“What we need to do is always lean into the future. When the world changes around you and when it changes against you—what used to be a tail wind is now a head wind—you have to lean into that and figure out what to do because complaining isn’t a strategy. ”
Preowned: Jet Buyers’ options
Spring has sprung and the preowned aircraft business is still germinating. A slow and orderly recovery continues its linear track to the lowest inventory levels since the market peaked in the fourth quarter of 2008.
While inventory represents a key indicator for buyers and sellers, it’s equally important to understand the makeup of today’s choices. When supply of a model is plentiful, there’s little need for buyers to travel far afield to flush out a viable aircraft. Consider that of the preowned jets now for sale, 70 percent are based in North America, 18 percent in Europe, 5 percent in South America, 4 percent in Asia and about 3 percent total in Australia/Oceana and Africa. Further, consider that 34 percent were made since 2000; 20 percent are 1990s vintage; and the remainder were manufactured prior to 1990.
So, for instance, if a U.S. buyer is looking for a Challenger 604, he may not consider the 17 that are based in other parts of the world and if on top of that he wants a 2000 model or newer, he’ll rule out another 16 due to their age. This will bring what had appeared to be 47 choices down to 14 in quick order. Those choices will be reduced further once other buyer parameters are applied, such as total time, interior condition and configuration and ownership history.
Of course, some market outliers force buyers to consider options beyond their borders. With recent civil unrest in the Middle East, my firm was not all that surprised to get a call from a 604 seller in Tunisia. While one could only guess at why the aircraft was being moved out of that country to be sold, this 604 would certainly be worth considering if you were hunting for value. On the other hand, you might well pass over such an aircraft over for related reasons, not the least of which is the need to get it deregistered by a government that has its hands full at the moment.
While we move through the historically active second quarter, we should continue to see further depletion of choices and perhaps a scarcity of prime options among a growing number of model types. Meanwhile, buyers will keep adding their specific requirements to the equation, pushing some aircraft to the side as they make their run at getting the perceived pick of the litter.
Bryan Comstock welcomes comments and suggestions at: firstname.lastname@example.org.
Source (all statistics and charts): Jetnet, LLC)