"Pre-Owned Jet Update – When you’re Hot, You’re Hot"  

By Michael Chase and Marj DeLong -- 06/06

As we come off of a record breaking first quarter in 2006 for new general aviation aircraft billings, OEM production aircraft are sold out for the next several months or even years so the pre-owned jet market should continue to heat up. 

As forecasts are being adjusted upwards for new aircraft production through the next decade, OEMs are looking for ways to improve delivery times.  The recently announced record orders are feeding these new forecasts and may also be fuel for the fire for some pre-owned jet models as the demand side of the market heats up.

New business jet orders have historically depended on a successful pre-owned market environment but the delivery cycles differ so first let’s take a look at the following comparison provided by JETNET/AvData that displays the historical deliver cycles of new and pre-owned business jets.

Note: As illustrated in the following chart, both new and pre-owned business jets are currently showing upward trends. However, this has not always been the case historically.

JETNET provides valuable industry data to many dealers and brokers in the   pre-owned market and helps depict key market trends. The following table and charts are a comparison of some business jet models with significant (Hot) pre-owned sales for the first four months of 2006 compared to the same time in 2005.

 Top 10 Pre-Owned Sellers

Looking at the TOP 10 Seller numbers the Citations lead the way when compared to all the other pre-owned models.  Beechjet 400A sales remained strong in the first four months of 2006 as did some older Learjet models.  The Excel may be the most sought after with only a little more than 1% of the fleet for sale.

In addition to these aircraft sales numbers, there are several trending measures that can help clarify the pre-owned market status, hot or cold, and they are worth reviewing. 

Comparison of the average days aircraft are on the market and the average asking price are two critical measures.  Since 1999, the “Average Days on the Market” has increased from 5.7 to 10 months while the “Average Asking Price” has declined from a peak at $6.3m in 2001 to $4.5m at the end of 2005.

 “For Sale” trends provide a historical view of the pre-owned market environment.  Since 2002, the average annual aircraft “For Sale” has declined from a peak of 4,238 to 3,451 in 2005 as shown in the following chart.

Since 2003, the average annual aircraft “Sold” has increased from 5,460 to a new peak at 6,244 in 2005

 SUMMARY

 q     Aircraft “For Sale” numbers have declined from a peak in 2002.

q      The “Average Days on the Market” are at peak levels of 10 months, nearly double since 1999.

q      The “Average Asking Prices” have shown recent significant declines, down $1.8m since reaching a peak in 2001.

q      Aircraft “Sold” has reached a new peak in 2005

These JETNET provided charts are all positive trend indicators for the pre-owned market.  Records were meant to be broken and this summer the pre-owned market just might break a record of its own with OEM backlogs fueling the fire.