As with most years, 2020 has its challenges for the pre-owned aircraft sales industry. But what can buyers and sellers expect? Rebecca Applegarth asks Eagle Aviation’s Lee Thomas how he sees the market…
With the end of 2019 bringing a surge in pre-owned aircraft sales, the final number of business jet and turboprop transactions for the year has yet to be published (though it’s unlikely to match 2018 sales levels).
Now Business Aviation has entered a new decade, and a New Year that brings the enforcement of ADS-B, and a US Presidential election. Coupled with murmurings that the economy could be heading for recession, it’s a timely question to ask those in the industry just how they see the year ahead unfolding.
One December report emanating from the broker community attributed a year-end burst of activity in the pre-owned marketplace to buyers and sellers trying to make deals in 2019 as a hedge against economic, political and tax uncertainties this year.
“As we move into election year, there are always uncertainties,” notes Lee Thomas, president, Eagle Aviation.
“However, I attribute more of the flurry in 2019 to the strong economy and the advantageous tax laws in the US.”
Thomas started working for Eagle Aviation when he was 25, and has progressed through the ranks from aircraft research, to salesman, to vice-president of sales, to president.
As well as its aircraft sales business, Eagle Aviation, based in Columbia, South Carolina, provides FBO, maintenance, paint and interior, parts and aircraft charter services. Eagle has historically specialized in Cessna Citation and Beechcraft King Air sales, but is also very active in the single-engine Cessna and Cirrus markets, and has branched into the Embraer, Gulfstream and Falcon markets.
So how do things look at the start of 2020? Can we expect to see the market slow down again as the new year gets underway? “We started 2020 with a flurry of activity, with several acquisitions and new inventory coming to the market,” Thomas shares. “Activity, generally, has been robust.”
Nevertheless, the current marketplace is no place for buyers or sellers to enter without the correct information to hand. While inventory levels have been rising over the past twelve months, and asking prices continue to wane, Thomas describes the market as a “dynamic” one, where securing a great deal from among the available inventory requires a great deal of skill.
“I couldn’t imagine trying to buy or sell in this market without experienced broker representation,” Thomas warns. “Finding good quality, later model aircraft remains a tall order at the start of this New Year.”
Encouraging Trends as 2020 Begins
Topics that grew in momentum as 2019 unfolded include the potential impact of the Millennials (perceived as preferring shared ownership/charter models of utilization instead of full ownership), and the optics of owning business aircraft in the midst of an increasing focus to reduce carbon footprints.
Both trends, according to observers, could spell out tougher times ahead for business aircraft OEMs, dealers and brokers if demand for ownership drops.
For the time being those fears do not tally with Thomas’ observation of the marketplace, however. “We have seen several first-time buyers enter the market,” he reveals.
Pressed on his views for the year ahead, he adds, “I think 2020 is going to be an amazing year, assuming we can avoid worldwide conflict. The economy in the US remains robust which translates to increased activity.”
The ADS-B Ripple Effect (Real or Not?)
Of course, we couldn’t preview 2020 without due consideration of the fall-out of the ADS-B mandate as it comes into effect. Concerns have existed for some time that the business jet fleet and inventory for sale is growing older.
With ADS-B predicted to force a rise in fleet retirements of older aircraft, could these have a meaningful impact on the fleet size in the US, and specifically on the lower end of the pre-owned aircraft market?
“Sure, we are seeing a few of the older aircraft electing not to comply, but I don’t think it’s going to be a meaningful impact,” Thomas projects. “I believe many of those jets already had other expensive issues such as engine overhauls, avionics upgrades, cosmetics (paint and interior), major inspections, etc. that contributed to their demise.”
More information from www.eagle-aviation.com