“Ideas are commodity. Execution of them is not. ”
Preowned Aircraft Annual Report
WHEN 2009 BEGAN, the preowned market was like a punch-drunk boxer trying to regain his footing. Down but not out throughout the year, the industry struggled to build strength and stability after absorbing an uppercut delivered by an economic near-catastrophe and then a barrage of power-of-the-pen jabs thrown by often-sensationalistic journalists. Now, as the year ends, the preowned business seems to be slowly coming off the ropes and looks poised to fight another day.
Prices, which began their fall well before 2009, continued to sink throughout the year. The declines were all the more dramatic because they came right after a period when some buyers were paying multimillion-dollar premiums for must-have-aircraft delivery positions. A Gulfstream GIV-SP that might have commanded $30 million in late 2007 or early 2008 was worth only about half that at the 2009 market bottom.
Recently, however, prices have begun to stabilize. Should the nascent U.S. recovery be sustained and jet ownership become less politically incorrect, we will likely see further evidence of price stabilization and tightening of inventory.
One change during recent years has been that individuals and businesses from many countries outside the U.S. have started buying jets. While these deals became less common during the last quarter of 2008, I've noticed that lots of international companies are reengaging. The trend became more pronounced in 2009, as the dollar retreated against many international currencies.
At this year's National Business Aviation Association Convention, which took place in late October in Orlando, Fla., I could see this change firsthand, as my jet-sales-and-acquisitions company received offers from international operators who came to the event with a clear intent to buy. A headline in a BJT sister publication, NBAA Convention News, suggested that attendees at the show represented "quality over quantity." This did seem to be the case, as many companies opted not to send representatives to the convention this year unless there was a real need for them to go.
The jet market will recover and without much government assistance, though bonus tax depreciation represents one small benefit for some. Despite shorn wings, the industry had to fend for itself, with no cash-for-clunkers program, no government bailouts and clearly no empathy from the general public.