I recently attended the International Aircraft Dealer’s Association (IADA) Spring meeting in Ft. Lauderdale, Florida. The meeting is an opportunity for the top Brokers, Dealers and Product Service Members in the World to get together and discuss market conditions, industry trends, and challenges we currently face in the turbine aircraft resale marketplace. The meeting was well attended and most everyone seemed very optimistic about the market conditions for the rest of 2023.
Overall, demand for aircraft remains fairly strong. It’s not quite to the level we saw in 2022, but still strong compared to historical numbers. Supply has been increasing since the first of the year, especially in the heavy iron & super-midsized segments of the market. This increase in supply has led to softening prices and a more balanced market, as opposed to the Seller’s market conditions we faced over the last couple of years. Buyers are now behaving more rationally, and with the lack of buying frenzy, are able to negotiate a more balanced transaction, with more reasonable terms and conditions.
We do continue to face may challenges, just to name a few: Supply chain issues, increasing crew costs, increasing maintenance costs, lack of inspection slot availability, attracting and retaining talent, among other things. But, because of the lack of good charter options, the higher price of charter and airline travel, and the continued need for corporate lift, so far the demand continues to overlook these challenges. That, coupled with the fact that a pre-owned aircraft put in service by year-end can still qualify for 100% depreciation, means everyone expects the rest of 2023 to be solid.
Today, buyers are looking for good aircraft priced at realistic prices with reasonable sellers. Markets are trying to find their equilibrium, and we are moving into Summer, when things typical slow down during the months of June, July & August. I think this should mean some good deals can be struck below market, before the 4th quarter rush begins again in October. I also think that people who wait for October, will be caught by surprise at how difficult it will be to close year end with a good pre-purchase inspection.
In summary, I would say prices are off peak, buying activity is solid, supply is increasing and opportunities are out there on good aircraft for a reasonable buyer. Flight operations have surpassed pre-pandemic levels, but year over year growth has decelerated. I expect the summer months to be a bit sluggish as they are in normal years, followed by a strong 4th quarter to end the year.
I hope you find this information helpful. If you would like any information on any particular markets, have any questions or would like to discuss values in any market segment, please don’t hesitate to reach out.
Kind regards,
Toby Smith