““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
One market, many interpretations
Just as different singers often offer widely varying interpretations of the same song, different observers view the used jet market from diverse vantage points. Moreover, a buyer’s or seller’s perspective on the market can make, impede or prevent a sale.
A few years ago, when sellers received hard evidence of their aircrafts’ reduced values, some stoically declared that they would wait for the market to recover before selling. I resisted the urge to ask, “When will that be?” but it seemed fairly clear within the brokerage community that the market would not be recovering anytime soon. Since it has not, these owners presumably still have their aircraft.
At the same time and with the same information, other owners interpreted the initial downturn as a sell signal and got out. These owners may have recognized that the market would never return to its previous lofty levels.
Still other owners simply did not care much where values were headed as they viewed their aircraft not as a commodity but as a much-needed business tool that performed its intended purpose regardless of whether it was worth a few million more or less.
Of course, many owners care a lot about value and for them the good news is that prices are finally stabilizing. There are more than 500 fewer aircraft for sale today than there were a few years ago, when inventory levels topped 3,000. That might suggest prices should be moving up and maybe they soon will, but right now the average price of all business jets for sale remains nearly $1.5 million below the average reached at the inventory peak.
Clearly, we’re still in a buyer’s market and–with toppled governments and economic mayhem capturing the world’s attention–there exists no shortage of buyers looking to lower the expectations of sellers. Still, one man’s music is another man’s noise, and each buyer and seller will continue to interpret market signals differently.
One thing’s for sure: While inventory may be slowly ratcheting down, predicting at what point a pricing recovery might occur remains a fool’s game.