As we enter the 3rd Quarter of 2024, the year continues to fly by. Every week seems to bring more activity along with more challenges in our marketplace. Demand continues to be strong, and most people continue to be very bullish on market conditions for pre-owned turbine powered aircraft for the foreseeable future.
I recently attended a conference with most of the top aircraft dealers and brokers in the world where we had an opportunity to share information on the current market, listen to some economists speculate on where things are headed and share some of the biggest concerns and challenges we are facing in today’s changing markets. Following are a few quotes I pulled from that conference:
“This is one of the most confusing markets in 35 years”
“Bizjet flight activity continues to normalize. It is now at 10% above pre-pandemic levels”
“We are in a bi-furcated market. The top half of the market is headed in one direction, while the bottom half of the market is headed in the other.”
“The best outlook in 35 years. I expect at least 5 years of continued economic growth”
“The increase in bizjet usage from the pandemic has been “sticky”, but settling back to earth”.
“Aircraft values continue to come off peak. Expect continued supply chain issues, pilot & MRO labor challenges”.
“Preferred inventory is rising to the top – pedigree, age of airframe, low hours and maintenance history are again extremely important.”
Overall, the consensus of most in attendance was all very positive with the outlook on our market looking strong. Markets have normalized quite a bit after a crazy couple of years of rapidly increasing prices and historically low inventory levels following the pandemic.
I’ve attached two graphs for your review:
Graph 1 – Bizjet Inventory Levels
The first is a graph of inventory levels of pre-owned aircraft by category. You can see that supply has been increasing on all categories of aircraft since 2022. The Mid-sized aircraft inventory levels have climbed the highest, and currently sits at 9.3% of the active fleet. The turb-props are currently at the lowest inventory levels at just 4.4% of the active fleet.
Graph 2 – Bizjet Transaction Levels
The second graph shows the Business jet transactions levels over the last 17 years. 2021 was obviously the peak, with the number of closings dropping in 2022 and coming back down to pre-pandemic levels just last year. Outlook for 2024 looks to be similar to 2023 levels at this point, but that could obviously change depending on what Q4 looks like.
Overall, things continue to look strong. I have heard very little concern about the pending election, and many seem to be eyeing a year-end transaction in order to capitalize on the bonus depreciation available for aircraft placed in service by 12/31. But, I would caution everyone not to wait. July and August are the two slowest months in our industry and many Sellers have been dropping their prices in order to encourage offers. When activity surges again in September and October, prices should once again firm up, the best opportunities will go under contract and pre-buy slots will once again be very difficult to get.
I hope you find this information helpful. If you have any questions on the general marketplace, would like some market information on what your current aircraft is worth or would like to explore the market for a potential replacement aircraft, please don’t hesitate to reach out.
Kind regards,
Toby Smith