I hope everyone is doing well. Now that NBAA is behind us, we are well into 4th quarter and the results of the election are in, I thought it was high time I give everyone a brief update on the pre-owned aircraft market and some of the things I learned at the NBAA convention in Las Vegas this year.
NBAA Convention
Personally, I found the NBAA convention to be very productive this year. I was a bit worried that the absence of Gulfstream and Dassault at the show might cause a large drop off in attendance of end-user customers. And while their absence was quite noticeable in the convention hall as well as at the static display of aircraft, I found a good number of my customers still made the trip and I was able to have some very productive meetings with them at the show.
The convention floor was at a smaller hall than last year, and there were certainly fewer people with booth space, but I was pleased with the number of flight departments in attendance. It was pretty much the same at static. A smaller footprint out at Henderson airport, and the number of aircraft on display was significantly less, but I saw a good number of operators in attendance, and most were very positive about the state of our industry and even looking at placing orders for new aircraft, even with the significant backlogs the OEM’s currently have.
IADA meeting
Before NBAA kicked off, The International Aircraft Dealers Association had their fall meeting. I am currently serving on the board for this great organization and found the meeting to be very well attended, educational and productive. We had a full day of meetings and speakers, and I’ll give a few highlights from the Economist we had speak to us, named Dr. LaVaughn Henry – former FDIC Sr. Policy Analyst.
A few notes on the general economy from his informative talk:
- Activity continues to expand at a solid pace. Job gains slowed last quarter but are still at historically strong levels.
- Inflation finally looks to be in control, coming it at 2.2% last quarter, with the desired level at 2.0%.
- In general, experts are fairly confident in the near-term outlook with no significant layoffs, no plant closings and steady job growth expectations.
- Consumer confidence is a bit uncertain, which is very common in an election year.
- One large concern remains national debt which is currently increasing at a faster rate than the government can make policy decisions to curtail. If the deficit growth continues, there will need to be cuts made somewhere.
Overall – Dr. Henry stated that the fundamentals of the economy are performing well, but we still face a number of challenges, with the tight labor market and continued supply chain restrictions.
Aircraft Transaction Challenges
There was also a panel of experts on aircraft transactions who discussed some of the challenges we are facing in today’s markets.
A few notes from that panel discussion:
- Bizav demand and pricing remains solid, but supply constrains abound.
- Supply of “good inventory” remains tight – those aircraft with good pedigree, low time, on programs, priced to market.
- Owner / operator optimism is not quite where it was the last few years.
- Book to bill is right about 1 to 1 – orders to deliveries.
- Expectations are that inventory rates should continue to climb, primarily on older, higher time aircraft, while late model, low time inventory will continue to be scooped up quickly.
Overall, the feeling at NBAA was very positive with the most recurring sentiment I encountered was a desire for the elections to be behind us with a clear winner. Now that we are there, I expect demand to remain strong and buyers continue to push for good opportunities to close on by year end.
I hope you found this information helpful. If you would like any additional information on the market in general, the market for your current aircraft or any aircraft you may be considering, please don’t hesitate to reach out.
All the best!
Toby Smith