Buy- Sell or Run Away: Is now a good time to buy or sell an aircraft? The slowdown in the aircraft market that started earlier this year is sure to worsen given recent turmoil in the financial markets. One thing is certain- things aren't as bad as they seem. But it may get worse before it gets better. Speculators are facing a bloodbath and they are probably getting what they deserve. For those buyers who base their decisions on long-term need- now is a good time to acquire an aircraft. I ...
Buy- Sell or Run Away:
Is now a good time to buy or sell an aircraft?
The slowdown in the aircraft market that started earlier this year is sure to worsen given recent turmoil in the financial markets. One thing is certain- things aren't as bad as they seem. But it may get worse before it gets better. Speculators are facing a bloodbath and they are probably getting what they deserve. For those buyers who base their decisions on long-term need- now is a good time to acquire an aircraft. I took a look using the AMSTAT aircraft for sale database of turbine business airplanes. As of this past week- 11% of the entire active turbine fixed wing market is for sale. As a rule- this indicates an overall balanced market between buyers and sellers. It has been steady throughout the summer at 11%. Individual models have fluctuated. We've seen an increase in the number of larger business jets for sale. For current production models- only 6% of the active fleet is for sale. This indicates a good market for late model turbine airplanes. This also means that there is a weak market for older aircraft. There is nothing new here.
What we are likely to see over the next 6 - 12 months is an increase in the number of newer aircraft for sale- and a larger increase in older models for sale. The manufacturers will see a decrease in their backlog- but for those with strong order books- they will survive just fine. The aircraft market is definitely shifting to a buyer's market.
If you are buying:
If you are buying because you need an aircraft- there already is a good supply of aircraft to choose from. There will be some opportunities to acquire new models this year as well. If these are coming direct from the manufacturer- they may qualify for the bonus depreciation and thus offer you a nice tax benefit. Prices will drop on some high demand models- so negotiate carefully and as long as you plan on keeping the aircraft five or more years- the deal can be a good one.
• Evaluate the price of the aircraft in excellent condition with refurbishing and updating an older model selling for a great price.
• Don't plan on low financing rates- but rates are still there for excellent credit risks.
• Look at a lease if you don't really need the tax write-off and will lease for five years or longer.
If you are selling:
Whether to sell now is a tough choice. There will always be a good market for quality used aircraft. If you have to sell- due to having a new aircraft delivery or a downsizing- then be prepared to wait a bit to get a good price. If your aircraft is in excellent condition and is a desirable model- then find yourself a good broker who knows your aircraft's market. Be advised that dealers with a sizable inventory are not likely to be interested in your aircraft.
• Be patient.
• Having a top-notch broker or dealer who knows your aircraft's market is a requirement.
• Listen to your broker or dealer.
Now is not the time to run away unless your 401(K) was heavy into financial stocks. It will be a cold winter- so bring extra blankets and keep active. One last tip: take a 72-hour news fast and disconnect. Watch the sun rise or set and enjoy the company of a good friend or a good book. The sky is not falling! á David Wyndham is an owner of Conklin & de Decker. The mission of Conklin & de Decker is to furnish the general aviation industry with objective and impartial information in the form of professionally developed and supported products and services- enabling its clients to make more informed decisions when dealing with the purchase and operation of aircraft. With over 1-800 clients in 90 countries around the world- Conklin & de Decker combines aviation experience with proven business practices.
More information from www.conklindd.com; Tel: +1 508 255 5975