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Pre-Owned Aircraft Sales Trends
While numbers are grim- activity is better (almost) across the board...

This past quarter- seven of the eight Vref Market Indices posted no change or much smaller price declines than the previous two quarters (see www.vrefonline.com). Activity is up- almost across the board - and it is possible that we may be in the early stages of a leveling out.

In a market that has been desperate to find a base- this is some rare good news. Though this recession may be more severe than any before it- the classic recovery processes still have to take place. First- sellers have to decide whether they want to sell an airplane or just list it for sale. This is happening in ever-greater numbers as owners reduce asking prices. Also- buyers have to realize that while owners are motivated- they are not crazy.

SINGLE ENGINE AIRPLANES FOR SALE
After years of steady declines- most light piston singles have stabilized. There was no change in the Vref Light Single Index and barely a 1% decrease in value for the average complex single in the recent quarter. Generally- the four cylinder fixed-gear airplanes continue to fare better. However- activity is improved for almost everything except the high-time or cosmetically challenged. Complex singles may be flattening out after fifteen quarters of searching for the bottom.

TWIN ENGINE AIRPLANES FOR SALE
Both the Vref Light Twin Index and the Pressurized Twin Index are flat this quarter. We have not seen this since 2005. Players in this market know that piston twins have endured all the negatives- such as higher operating costs and stricter insurance requirements.

In recent years- many potential buyers fled to much faster and cheaper-to-operate Cirrus SR22s and Cessna Columbus 400s. However- at very attractive prices- Beech Barons and Twin Cessnas remain a smart choice- especially if you are flying at night or over unfriendly terrain.

BUSINESS TURBOPROPS FOR SALE
In the recent quarter- the Vref Turboprop Index fell 5.4%- exactly matching its low in 2003 (see www.vrefonline.com). That is a tiny drop compared to the last two quarters. Inventory numbers remain high. According to JETNET- more than 14% of the King Air B200 fleet is for sale. Prices have reached a level that is more attractive to buyers- and airplanes are beginning to move. As always- the better airplanes- and the better deals go away first.

BUSINESS JETS FOR SALE
Talk to 100 aircraft dealers or brokers and you’ll get 100 different assessments of the Jet market; but they are all more positive than just a couple of months ago. “Activity is up. The parachute is opening. We are rounding-out. Stability seems to be returning.”

Few people think this is the absolute bottom for the entire market- but for aircraft - and dealers - who were first to react- a trading floor or base seems to be forming. For example- Challenger 300s were one of the first airplanes to fall - dropping more than $6m in what felt like days. Now- the good ones regularly trade in the mid-$15m range- depending on serial number.

Obviously- former fractionals can be well below this average. Stories of super-cheap airplanes continue to confound the market. When tracked down- there is a reason why they are cheap. In a good economy or bad- very high time- damaged or lightly equipped airplanes do not constitute a legitimate bottom of the market - they should be considered below the bottom.

So many aircraft have been so heavily discounted that it is separating the buyers from the shoppers. Real buyers are sensing the world is not coming to an end- but the best deals will be.

The table below depicts the huge price changes in just the past year. There is reason to believe that the downside risk in some markets could now be less than the upside potential. The Vref Light Jet Index lost 8.7% in the recent quarter. Mid-size jets dropped 7.7%. Only the Large Jet Index fell more than previous quarters- shedding 18%. This is due to a big slide in values on Challengers- Falcon 50s and GIVs.

WHAT IS OVER THE HORIZON?
With a March to May stock market rally- some claim the recession is waning. Others remind us there are at least two other shoes that have to drop - commercial real estate and credit cards. Since this recession is touted to be unprecedented- it is logical to believe that a recovery might also be difficult to foretell.

When the sun finally comes out tomorrow - or next year - airplanes will still be valuable tools. And- they have never been a better deal. While much of corporate America tries to distance itself from corporate airplanes- many visionaries are actually creating flight departments. For airplanes for sale that are priced right- the buying has started!

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


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