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Pre-Owned Aircraft Sales Trends
The B.R.I.C. - driven market recovery? 

If you are angry about outsourced jobs- be happy about outsourced airplanes. Thanks to BRIC – Brazil- Russia- India- and China – activity has resumed and prices have stabilized. For some dealers- there has been more activity in the last sixty days than the last six months. But- let’s talk prices. Most markets continue to be - at the very least - price-sensitive- if not price-driven.

Two developments from the last year or two: First- the obvious - the Great Recession still lingers. Until a recovery gathers momentum- buyers will remain cautious. Secondly- we have become a nation of bargain hunters. That’s ok if we’re talking toasters or cars- but airplanes?! Airplanes are handmade- custom-built machines that should be flown by professionals and maintained with great care.

The cheapest one is probably not the best choice. This ‘get a deal no matter what it costs’ mentality is a bad thing for the American buyer- because buyers from BRIC- and other countries- are picking off many of the better airplanes – and with much less price resistance.

For most of 2009- the good airplanes were cast into the moat with the average. Now the gap between low-time/excellent and their less-fortunate brethren has returned – and is widening. The rough airplanes are still distressed- but prices for ready-to-go models have bottomed out – and possibly firmed-up a bit.

Activity is still not what it should be- but has definitely improved. As mentioned before- the level of interest and selling price depends on the geography of the buyer. Offshore buyers have provided a kind of aviation stimulus package by regularly outbidding domestic shoppers. This has established a floor under the market and even put upward pressure on some airplanes.

The Vref Light Single Index was flat for the recent quarter. Complex Singles managed a tiny increase (see VrefOnline.com). Most Beechcraft singles are unchanged; older Cessna 172s and 182s are up slightly; Cessna 210s creep up after a very long flat period; most Mooneys have leveled out; most Pipers are unchanged; and Cherokee Sixes have managed an uptrend.

Another positive influence in the single-engine market is a thriving light sport segment. If a new light sport airplane costs more than $100k- a used Bonanza- 210- or Mooney 201 at $100k looks like a steal.

Still the most undervalued- overlooked segment is that of the Piston Twins. This market is ‘all wrung out.’ Old Beech B55 Barons- Twin Cessnas- Piper Twin Comanches- Navajos and others- are spectacular values just looking for qualified buyers.

Only a burgeoning export market is keeping piston twins out of the abyss. We have recently seen Beech Barons and Piper Senecas bring 10 to 15% more through export than they would have brought domestically. This is a very stabilizing influence for the US market. The Vref Light Twin Index is unchanged- while the Pressurized Twin Index is down less than a percentage point.

Though prices may be flat- Turboprop activity continues to move up. Price-conscious buyers are moving in- before prices move up. The Vref Turboprop Index is unchanged for the second quarter in a row. A flurry of year-end activity helped remove some of the better deals and the most motivated sellers. Historically- Beech King Airs are usually the first turboprops to recover. However- no upward movement is detected at this time - for example- Cessna Conquests are active but flat; older Avantis- PC-12s and TBMs are down slightly; Piper Cheyennes and Twin Commanders are stable.

Did we hear the word premium? We certainly did in a conversation about a Gulfstream. It is very surprising just how fast the upper-end of the market has turned around. Less surprising is that prices continue to slip on many older- out of production airplanes.

The Vref Jet Market Indices comprised of 1985 to 1993 airplanes- are all down. The Light Jet Index is down 3%; the Mid-Size Jet Index is off 4%- and the Large Jet Index has lost 4.5% in the recent quarter. This is in sharp contrast to late models such as Global 5000s and G550s which are squarely in recovery mode.

It should be no surprise that each market - each airplane type - is unique and responds differently to economic conditions. For example- is the Gulfstream market good? Are you talking about G550s or GIIIs? How about the Hawker market? Do you mean late model ProLine 21 airplanes- or former fractional 800As? How is the Cessna Citation market? Would you mean Citation IIIs or CJ3s?

An economic recovery always affects every airplane differently- and will most likely leave some behind completely. Honing in on the jet market- Beechjets are down again; Premiers are flat; Bombardier Challenger 300s are unchanged; and 601-1As and 3As- way off. Challenger 604s are leveling; and Global 5000 & XRS prices have rebounded nicely.

Cessna Is- IIs- Bravos- Vs- Ultras and Encores are generally flat; CitationJets & Excels have seen some slight upward pressure- but Citation IIIs- VIs & VIIs have been very slow. Late model Sovereigns are much improved; Falcon 2000s & 2000EXs have seen some good upward pressure. The Falcon 50s have been down while the Falcon 900Bs & EXs are improving- and the 900EX EASy is much improved.

Gulfstream IIIs are slipping toward GII levels- but GIVs & GIVSPs have seen activity return - but are very price driven. G450s are a good market- and G550 are a very good market. Finally early Hawker 800As are down slightly- and Lear 45s & 60s have seen prices slip- but activity is up.

If you are reading this- congratulations on surviving the toughest year general aviation has ever known. In early 2009- it seemed that no one would ever buy- sell- or get a loan for an airplane again. Now that there is a market- let’s look at who is buying what.

Sometime during the last recovery (2006/07) it became clear that aviation was going global. Sure- the housing bubble was a good short-term thing that drove the US economy for a while- but emerging nations were largely responsible for taking aviation to record highs.

The current recovery- if you agree there is one- is being driven mostly by exports. Buyers from BRIC- to name a few- are concentrating on new or like-new airplanes. High-time- or decades-old airplanes are being left for US consumption. It may prove easier to find a wife for George Costanza in 2010- than a buyer for a 1979 run-out in need of paint.

More information from www.vrefpub.com or www.vrefonline.com 

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