Used Aircraft Market Update: ‘The Challenge of Normal’

Founded in 1993, Missouri-based JetBrokers covers a wide range of aircraft markets including business jets, turboprops and piston aircraft. Celebrating 30 years with the company this year – 25 as President – Tom Crowell, Jr. (pictured below) has seen it all in terms of market cycles in the aircraft sales business, along with the impact that external factors can have on these.

Of course, every so often the market encounters a ‘rogue wave’ as it did when Covid-19 struck in 2020. Nobody could have anticipated the extent of the subsequent and sudden demand for private aircraft that followed, with many who previously flew business class on the airlines seeking an alternative and safe way to fly.

With pre-owned aircraft sales spiking and inventory hitting an all-time low at just above 2% of the worldwide fleet, there was a line of thought that, with a significant portion of the demand coming from first-time buyers satisfying their private travel needs, once the reality of aircraft ownership costs hit, and as the airline schedules returned to normal, pre-owned market availability could rebound sharply with values plummeting.

So far, Crowell points out, that hasn’t been the case, with the rebound proving far softer.

“The market has definitely slowed and market inventory has increased,” he affirms. “But that has generally been down to a slow return to normal – not because hundreds of first-time owners are rushing for the exits having had their fingers burnt as some might have feared. The first-time buyers have mostly stayed in the market.”

In fact, according to Crowell, JetBrokers has had several of them upgrade from their initial purchases, impressed by the newly discovered convenience of flying to their own schedules.

What has changed, however, is the balance between private and business flying, following the sharp increase in private flying that was seen in the aftermath of Covid.

“The split has definitely swung back towards the business traveler as most companies are open to their employees travelling again,” Crowell notes, but while leisure travel has subsided a little, it has not done so significantly.

Market Challenges of Returning to ‘Normal’

So, what are the biggest challenges to buyers and sellers in today’s pre-owned aircraft market if availability is gradually increasing and prices are stabilizing? According to Crowell, the biggest hurdle is “finding ready buyers and realistic sellers”.

Those who bought aircraft or saw others selling aircraft at premiums in the years immediately following Covid are still adjusting to the reality that the market won’t support similar price expectations today as they look to sell.

While late-model low-time aircraft continue to command premium prices, they are in very low supply and are the exception. “That mid-time, 10-year-old jet that you bought at a premium 18 months ago is no longer worth the same amount,” Crowell emphasizes. “But equally, if you sell lower, you’re going to buy your next jet lower, too.”

Even if a seller has a jet with a freshly overhauled interior or new exterior paint, that is more likely to catch a buyers’ eye and lead to a quicker transaction than directly contribute to a higher purchase price.

As for finding ready buyers, high interest rates have increased the cost to finance aircraft, Crowell notes, attributing this as one possible reason some are hesitant. “The cost of borrowing was almost free 18 months ago,” he adds. “Others may be waiting to see how far values will come down.”

And a few would-be buyers could be waiting to see how the US Presidential election plays out, or how geopolitical situations elsewhere in the world develop.

There’s also the fact that buyers are in much less of a hurry than they were 18 months ago, taking their time to do their due diligence while, as some of the heat comes out of the marketplace, they can also afford to be a little choosier.

Near-Term Market Improvements?

Nevertheless, after what seemed a slow start to 2024, “the market is getting better as the year progresses,” Crowell adds. “Buyers and sellers are adapting and will continue to do so towards the current realities within the marketplace.”

And, based on numerous conversations he’s had with buyers and sellers of pre-owned business aircraft, Crowell is upbeat about the prospects for the market over the remainder of 2024 and moving into 2025.

“I expect the second half (H2) of 2024 to continue to show market growth. When we look back on H2 2024, I’d expect it to show small increases in activity compared to H1.

“Heading into 2025, I am expecting to see those incremental increases in activity from 2024 continue,” he concludes.

More information from: www.jetbrokers.com

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