Single-Pilot, Owner-Flown Turbine Aircraft Market Conditions

Ranging from those planes with enough room for your spouse and a suitcase to a continent-crossing transport for a golf day, here we’re taking a look into the pre-owned sales market for personal jet and single-engine turboprop aircraft – the likes of the Pilatus PC-12, Cessna Citation M2, Daher TBM and Kodiak, Cirrus Vision Jet, and HondaJet. Think of these as the top-end of single-pilot, owner-flown turbine aircraft, a category that is forecast to continue to grow 5% annually over the next 10 years.

As with most industries riding the gyration into and out of COVID, the past few years of aircraft values and aircraft sales had been hard to predict. The world went from one where some people were forbidden to leave the home resulting in an increase in inventory, to one where stir-crazy pilots decided to “just buy the damn thing” resulting in most values increasing a minimum of 20% to as much as 50% from pandemic induced price changes. For owners, large fluctuations in aircraft values means it’s harder to make decisions around equipment upgrades, insurance, and utilization, but also critically it increases uncertainty for those looking to upgrade to a new aircraft or simply transition out of their current one. 

Looking back over the past 24 months, pre-owned aircraft values is a tale of downs and ups. The first half, where inventory largely dried up, and aircraft values remained largely unchanged, and the second half where inventory remained low and values surged. We’re now showing initial signs of entering the third stage of the recovery – stabilised aircraft values and rising, healthier inventory levels.

Older aircraft increased in value more than newer ones but will see a larger drop in value as the market normalizes.

 During the period of low-inventory/high-demand, all prices surged. However, there was a marked difference in newer versus older aircraft. Assets less than 10 years old benefitted from an approximate 20% bounce in value. In contrast, aircraft over 10 years old saw upwards of a 50% increase in value. This is a new high-bar, but also shows the difficulty buyers had in finding suitable aircraft, often having to compromise on age, or even sometimes installed-equipment and other influencing decisions. While prices for recent models have stabilised, going forward expect to see a continued negative value-trend in older models. 

Following this surge in aircraft values, the first few months of 2023 have shown a modest correction, and most recently a stabilisation of values. For owners of recent models, there are a number of factors why values may not come back down as hard as they went up:

 - Long OEM Delivery Backlogs – Historically, lead times for new aircraft were 4-6 months. In the past two years, due to a sharp increase in demand, this has increased to more than 18 months across most all manufacturers. Long lead times support pre-owned pricing for buyers seeking to acquire an aircraft today 

- Realignment of Personal Values – Coming out of COVID, many have realigned personal values, believing time, whether familial or in business, has a value exceeding the cost of an aircraft. The challenges of learning to fly and operating your own aircraft may form part of this for owner-pilots. 

- New Users of Private Aviation – The entire private aviation market has seen a boon in new entrants, from new charter clients, to new bizjet owners, and new owner-pilots. 

- Positive Economic Indicators – Despite recent economic worries, rising inflation and geo-political rebalancing, the global economy remains relatively stable. Positive economic indicators strengthen buying decisions for the owner-pilot.

The good news is that we enter 2023 with a resilience in aircraft prices, sustained demand, a normalising supply curve and, overall, a healthier aircraft market than we saw last year. This is good news for sellers that are upgrading their aircraft and buyers alike. 

Sellers can benefit from clearer asset value, where demand remains strong.

For sellers this means the delta to upgrade their aircraft has reduced, but also there is a return to rational pricing, meaning clearer asset values. For owners looking to transition up, stabile aircraft values mean more certainty on the total cost to upgrade, and more seamless transition with a buyer and seller on both ends of the transaction. 

For buyers this means more choice, and therefore the opportunity to find aircraft with fewer compromises or excuses. Equally, pricing stability and certainty in aircraft value gives more confidence in the purchasing decision. It does, however, mean we are likely to see a value decline in older models. 

The reality is, there is no better time than now to step up into turbine ownership. Aircraft values will do what they will, and because we are owner-pilots, we can’t forget that a huge amount of joy comes in flying them.  

Aircraft buyers can benefit from finding aircraft with less compromises.

Philippe Polman is Sales Director Europe for Lone Mountain Aircraft, the first-choice aircraft broker for owner-pilots. www.lonemountainaircraft.com