Weighing Today’s Market Strength and Tomorrow’s Values

The National Business Aviation Association’s (NBAA) annual trade show, the world’s largest bizav gathering, is an excellent bellwether for gauging the industry’s health and prospects via attendance figures, exhibitor numbers, and announcements of new products and contracts. This year’s edition in Las Vegas in October was especially illuminating regarding preowned transactions, and the news—particularly if you’re a recent or prospective buyer—was all positive. 

The International Aircraft Dealers Association (IADA) Third Quarter 2023 Market Report, released at the show, revealed that inventories of preowned aircraft for sale are expanding and price inflation has slowed, portending a more balanced and steady market. Prices of newer models and higher-pedigree aircraft have fallen 5 to 10 percent from their post-COVID peaks, while prices of less-desirable and older aircraft are off 15 to 20 percent. For the next six months, IADA dealers see stable demand for turboprops and light jets and a slight decrease in demand for midsize, large, and ultra-long-range jets.

Though the 853 transactions in the first three quarters of 2023 represent a decline of some 7 percent from last year’s record of 929 sales, the trade organization predicts “a significantly larger market ahead.” IADA claims its members handle 50 percent of all preowned aircraft transactions and buy and sell more aircraft value-wise than the rest of the world’s dealers combined. 

Figures reported in early October by business aviation data specialist Amstat mirror IADA’s findings. About 2,200 units—some 5 percent of in-service business aircraft—are for sale, fully 45 percent above the numbers a year ago but still below 8 percent, the normal/average availability over 10 years, according to the New Jersey–based company. Inventories of heavy and super-midsize jets for sale (6 and 7 percent, respectively) showed the largest increase. Meanwhile, transaction numbers are down 26 percent year over year, but median values for business aircraft are unchanged versus the start of the year; a drop in the value of heavy jets (down 6 percent) was offset by gains in the value of midsize jets and turboprops (7 and 4 percent, respectively), while super-mid and light jet median values remain unchanged. 

Business aviation trends beyond the preowned market also support a “cautiously positive outlook,” as JetNet iQ stated in a market report presented at the NBAA show. The business aviation data specialist predicts the business jet fleet (now comprising some 23,417 aircraft) will have a net increase of some 5,000 jets over the next decade, even with the anticipated retirement or removal of 3,745 aircraft over that span. JetNet iQ expects the turboprop fleet to grow by 1,300 units. However, regional conflicts, supply-chain issues, and a thin talent pipeline continue to threaten the market’s health, the report noted.

Nonetheless, recent large orders for new jets from fleet operators further support a continued expansion of preowned inventory for sale, as their older jets come to the used aircraft market. Meanwhile, WingX reported in October that global aircraft utilization remains “solid,” close to last year’s gangbuster third quarter, and well ahead of pre-COVID peaks.

Strong Ongoing Demand

Honeywell’s bullish Global Business Aviation Outlook also speaks to both strong ongoing demand and increased inventory. Released at NBAA, this 32^nd installment of Honeywell’s annual forecast predicts as many as 8,500 new jet deliveries, valued at $278 billion, over the coming decade, with large and ultra-long-range jets comprising most of the demand. Deliveries of 730 new jets are expected this year, increasing by 10 percent in 2024 and surpassing the 800 mark for the first time since 2019. The engine and avionics manufacturer expects new jet sales numbers to continue rising through the decade, possibly surpassing 900 units in 2031. 

Honeywell anticipates that North America will absorb 64 percent of the new jets, with Europe consuming 14 percent, Asia-Pacific 11 percent, and the Middle East 6 percent.

New-to-business-aviation users are expected to buy 500 of the aircraft.

If you’re looking for financing to assist with your preowned purchase, it will be available, according to a study commissioned by Airbus Corporate Jets (ACJ) that was also released at the convention. The survey of 50 business jet brokerages and 50 business aviation financiers found that 82 percent expect access financing to increase over the next three years, and 98 percent believe interest rates remain attractive. However, 54 percent expect the amount of cash buyers put up to rise slightly during that time, reducing financiers’ exposure for these loans. Consistent with the reports and data cited above, ACJ’s survey participants foresee large jets leading the demand in the preowned market, and 77 percent believe securing financing will be easier for this category than for midsize and smaller jets.

If you’re considering a preowned purchase but remain concerned about valuations cratering despite all the evidence to the contrary, you might be glad to hear that global brokerage Jetcraft has partnered with Jetquity to offer a first-of-its-kind residual-value program. For one premium payment, the program sets the minimum exit price of an aircraft purchased through Jetcraft, should a buyer choose to sell it. The buyer selects the duration of the coverage—from one to 10 years—and is guaranteed to receive the agreed-upon exit price from Jetquity if the aircraft can’t be sold for more on the open market. If you’re sitting on the fence, that should remove any remaining qualms about moving to an aircraft of your own. Jetquity launched the program last spring and will likely offer it through other brokerages, as well.

James Wynbrandt is a long-time contributor to BJT who has also written for Aviation International News and other aviation publications as well as for the New York Times, Forbes, and Barron's.