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Pre-Owned Aircraft for Sale Trends

The much anticipated change in the marketplace has arrived.

With the exception of a handful of late model- long-range jets- the used aircraft for sale market is loading up- and all eight Vref Market Indices are down. The real news is; this downturn does not appear to be as severe as many expected – so far. Strong demand from outside the United States that fueled a turbine recovery in 2003- now may be propping up much of the general aviation fleet. If there is any positive to a weak dollar- this is it. Just about everything from Cessna 152s and Skyhawks to $60m Gulfstream G550 positions- are being exported. Some U.S. dealers (and aircraft manufacturers) report that 90% of their activity is outside the U.S.

A deluge of negative economic reporting by the 24/7 news media has transformed those of us who are normally ‘glass half-full’ people to ‘cautious without the optimism.’ The list of fire and brimstone is long. At the top of the list- just above the economy sits fuel prices. We have often thought that the upper-end of the market does not notice the cost of fuel. We were wrong. With jet fuel approaching the $7/gallon range- everyone is noticing.

Single Engine Airplanes for Sale
While it’s true that low-time- recently updated- well maintained airplanes remain in short supply- there is a disturbing trend. The off-market market may be almost as big as the number of airplanes for sale that are actively for sale. Many owners are just not bothering to officially list their airplane because of the expense or hassle – or as one put it- ‘What’s the use?’ This is most apparent in the out-of-production airplanes like Beech B55 Barons- older Cessna 210s and 310s- Piper Comanches or Aztecs. Buyers are becoming less forgiving of outdated panels and deferred maintenance.

The Vref Light Single Index lost 2.8% in value during the recent quarter. Though average selling prices were off- this is the segment where decent activity remains. There is a continuing demand- from emerging markets outside the U.S.- for trainers such as Cessna 152s and Skyhawks. Also- domestic buyers still want a four cylinder Cessna 150 or Cherokee 180 that won’t break the bank.

The upper end of the single-engine market is price driven. The Vref Complex Single Index was down again- losing 1.6%. Rising ownership costs continue to put downward pressure on this market. However- in this economy- a Beech Bonanza or Piper Saratoga makes a lot of sense. These high performance singles can actually be used as a business tool - and you’re only feeding one engine. Another bright spot in the market is any Bonanza- 182- Cirrus or Saratoga with a glass cockpit. Today’s buyer does not want a panel full of half-century old technology.

Twin Engine Airplanes for Sale 
No improvement is on the horizon for piston twins. In the recent quarter- the Vref Light Twin Index fell 1.4%. That is the eleventh consecutive quarterly drop. Barons- 310s and Senecas all fall into a niche with all the costs of a second engine- but without the benefits of speed and pressurization. One advantage could be that light twins are a steal. The average 1980 A36 Bonanza is trading at 112% of its original new price- while the 1980 58 Baron is currently at only 74% of its new price.

Airplanes in the pressurized twin segment are not faring any better. Small businesses- the typical operator of Cessna 414s- 421s- and other cabin class twins- are feeling the economic slowdown first and worst. The Vref Pressurized Piston Twin Index fell 1.9%.

Business Turboprop Aircraft for Sale
Asking prices remain high- but the number of ‘Just Reduced’ aircraft is increasing. Inventory levels have jumped- but so far there is little change in actual selling prices – partly due to meager activity.

The Vref Turboprop Index was off only 0.9%. Abysmal airline service is keeping the demand for charter high. This is expected to keep most of the turboprop market from crashing.

The King Air B200- which led this segment to record highs- is mostly flat- early models are off slightly; the Cessna Conquest with inspections complete is good; but Cheyennes and Twin Commanders are presently feeling some downward pressure.

Business Jets for Sale
Comments from the jet market range from “What market?” to “Can’t find one at any price!” Beechjets- Cessna Citation IIs- Falcon 10s and Westwinds are a few of the very flooded- very quiet markets. One dealer summed it up this way- “The poorer millionaires are struggling.” CitationJets- a hot market last year- have been abnormally quiet in 2008. Many dealers expect prices to slip further due to increased availability. The Vref Light Jet Index fell 3.6% during the recent quarter – that is significantly more than any other segment.

Mid-size jets are also feeling the pressure. The Vref Mid Size Jet Index dropped 2.4% in value. Cessna Citation IIIs- VIs and VIIs are all down; the early model 800XP is off slightly- and the Pro Line 21 is still scarce up front; meantime- the Lear 60 downtrend continues. It is important to remember- though- that all of this market should not be painted with the same brush. Even in a flooded market- there is demand for the better airplanes – those with a good pedigree.

Of all the jet markets- the large jets gained far more than any other from 2003 to present. It’s not surprising- then- that there would be a correction. In the recent quarter the Vref Large Jet Index fell 1.4%.

Bombardier Challenger 300s are off sharply while Globals are good but flat. Early Falcon 2000s are more plentiful and prices down- while late models are strong; the Falcon 50 is down again; and Falcon 900Bs and EXs are difficult unless it’s the lowest time- latest serial number.

High inventory and high asking prices have stifled the GIV market; although there is good demand for later serial number IVSPs; G450 are still strong; and GVs and G550s fall in the ‘difficult to find’ group.

Some observations…
The general aviation market enjoyed years of strong growth thanks to emerging economies and offshore buyers. Now that the U.S. Economy has cooled- good international activity is having a stabilizing effect on airplane prices. Where are we headed? Virtually everyone agrees that a more global marketplace will ensure a bright- long-term future for general aviation. However- that World Economy is navigating a rough patch. Rising fuel costs and serious worry about the U.S. Economy have most dealers very nervous about the near future.

Estimates of recovery range from ‘before year-end’ to ‘well into next year.’ But- as they say- ‘Talk is cheap...’ For the near term- almost every inventorying dealer is being very conservative- bidding low – just in case.

More information from www.vrefonline.com


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