Preowned Market Remaining Stable Despite Market Turmoil

Despite the market turmoil associated with Covid-19 pandemic, the preowned market—so far—has marked a “stunning contrast” to the financial crash of 2007 and 2008 when a glut of aircraft came up for sale, said business aviation analyst Brian Foley.

Foley, owner of Brian Foley Associates, noted that between 10 percent and 12 percent of the fleet typically was for sale in years leading up to the market crash. But once the market crashed, that “quickly ballooned to 18 percent, meaning that nearly one in five of all the world’s jets had a for sale signed taped in their windshield.”

Now, a decade later, owners mostly still appear to be hanging onto their aircraft despite the unpredictable stock markets, he said, citing Amstat figures that the for-sale figure has “blipped up” to just 10.3 percent, compared with 9.8 percent of the fleet available pre-virus.

Foley suggested a number of reasons for this difference, including that the 2007/2008 crash unearthed a fragile financial system bolstered by sales to people who weren’t financially solid. This was exacerbated by a public perception issue heightened by automaker executives traveling to Washington aboard their corporate jets to ask for bailouts. “Add to that an economy that was already on a downward trajectory and owners could no longer afford or justify keeping the corporate jet,” he said.

This time is markedly different, he said, adding the economy was strong before the pandemic, lending standards are stricter, and the stock market hasn’t been in one continual free fall. Importantly, there isn’t the same fear of a bank collapse.

“This has given owners the fortitude to stand pat and look beyond the current environment to a presumably brighter financial future, at least so far,” he said.  Further, those who can afford to fly private will continue, especially given the uncertainties surrounding the pandemic.

“For this reason, it’s assumed that the business aviation industry will recover more quickly than the airlines since those traveling on private aircraft will feel safer taking to the skies sooner,” he said. “Those who own jets now have the ability to travel in a proverbial plastic bubble, less exposed to airborne nasties to be endured by public air travelers for the foreseeable future.”

Having said that, Foley doesn’t see a surge in jet sales, expecting charter and other “non-ownership” models to tick up first. But new business aviation clients might stay in the fold rather than return to airline travel.