The preowned business aircraft market has seen six consecutive quarters of reduced pricing and increased inventory, with aircraft staying on the market longer, according to valuation specialist Vref.
“The aviation market, traditionally resilient, is experiencing unique challenges this summer,” said Vref president Jason Zilberbrand in the company’s 2024 mid-year outlook. “We are observing a slowdown in business aviation transactions, with an aging fleet and increased price reductions to close deals.”
Used business jet inventory is up 18% year over year and Zilberbrand said, “My inbox is flooded with price reduction notifications. Aircraft sitting unsold for over 90 days are often overpriced, reflecting a necessary market correction post-Covid.”
According to Vref, business jet inventory grew from 1,857 aircraft in fourth-quarter 2022 to 2,719 a year later, and 2,737 at the end of the first quarter. However, performance depends on the model. Newer jets are maintaining stronger market positions with a reduced demand for older jets, Vref said.
Pointing to specific models, Vref noted that about 6.5% of the Cessna Citation M2 fleet is for sale with an estimated selling time of six months and a 5% decline in values. Values for the Embraer Phenom 100 are down 7% this quarter with 6% of the fleet for sale and an estimated selling time of five months. Meanwhile, the Falcon 2000EX EASy has an estimated selling time of 2.5 years, values are down 8% this quarter, and 6% of the fleet is for sale.
Gulfstream’s G550 has an estimated selling time of six months with 6% of the fleet for sale and a 4% decline in value, while Honda Aircraft’s HondaJet has an estimated selling time of 1.5 years with a 5% decrease in value with 18% on the market.
Helping to drive this slowdown is higher interest rates exceeding 8%, which are deterring new loans. “As a result, the market is experiencing stagnation, with many transactions delayed until interest rates potentially drop in the latter part of the year,” Vref said.
The aircraft valuation firm further pointed to the upcoming presidential election, which adds uncertainty. Election years tend to create some market volatility, Vref noted.
However, with values sliding, buyers have more opportunities and the ability to negotiate better terms. “This environment is ripe for those who can leverage alternative financing and creative deal structures,” Zilberbrand said.
In addition to its market outlook, Vref noted that it is launching a new version of its software soon that will provide intuitive data that will save time and provide more comprehensive insights.