Happy New Year to everyone. The shelves at the local Walgreens are already pairing down their supply of valentine’s candy and starting to ramp up the Easter displays. We are half-way through winter and spring is just around the corner.
It usually takes several weeks after the New Year for activity to ramp up in our industry and this year has been no different. But, now that we are moving into February, things seem to be percolating and there are some really interesting signs that point toward the transitional market that we have all been waiting for. Business aircraft flight activity last year in the U.S. was the best since 2008, rising 2 percent in 2014, according to TraqPak data released late last week by aviation services company Argus.
Although the ultra-long range aircraft market has continued to suffer recently, the mid-sized and large cabin market segments have been making slow and steady progress. In some of these markets, buyers are now finding it difficult to locate a good U.S. based aircraft at reasonable prices. Following are a few examples of markets where inventory levels have dropped significantly over the last 12 months:
- Citation XLS – supply at 7 year low (pre-downturn levels)
- Hawker 850XP – supply at 7 year low
- Challenger 604 – supply at 7 year low
- Falcon 900EX – supply at 5 year low
On top of the low availability of these aircraft, many of the units that are for sale are based overseas, while a vast majority of the potential buyers are located in the U.S. right now. By and large, U.S. buyers prefer not to pursue aircraft based overseas for reasons like; lead time required, higher transactional costs, more difficult to oversee all aspects of the transaction, operational & corrosion concerns and the impact on residual value.
Because of continued financial struggles outside of the U.S. (Europe, Russia, China, Brazil) a larger percentage of aircraft for sale today are based overseas while most of the buyers are in the U.S. This geographic and cultural gap is one reason more retail transactions are not taking place right now, despite the good news about increased flying and the economy. Many dealers have recognized this gap and are moving quickly in order to capitalize on some good deals that are available for those willing to travel.
This market has created an environment where leading edge information is extremely important. By the time information about a price change hits the multi-listing services, the dealers and brokers who are active in those markets have already had time to analyze the information and present it to their clients. Today it is more important than any time over the last seven years to be plugged in to a particular market and be ready to move when an opportunity presents itself. That means having a good feel for the market, knowledge of the most recent comparable sales, a reasonable deposit ready to be placed in escrow and a professional broker representing your interests.
If you would like some information on supply rates or recent sales prices on any particular market, please call one of the experts at JB&A Aviation. We would be happy to update you on any market and help you to navigate the challenges of finding the best opportunity available in today’s market.
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