It’s official. We are already more than halfway through the year. Year-end is always on the minds of ultra-high net worth individuals, senior executives, and those who closely support them. Strategic planning ensures thoughtful consideration of the many factors associated with the purchase or disposition of high-value assets. Aircraft transactions fall into that category and require the same careful execution, particularly during fluid market conditions.
In the not-so-distant past, an initial purchase or a change in the size or makeup of a flight department or fleet could be accomplished relatively quickly. According to Ann Pollard, a transaction expert with Duncan Aviation’s Aircraft Sales & Acquisitions team, “A successful aircraft transaction now requires more time to complete. Although we have seen some easing and improved conditions for buyers, transactions are still taking longer to close.”
High-quality shops continue to experience significant backlogs. Flight department staffing, particularly with respect to qualified flight crews and technicians, is an ongoing challenge. This translates to longer lead times to identify, hire and train qualified personnel. “All infrastructure that supports flight departments is experiencing longer lead times and requires advanced planning. If a year-end transaction is desired, it should already be underway or getting started as soon as possible,” Pollard says.
PRE-OWNED MARKET UPDATE
The current preowned aircraft market is starkly different from the same period in 2022. Nearly every market segment has experienced downward pricing pressures due to increased inventories of aging, high-time airframes. Pre-pandemic inventory levels were around 2,500 business jets for sale. At the start of 2022, we saw just under 750 active, on-market business jet listings due to significant spikes in pandemic-related demand. This resulted in record-high market prices.
Duncan Aviation’s Aircraft Sales & Acquisitions team is seeing signs that the market is stabilizing as more aircraft are listed around the globe. High-quality aircraft are still trading at a premium, but not at the same peak or frenzied terms seen during pandemic market conditions.
“When buying or selling a high-value asset in rapidly changing market conditions, working with a team that truly understands and closely monitors inventories, recent transactions and market values is critical,” Pollard states. “Overpriced assets will linger and will ultimately sell at a lower price than assets that are priced appropriately. Conversely, buyers who are not working with an experienced team can end up paying more than they should. Duncan Aviation’s team strives to provide the most current and accurate data to empower our clients to make informed decisions on the purchase, sale, or retention of an aircraft asset.”
Concerns about financial headwinds and increased costs to finance assets is leading some owners to re-evaluate aircraft ownership versus charter, fractional, or other forms of private aviation. However, there continues to be a steady number of owners seeking to upgrade. Market conditions vary between makes, models, and across global regions. Duncan Aviation’s team touched 8,496 aircraft from 79 different countries and territories last year. Duncan Aviation’s global influence enables the Aircraft Sales & Acquisitions Team to keep a finger on the pulse of rapid-fire changes in socio-economic conditions that can drive out of the ordinary price fluctuations.
While it appears that many people are talking the market down, it’s not nearly as bad as painted by some, as the number of aircraft for sale is still well below where it was three years ago. Currently, 6.04% of the aircraft inventory is for sale, compared to around 10%, which is considered normal or balanced.
Why are inventories still so low? Pandemic-related surges in charter demand resulted in companies adding a record number of aircraft to charter fleets. Popular charter models were snapped up to support this burgeoning market while many private buyers, including an unprecedented number of first-time buyers, also sought to secure their own aircraft to support increased demand for Part 91 flights.
FLEET PLANNING
Whether or not you are considering a year-end transaction, regularly revisiting the strategic plan of your flight department is a good idea. Duncan Aviation’s experienced team can assist your department with the development or review of a strategic plan, including the following key points:
· Mission profile for C-suite flights: which members of your team can, or should be flying
· Flight department budget considerations
· Availability of personnel to support flight and maintenance operations
· Possible bottlenecks with maintenance support and supply chains for all key components and systems
· Budget for anticipated maintenance and upgrades for current or future models
· Analysis of anticipated demand verses anticipated downtime for upcoming maintenance or upgrades
· Other considerations that are unique to your specific flight department
Whether you are considering a year-end transaction, contemplating future fleet planning strategies, exploring the performance and operating costs of different aircraft models, or simply looking for insights into the current market, Pollard says that Duncan Aviation’s Aircraft Sales & Acquisitions team is ready to assist. “Duncan Aviation’s industry leading legacy in aircraft sales began in 1956,” she says. “With more than 3,500 transactions to date, we are uniquely positioned to help our clients expertly navigate rapidly evolving market conditions.”
To learn more about Duncan Aviation Aircraft Sales, visit www.DuncanAviation.aero/services/aircraft-sales or contact the team today via email, [email protected].
AIRCRAFT SALES RESOURCES
Duncan Aviation Aircraft Sales & Acquisitions Website
Duncan Aviation Aircraft Listings
Aircraft Sales & Acquisitions Brochure
Business Jet Model/Market Summary