It’s been a while since I put out my last blog entry, but I felt it was time that I started communicating with the marketplace again. I see so many good things going on in the aircraft resale markets and the economy as a whole, but still get the sense that many potential buyers are waiting for something. It can be difficult to weed through all the bad news we hear from the media on a daily basis, let me attempt to shed some light on some really good things that are going on right now.
U.S. ECONOMY – Following from the latest Kiplinger Report
- Kiplinger expects the economy to grow 3% or better in 2015. That’s the best annual growth rate since 2005 and up from expected growth of 2.2% in 2014
- Monthly job gains averaged 227,000 through the third quarter of 2014
- Unemployment could sink to 5.5% by the end of 2015
- The average debt-to-income ratio is the lowest since 2002 as falling food & gas prices are leaving more money in our pockets
- “We’re in a boomlet here in the U.S.” says Bob Baur, chief global economist for Principal Global Investors
- Dow Jones Industrial Average at historically high levels
- S&P 500 at historically high levels
- Nasdaq nearing historical highs
- U.S. Dollar at 5 year high
AIRCRAFT MARKET – Following from Amstat Business Aviation Research
- More jet aircraft were sold during the first three quarters of 2014 than in any of the first three quarters over the last decade.
- The number of jet aircraft for sale has dropped to 11% of the total fleet, the lowest level since before the downturn in 2008.
- Inventory turnover rate (the time it would take to sell off the current number of aircraft for sale based on current transaction rate) is down to 12 months. That is half what the turnover rate was four years ago.
- The medium and light jets are actually leading the charge towards lower inventory levels and firming prices.
Interest rates remain extremely low and it seems banks are loosening their purse strings as lenders really seem to be chasing deals again. There are some great opportunities on aircraft out there, but finding them is becoming more and more difficult. Dealers are searching far and wide for the best deals and locking them up quickly when they find them. The average buyer does not have the time or resources available to compete with Dealers without professional help.
I have been getting calls from potential buyers recently who want to try and match a deal their buddy got on an airplane. I find myself explaining that the transaction was completed after many weeks of hunting for the best value with a professional broker and that the market has continued to tighten up since then. I suggest that in order to begin the process for them, we would require an agency agreement and a good faith deposit be placed in escrow. For some reason, that is enough to put the brakes on for many people. The days of finding a great buy just by opening a copy of controller are well behind us. In order to compete in today’s marketplace, a buyer needs to know about an aircraft before it comes to market which is where the services of a good broker comes in.
If you have been waiting for just the right time to acquire an aircraft for your travel needs, all the indicators point to now as being the best time over the last 10 years. If that’s the case……what are you waiting for?
If you would like to learn more about JB&A Aviation or how we can help you, please take a look at our website at www.jba.aero or give one of the professionals at JB&A Aviation a call.
Toby Smith – Vice President
JB&A Aviation, Inc.
Toby Smith is Vice President of JBA Aviation and has been helping customers buy and sell turbine aircraft for 17 years. He operates a satellite office located at the Atlantic Aviation FBO in Tulsa, Oklahoma