“Market Opportunities Abundant For Savvy Dealers and Brokers”

By Michael Chase and Marj DeLong

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The market for new business aircraft continues to move in a very positive direction which is the good news but this climate is forcing lead times for OEM deliveries to climb which can be the bad news for some buyers.  Many Dealers and Brokers will take advantage of these opportunities by supplying an interim solution of a pre-owned business jet.  But the pre-owned market makers may find themselves spending much more time sifting through aging fleets trying to get their hands on the aircraft the customer wants at the price they want to pay as the market tightens.

It is probably no surprise that 80% of active aircraft dealers and brokers reside in the US because that is where most business jets and turboprops are based.  In the age of digital transactions, aircraft buyers and sellers can be around the world from where the dealer is but with most business aircraft operated in North America, the supply and demand infrastructure tends to command most of the activity state side.

As the previous US map indicates there are over 1200 dealers and brokers in the U.S. that compete for their own piece of the pre-owned aircraft market.  The more aircraft operating in a state tends to demand more dealers and brokers as economics 101 takes over.

Pre-owned business aircraft inventories are following patterns parallel to positive economic cycles of the past and we are experiencing similar demand for low time aircraft.  So an interesting issue to explore now is the aging fleet of pre-owned aircraft for sale.  Currently 73% of business jets “For Sale” are more than 15 years old as the population of the aging business aircraft fleet continues to grow.  Turbo-props are not any younger as 78% of the fleet “For Sale” are 16 or more years old.  Obviously the buying majority might be looking for something newer than a 1990 model aircraft so this leaves fewer jets and turboprops for customers to choose from and fewer slightly pre-owned inventories for savvy dealers and brokers to buy and sell.          

Of course all of us aviation buffs know it’s not the year it was built but how many hours and cycles the aircraft has flown that the customers should be concerned about, right?  So having the latest and most accurate aircraft market data available and effectively educating the buyer on the current make/model status may help market some older aircraft more effectively.  Targeting the need for temporary lift while a corporation waits 18 months or more for their new aircraft delivery may also bring the demand for some aging aircraft to a new high and no doubt a higher price to go along with it.   For some of the 422 business jets and 239 turboprops “For Sale” that were built pre-1975 we can’t help but wonder when will they roll off active status and finally retire in the desert somewhere.

The opportunities for the 1,570 dealers and brokers worldwide are abundant as the industry demand continues to rise.  The next chart indicates the activity that is generated by the Business Jet OEM’s that show the number “For Sale”,

Number in Operation, Percentage “For Sale” and a comparative of the     “Number of Aircraft Sold” in the first five months of 2006 compared to 2005.

From November 2005 to April 2006 there were 205 aircraft transacted by ten of the most active dealers/brokers but worldwide there were XXX aircraft transactions during this period.  So xx% of the transactions were made by the ten active dealers/brokers and xx% made by the remaining 1,570 dealers/brokers.   You may say this looks like a very competitive market for dealers and brokers but abundant opportunities for the savvy aircraft marketers none the less.