5/26/2020
By Eric Hammer – Executive Sales Director
Given the dynamic and constantly changing environment, I wanted to share with you what the professionals at Elliott Jets are seeing in the aircraft market at this stage of the pandemic. In summary, we are certainly NOT seeing what we saw in the early stages of the “Great Recession” in ‘08/’09. Eleven years ago, there was a very rapid and significant increase in pre-owned inventory for sale, and a fairly rapid drop in published pricing… and when transactions began to occur again, a fairly stark decrease in market values. Thus far, after a near stand-still in aircraft transactions over a several week period beginning in late March, we are now seeing transactions resume and asking prices re-adjusted, all equating to some models that have thus far experienced very modest reductions in value, while others have had transactions that point to a 10% or greater price decline. Please read our Phenom Spring 2020 Market Update if you would like to see specific data as it relates to the Phenom 100 and 300 market.
One of the many advantages of aligning with Elliott Jets is that we are a member of the International Aircraft Dealers Association (IADA). This is an elite group of aircraft broker / dealers that abide by a strict code of ethics. IADA represents just 3% of all aircraft broker / dealers worldwide, but account for more than 60% of all pre-owned aircraft transactions. This gives us unique insight into the markets. Our members were surveyed for the period of 3/27/2020-4/30/2020. With all 46 broker / dealers providing a response, this is what we found:
1) 53 retail transactions closed (approximately 50% of “normal” based on historical averages).
2) Transactions, while down meaningfully, have fared better than fuel sales and retail charter demand, both of which were down 90%+ during the same period.
3) 58 aircraft went “under contract.”
4) 31 transactions were terminated.
5) 34 price adjustments by an average reduction of just under 10%.
6) 27 new acquisition agreements.
7) 63 new brokerage agreements.
8) 7 IADA member inventory commitments.
The TakeawaysTransaction volume is down but all key components of the brokerage industry, after a collective pause during nation-wide lockdowns, are beginning to function once again as restrictions loosen. Values are not in free-fall as buyers resume previously planned purchases thanks to a favorable tax and regulatory environment. Perhaps airplane owners, especially those that were owners 11 years ago, are somewhat sensitized to extreme volatility and thus are behaving with more restraint. Or perhaps it is due to genuinely more confidence in the outcome. It remains to be seen. Clearly this crisis will have far ranging impacts that are not yet fully known. One only has to look at the impacts to small business and the airline and hospitality industries to know that.
For a more in-depth analysis, we subscribe to an aircraft listing service called JETNET. As part of this service, we receive a periodic report, which is essentially an analysis of the market. In their latest analysis, pre-owned business aircraft inventories have begun to creep back up. The percentage of the worldwide private jet fleet for sale in March was up more than a half point year-over-year, to 9.9 percent. It marked the first time since 2016 that the month of March saw a year-over-year increase in the fleet percentage for sale. Business jet sale transactions slowed by 5.8 percent from March 2019, with aircraft on average taking 13 days longer to sell. An inventory of above 10 percent is generally considered a buyer’s market, but JETNET cautioned that while the number of jets currently for sale increased by 162, or 7.9 percent, to 2,215 in March 2020, it pales in comparison to 2009 when available business jets jumped by 1,095 units, a 62 percent increase, during the height of the Great Recession.
Wrap Up
As the first in a series of posts, I hope you find this information on the state of the aircraft markets helpful and look forward to my next update. Until then, please reach out to me with anything you believe I may be able to help you with. I want to be a trusted resource for you. If you’d like to discuss how I can help you sell your current aircraft quickly and for the best price this market will allow, and / or help you acquire the best valued aircraft that meets your requirements, then please contact me at ehammer@elliottjets.com or call 336.553.8888. You can also request a free valuation of your aircraft here. Make sure to sign up for more updates.
About Eric Hammer:
Prior to joining Elliott Jets, Eric was a Regional Sales Director for Embraer, responsible for all pre-owned aircraft sales into North America. In addition to his most recent position, he has led sales efforts for Atlantic Aero and Cessna. During his aircraft sales career, he has been directly responsible for the sale of more than 150 turbine-powered aircraft. Prior to selling aircraft, Eric spent 11 years as a Flight Dynamics Officer in NASA’s Mission Control Center in Houston.
Eric is a retired Navy Reserve Officer and an active aviator. He is a commercial, multi-engine, instrument-rated pilot with nearly 1,500 flight hours.