“"Many years ago, our company founder, Al Conklin, sold a new twin-engine business aircraft to a very successful entrepreneur. He had established a bit of a rapport with the individual and, after the sale, asked him straight out, 'How can you justify the cost of this airplane?' His reply? 'What is the cost of a divorce?'"–David Wyndham, president, Conklin & de Decker”
Preowned: A flat market—with exceptions
Overall, jet buyers and sellers seem about evenly matched. But some models are in much greater demand than others.
Gazing through the rearview mirror at the first half of 2013, we see that, overall, the number of used jets for sale is neither rising nor contracting. Some models are a different matter, however.
In the light-jet category, for example, the Citation CJ3 seems to have become more popular over the past year. Last summer, you could choose from nearly 40, but the number on the market has since dropped to about half that figure, a level not visited since 2009. The downward trend may accelerate on the heels of Cessna’s announcement this past spring that it was reducing production of many of its light jets due to weak demand. Inventories typically grow in summer, but if CJ3 options remain limited, pricing could tighten in the fourth quarter.
Meanwhile, the large-cabin segment seems a bit fickle. Inventory of the Gulfstream 450 had been flat in the second half of last year with only two sales. This year, activity finally kicked in toward the end of the first quarter and since then, six have sold, with others reportedly under contract. I’d be tempted to chalk up the lift in sales to the often-active spring buying season were it not for the Global Express market, which behaved in an opposite way and did the equivalent of an about-face. Only two have sold since the beginning of this year, yet in the previous six months five traded hands.
While demand seems to be rising for the G450 and declining for the Global Express, neither has sold impressively over the past year. And because the large-cabin segment had long been one of the bright spots in an otherwise murky market, I’m left grasping for an explanation. Has much of the large-cabin buyers’ appetite been temporarily satiated? Are some models getting long in the tooth?
Whatever the answer, there’s no question that buyers appear for any particular model once the price point meets their expectations; and while the pace of the slip in values may have slowed, it hasn’t stopped. Buyers continue to wield an upper hand.
Bryan Comstock welcomes comments and suggestions at firstname.lastname@example.org.