I hope everyone is doing well. There seems to be a lot of important news stories hitting these days….it is like you can’t turn away for a day without some new wrinkle hitting that could have a direct impact on your pocketbook. The stock market seems equally volatile, with the Dow down almost 900 points today as I write this. There have also been some interesting developments that will have a direct impact on turbine aircraft transactions, so I thought it might be helpful to summarize them for you.
Bonus Depreciation
For Those who didn’t watch President Trump’s speech last week, you may have missed his reference to bringing back 100% bonus depreciation. About 38 minutes into his speech, President Trump said, “We want to cut taxes on domestic production and all manufacturing. And just as we did before, we will provide 100% expensing. It will be retroactive to January 20th, 2025.”
That’s good news for our industry. Bonus depreciation began phasing out in 2023, and was reduced by 20% each year, currently sitting at 60% allowable in year one. Reinstating the ability to depreciate 100% of the purchase price of an asset in year one should really help drive activity in both new and pre-owned aircraft sales. President Trump appears confident he can get this passed through both Houses, but I don’t expect that to happen immediately.
When it does pass, I expect a late-year surge in aircraft transactions. That means a lot of buyers all scrambling after the same aircraft at the same time of year, with a limited number of pre-purchase inspection slots available. I would not recommend buyers wait for this surge, as that will surely firm up prices and embolden sellers to negotiate better terms. A much better strategy would be to start now, while inventory levels are up, prices have come well off peak and demand is a bit sluggish.
Tariffs
We’ve been hearing a lot about tariffs lately, and they are having a direct impact on aircraft sales. Specifically, the tariff imposed on Canadian-made products is impacting anyone wishing to purchase an aircraft produced by Bombardier after April 2nd of this year. That means, if you ordered a Challenger 3500 two years ago and it is set to deliver next month, the cost to you just went up by 25%.
Additionally, according to aviation attorneys I have consulted, this tariff would also be applied to a pre-owned Canadian-made aircraft being imported into the United States. So, if you are planning to import a Global 5000 based in Europe, a 25% tariff would be imposed on the fair market value of the aircraft at closing. All this is obviously very new, and will likely change just as soon as this email comes out, but suffice it to say, if this tariff stays in place as is, it will have a direct impact on the cost of Bombardier products, and other foreign-owned aircraft if additional tariffs are imposed to those countries.
Conclusion
I will stay on top of all these changes and let you know as I hear updates. In the meantime, please let me know if you have any questions, would like a market update on the value of your current aircraft, or would like to look at inventory in any other market.