Relatively strong economies in the US and in Europe are providing tailwinds that are as welcome as a warm sea breeze at the end of summer. Aircraft utilization rates, perhaps the most fundamental of all bizav health indicators, are generally trending upwards on a Year-over-Year (YoY) basis, which is as it should be with more new aircraft coming into the market than are being retired.
With the worldwide business jet fleet growing at 3.3% CAGR in the last 10 years, one would expect that overall utilization levels, whether in cycles (a takeoff and landing) or flight hours, would be accelerating at this pace or even better, as younger aircraft tend to fly more than older aircraft.
Tightening Market Segments
Evidence is sprouting up about stronger (read ‘higher’) pricing for sellers of younger, used business jets. This is absolutely as expected with tight inventory levels of the most attractive models.
As of mid-August 2018, just eight examples of the Gulfstream G650/G650ER were listed as ‘For Sale’ according to JETNET data, representing just 2.8% of the installed base of more than 300 aircraft. For folks preferring Bombardier or Dassault brands, the current worldwide market for both the Global 6000 (3.6% of the fleet is ‘For Sale’) and Falcon 7X (5.4%) has shifted towards favoring the seller.
Other examples reflect a similar market dynamic, with buyers having to move quickly – and pay something at or close to the asking price – if they want to see themselves in the Captain’s chair of one of these elegant business jets.
Total retail used business jet transaction volumes through H1 2018 were about flat YoY, no doubt throttled back by the age and maintenance status of the available inventory. Who would have thought that more than half of business jets built would still be flying more than 40 years after delivery?
For used business turboprops, the in-service fleet is even older, with about half the fleet still in service after 50 years.
Of approximately 1,900 business jets currently listed ‘For Sale’ globally, less than one-in-five were delivered new in the last 10 years. For buyers looking for a ‘smoking hot’ deal on a relatively young used business jet, those days are in the history books. As always, but especially now, the value of the services provided by an experienced aircraft dealer/broker and their transaction teams to help navigate through these tight market conditions cannot be overemphasized.