I hope you are well and that the new year has been good to you so far. With all the talk coming out of the talking heads on TV right now, I know a lot of you are wondering what the state of the aircraft resale market is. 2022 was another banner year in the pre-owned market, but as the opportunity to take full depreciation in the year of purchase starts to sunset, and the dreaded “R” word that keeps creeping into conversations about the economy, some people seem a bit bearish on what 2023 will hold.
But, as we start wrapping up the third week in the new year, so far things still look strong out there. For your reference, I have attached the IADA 4th Quarter 2022 market report that has some insightful information from the top dealers and brokers in the world. We went through the report yesterday on a video call and I would like to share with you some of the more pertinent things that were brought up on that call, and highlight some information brought up in the report.
Page 5 shows a chart of optimism from the member companies that were polled in Q4 2022 and compares that to optimism during the same time in 2021. It shows that, although the overall sentiment is still quite positive, most dealers and brokers are slightly less bullish about the market looking forward 6 months, as compared to the same time last year.
The next several pages show the general sentiment quarter by quarter in 2022, which shows a generally declining trend over that time. Inventory rates have been increasing in most market segments, but so far demand continues to absorb the additional aircraft, keeping available supply low and prices continue to be very stable. Pages 11-13 show that many are projecting an increase in supply, stable demand and slight decrease in pricing for most market segments going forward.
So, what does that all mean for 2023? When 2022 started, most of us did not think we would be able to replicate the incredible year we had seen in 2021. However; it quickly became apparent that 2022 would be even more frenzied than 2021, and pricing across the board shot up like we had not seen in ~ 15 years. At the end of 2022, I think a lot of us feel like we did a year ago. It will be very difficult to produce another year like 2022, but we are cautiously optimistic about the state of things with solid demand across most markets.
There are definitely a lot of challenges we face this year: Increasing interest rates, pre-purchase inspection slot availability & continued low supply of aircraft. But, so far, demand continues to outweigh those challenges, and the historically long backlogs at the OEM’s should continue to be a driver for demand in the pre-owned market. I think a lot of us foresee moving to a more traditional market this year. I don’t see this year being quite so frenzied, which means negotiations go back to the “normal rules” as opposed to the expectation that you might have to pay above asking price and purchase an aircraft with no pre-buy, or risk losing out to someone else.
Demand remains strong, but I see more caution and due diligence coming from today’s buyer as opposed to this time last year. This remains a market where relationships play a big part in getting a transaction done. Relationships are important in negotiating reasonable terms and conditions in an LOI, in a purchase agreement, in obtaining a pre-buy slot, getting financing, insurance, aircraft management, charter, etc. It continues to be a market when IADA member brokers get advanced notice of good aircraft coming to market, and IADA products and service members give the best service possible to their IADA dealer and broker referrals.
Of course, none of us know exactly what this year holds. But, right now, things look to be going strong in the pre-owned business aircraft marketplace, and I am cautiously optimistic that demand will remain strong for the near future. As usual, the older, higher time aircraft will have the highest risk of market correction, while the newer, lower time, pedigreed aircraft will have a greater chance of maintaining today’s strong values.
I hope you find this information helpful. If you have any questions, would like more information on the state of the market, or would like to discuss your current aircraft’s value, or the current pricing in any specific market segment, please don’t hesitate to reach out to me, or another sales professional at JB&A Aviation.
Kind regards,
Toby J. Smith – Vice President
(918) 630-4548 Mobile
Toby.smith@jba.aero
https://drive.google.com/file/d/1IGZDSonBwN2hnfKYfZTBNOBg3IY7A-Uw/view?usp=drive_link