Continued Pre-Owned Aircraft Market Correction in 2024?

Compared with anything prior to 2020, the year 2023 was a good one for pre-owned aircraft sales, and for Gig Harbor, Washington-based International Jets, Inc. And that’s cause for optimism, according to David Kilcup, the company’s Founder and President.

“We always look forward optimistically to a new year, and 2024 is no exception,” he says. “Interest rates trending downward slightly are cause for some of the optimism, but also the continued market strength right through the interest rate increases during 2023 – the pre-owned market showed its resiliency.”

David (pictured to the left) grew up in Seattle surrounded by family-members who were Boeing engineers and airline pilots, though he aspired to be an architect. In fact, he was enrolled at the University of Washington before he took his first flying lesson which ultimately changed his career path.

Instead, he earned his pilot certificates, taught flying, flew corporate for several years, and eventually managed an FBO offering charter, sales and maintenance. Then in 1997, he founded International Jets which paved the way into the brokerage business.

“We incorporated in 1997 and spent most of the first year brokering aircraft charter as that was a market I was very familiar with,” he recalls. “Eventually charter clients became prospective buyers and we moved away from the charter brokerage business in the early 2000s.

“Today, our bread and butter is the Cessna Citation jet market, but we have found ourselves in the Dassault Falcon and Gulfstream markets more regularly in the past three years. We hope that trend continues.”

As for many in the industry, the post-Covid era of 2021/2022 were record years for International Jets. “Historically, we’ve done very well in down markets as we’re very much ‘value driven’ and fiscally conservative,” David adds. “That made paying 2021/2022 prices a bit hard on my psyche!”

And although 2023 was a year that saw the market normalizing with inventory increasing, prices stabilizing gradually, and demand reflecting more closely the pre-Covid marketplace, he argues that this should be kept within context. “Keep in mind that inventory levels dropped to historic lows, so any ‘rise’ in inventory has to be measured against the very low inventory levels of 2022.

“I think we were down to less than 3% of the worldwide fleet of purpose-built jets and turboprops at one point, which was around 25% of normal levels.” In David’s view, the year 2024 should bring about continued market corrections towards a healthy buyer/seller market equilibrium.

Trends to Watch in 2024

Of course, there are some trends to keep an eye on with the potential to disrupt natural market cycles in 2024. Among the trends David will be monitoring are the various wars that filled the media’s coverage towards the end of 2023.

“Not only is war a terrible scourge on humanity but it is obviously destabilising to economies and markets,” he says. “Without inundating ourselves with these issues, it is wise to keep abreast of news that can - and does – have trailing effects on not just our aircraft markets, but the markets generally.

“Combine this with the 2024 election cycle and it makes for some potentially interesting months ahead.” 

Having been in the aircraft sales business through six US Presidential election cycles, David notes there is certainly some apprehension that typically builds within the market as election day approaches. But he echoes the observations of other brokers that the market is ultimately greater than the US Presidential election outcome.

“Within a day or two after the contest is called, we all get back to working and putting deals together. I do not expect anything different this time around,” he adds.

No Time to Wait in 2024

Ultimately, according to David, 2024 should not become ‘The Year of the Fence-Sitter’ when it comes to aircraft buyers and sellers.

“Prices on very good aircraft are not necessarily dropping precipitously, and others that have been on the fence a little longer may have reached their limit on waiting, closing out deals on aircraft that those buyers still on the fence were hoping would become more agreeable, pricewise.”

So, if buyers and their team have found what they believe to be the right aircraft, “make the move,” David urges.

Likewise, sellers should move without hesitation in 2024. “Make the best decision, based on the information at hand,” he adds.

Keeping in mind the variables that affect decisions to buy and sell, including tax ramifications, crewing challenges (both in terms of pilot shortages and accessing fully booked training centers), hangar size/space, and more, “if you have addressed those items and plan on selling to either upsize, or at least stay in the aircraft ownership game, then make the decision and don’t wait,” he concludes. 

More information from: www.intljets.com