers wanting to close on an aircraft by the end of the year need to be in the market today. With workforce shortages, it may be difficult to find a facility to perform a prepurchase inspection right away.

The number of first-time buyers has risen dramatically since the beginning of the COVID pandemic. In addition, the average age of a new jet user has declined materially over the past decade—particularly over the past 18 months, some experts say. New buyers enter the market with no aircraft to trade.

Historically, 80% of pre-owned aircraft sales are to current aircraft owners, while 20% are to first-time buyers, Kioussis says. Those percentages have changed significantly, he says.

That means his team spends more time educating clients. New buyers need an experienced broker and a good team around them.

“If not, the problems you could create for yourself are numerous and the financial implications could be steep,” Kioussis says. “It’s just not the price of the aircraft. It’s the total operating cost of the aircraft. If you buy an aircraft with a whole bunch of upcoming maintenance to it, you’re going to be surprised at what the operating costs are going to be.”

More deals are being done with cash. “Cash has always been king,” he says. “We don’t see that changing.”

Low numbers of quality pre-owned business jets for sale and rising prices mean more buyers are turning to new aircraft. Manufacturers are reporting growing order backlogs. On the other hand, the unavailability of used aircraft could have the opposite effect, some experts say. It could cause potential buyers to step aside and wait.

Over time, the issues will work themselves out, says Kaushal of Global Jet Capital. “We take a more expansive view.”

Molly McMillin

Molly McMillin, a 25-year aviation journalist, is managing editor of business aviation for the Aviation Week Network and editor-in-chief of The Weekly of Business Aviation, an Aviation Week market intelligence report.