2024 BizAv Sales: What Could go Right & Wrong

Last year drew to a close without any major disruptions following a Covid-fueled, unsustainable growth trajectory. While year-over-year activity in 2023 was slower with regards to used aircraft sales, it fell in an orderly fashion to what has proved to be a soft landing.

Business aircraft statistics provider AMSTAT offers some perspective on how the pre-owned aircraft sales market performed. Coming off Covid-induced highs, it’s clear that the market has been returning to more traditional levels of pre-owned jet inventory. For example, depending on cabin size, the ‘for sale’ business jet inventory has increased by as much as 123% year-over-year for Super Mid-size Jets to a 32% increase for Light Jets.

Meanwhile, pre-owned business jet transactions have fallen to more typical levels, with a 31% one-year decrease in Super Mid-size Jet sales and a 12% decrease in Light Jets.

Prices have been the anomaly as the market normalizes. With the exception of Heavy Jets, prices have increased over the past year on average by a whopping 30%.

Looking Ahead to 2024

To begin to come to a reasonable conclusion on how 2024 could potentially pan out, it’s helpful to consider what could go really well for the market and what could make it severely underperform. Essentially, somewhere in the middle would be the most likely scenario...

What Could Go Wrong in 2024: An escalation of any of the local geopolitical conflicts into an international one could have a negative impact on buyers’ propensity to buy a capital-intensive asset like an airplane. Sample geographic areas of concern include Ukraine, Israel-Palestine, Taiwan, South China Sea, Syria, Myanmar and more.

Such an occurrence would create uncertainty, the bane of worldwide stock markets and growth. Similarly, the default of a major fleet operator would have repercussions on the pre-owned aircraft sales market.

Such a situation was narrowly avoided when Delta gave Wheels-Up a ‘Mulligan’ by leading additional investment in an eleventh hour rescue.

While pre-owned aircraft buyers would have more choice and lower prices if a large fleet were to be liquidated, sellers and lenders would suffer from lower residual values and longer days on the market. And there would also be fewer new aircraft sales since the pre-owned market would be loaded with like-new identical models at deep discounts.

On the economic front, a hot inflation report followed by further monetary tightening and interest rate increases would have an unfavorable impact on financial markets and, ultimately, on business aircraft sales.

What Could Go Right in 2024: Just as there are a litany of things that could upset the applecart, there are also several positive forces that if they were to occur, would portend strong markets.

As an example, in the U.S. where two-thirds of the world’s business aircraft live, a loosening of the Federal Reserve’s monetary policy, subsequent drop in interest rates, and jump in financial markets would bode well for our industry.

Another plus would be the continuation of large fleet orders by the fractional companies. A move has been afoot by aircraft owners moving towards the anonymity provided by fractional ownership. This in turn has seen orders placed in the thousands for new business jets over the next decade, with the opportunity for even more large-scale orders to be placed (such as one anticipated from Flexjet).

Manufacturers will hopefully eliminate the worn-out “supply chain issues” alibi from their vernacular. In my view, this has become the de facto, unverifiable excuse used by management for its continued failure to execute production increases. Any improvement will result in more shipments.

2024: The Likely Scenario

It’s my thesis that because there are more first-time aircraft owners who have remained in the fold since Covid, and hence a larger population of owners, inventory will remain lower than historical levels, transactions above pre-Covid levels, and prices will remain higher in 2024.

Think of it this way: While the number of aircraft in the fleet is relatively fixed, there are now more parties interested in ownership.

From this perspective, it’s believed that inventory will continue to increase – albeit at a slower pace – and eventually find equilibrium below the historical 10-12% fleet for sale. Similarly, it’s thought that the number of transactions has largely corrected itself and 2024 should be roughly on par with 2023.

Elevated pricing suggests that there’s still more demand than supply, which will persist. Those same first-time buyers are staying, holding on to their aircraft as prices and interest rates keep them from trading up, analogous to the current housing market.

Taken together, 2024 should shape up to be another good year.

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