Pre-Owned Aircraft Sales: What Have We Learned in 2023?

The impact of COVID-19 on the Business Aviation market – and in particular the pre-owned aircraft sales scene – will go down in history. The spike in first-time buyers, low-to-no inventory (depending on the aircraft make/model being sought), and price premiums all played their part in weighting the market firmly in favor of sellers.

But just as the ocean tide ebbs and flows, balance eventually returns in pre-owned aircraft sales – and that balance has begun to build over the months of 2023. Inventory has been growing, values have been stabilizing, and the pool of first-time buyers has diminished to more traditional levels.

“While transaction volume is down in 2023 generally, I believe we’re looking at a healthier marketplace,” says Jim Donath, President at Donath Aircraft Services.

Though Mathieu Pezin, Co-Founder of Monaco-based AeroBuyNow prefers to wait for December’s sales figures before drawing any firm conclusions on the year, he agrees that a “steep, upward, bumpy slope representing the average price trend” of pre-owned jets that began its climb in Q2 2021 seems to have plateaued this year.

And the trend isn’t just showing for business jets, he adds. “The turboprop market is acting no differently.”

Yet the turbine helicopter market, while following the same overall trends as the business jets and turboprop values, seems to be showing a little more stability in terms of prices, he notes.

“We can conclude that the pre-owned market has been slowing at a fairly low rate during 2023, despite the fact demand has remained strong throughout the year,” he summarizes.

Private Jet Units Sold per Month (September 2018 through September 2023)

Graph from AeroBuyNow; Data: JETNET

What Surprises Has the Pre-Owned Market Held in 2023?

While nobody is surprised to see the market trends heading in the direction they currently are – the enormous demand on a depleted pool of business aircraft was, frankly, unsustainable – the year has held one or two surprises.

“One is that supply chain challenges, in conjunction with capacity issues at MRO shops, has continued to constrain our market to such a large degree,” Donath shares.

While the pre-owned marketplace has performed pretty much as expected, “the ability to schedule a pre-purchase inspection or get the needed part for an aircraft’s return to service after an inspection is still a frustrating choke point for those looking to complete transactions,” he adds.

“Planning, patience, and cooperation have become even more important to the success of aircraft buyers and sellers over the last year.”

What Have We Learnt From Pre-Owned Sales in 2023?

According to Donath, if our market has truly normalized in 2023 and this trend continues, we could expect Q4 2023 and Q1 2024 to follow seasonal patterns.

In layman’s terms, “that means a jump in transaction volume before year-end, followed by a substantial drop-off in activity in the early part of the new year.”

Pezin says it’s still too early to tell how the market will behave heading into 2024, adding that more will be known once December’s activity has been measured. Traditionally a month where US buyers of pre-owned aircraft are rushing to close their acquisitions to benefit from tax incentives, “each December tends to see a peak in aircraft sales”, he clarifies.

With 450 units sold in December 2018, 515 in 2019, 680 in 2020, 706 in 2021, and 537 in December 2022, Pezin highlights that December 2022 sales were down by 25% compared to December 2021. So, does he see December 2023 faring any better?

Pointing to the most recent month’s transactions at the time of writing, he notes “we can see that September 2023 recorded just 97 units sold to date [per JETNET data]. That’s the lowest month in terms of aircraft units transacted in the last five years.” It would probably be a stretch to conclude December’s sales figures will surge to 2021 levels – but they could instead match the more normal pre-Covid 2018-2019 levels.

As we approach year-end, “Buyers may see a more competitive environment for quality aircraft in the short-term,” Donath suggests, “but they may also find some sellers who are very motivated to strike a deal before year-end.”

“Demand in 2023 has remained strong, overall, despite the 30% price increase which occurred in the aftermath of Covid-19,” Pezin adds. “But it seems that 2023 could easily prove to be the start of a period when the market enters a new downward cycle.”

Pressed for a prediction, Donath reckons the market will soften in Q1 2024, with values adjusting downward and inventory continuing to grow (a contributing factor for his suggestion of buyers finding some motivated sellers at the back-end of 2023).

A Final Take-Away from the Market...

“The main lesson of 2023 so far is that unless a major, unexpected event turns the current market trend upside down you should not expect a quick drop or rise in either demand or asking prices over coming months,” Pezin concludes.

The shift from a firm seller’s market into more neutral territory has been gradual, and should continue to be so heading into 2024, he says.

More information from:
AeroBuyNow: www.aerobuynow.com
Donath Aircraft Services: https://donathaircraft.com