Bizav Market Defies Traditional Valuation Models

Aircraft values are maintaining strength despite increasing inventory and longer market times, breaking decades-old patterns that typically signal price softening, according to industry experts speaking at the JetNet summit in Washington, D.C., this week.

The unexpected resilience reflects fundamental changes in buyer behavior and market structure, with transactions increasingly driven by mission-specific requirements rather than general aircraft availability. This shift has created what appraiser David Crick of DavAir described as market “splintering” rather than traditional bifurcation.

“We’re seeing that there are increases in inventory of certain models. The days on market are increasing a little bit. But there’s not a corresponding drop in value. Values are being retained,” Crick shared during the panel discussion, “Let's Make a (Plane) Deal,” moderated by Phil Winters, IADA chair and v-p of aircraft sales and charter management for Western Aircraft.

Market Fragmentation and Scarcity

The phenomenon stems from buyers seeking aircraft with highly specific criteria, including geographical location, maintenance status, and interior configurations. While overall inventory may appear abundant, the pool of suitable aircraft for individual buyers remains limited.

“If you take away all the ones that are really old, all the ones that are really new, all the ones that are due for maintenance, or all the ones that have an aft galley instead of a forward galley, if you have a specific kind of aircraft that you want, there’s really not that many,” Crick noted.

This specificity has eliminated the broad-based purchasing patterns of previous years. “Buyers aren’t just willy-nilly saying I’ve got this great big lot of money in my pocket and I need to spend it,” Crick said. “It’s more about specific tasks or missions that I need to find an aircraft for.”

Financing

The lending environment remains robust, with financial institutions holding substantial capital reserves that have intensified competition among lenders. Ramy Sidhom, head of aviation at PNC, reported that banks are “sitting on a lot of capital,” resulting in loosened terms, extended amortizations, higher advance rates, and compressed spreads.

Interest rate conditions have improved significantly. “Rates have also come down a little bit. So if you look at the swap rate, it’s down about 100 basis points. If you look at the 10-year treasury, it’s about the same. So it’s very advantageous right now,” Sidhom said.

However, ongoing consolidation in the banking sector is reducing the number of specialized aviation lenders. Sidhom indicated that this trend primarily affects regional institutions rather than major aviation financing providers. “We just recently purchased a bank this past week,” he said. “It’s First Bank, about $27 billion. That takes us to about $600 billion, probably still have about $50 billion in capital available. So you’re going to see the M&A conversation continue.”

Legal Complications 

New challenges are reshaping transaction complexity, with tariffs becoming a significant factor for the first time since the late 1970s. Amanda Applegate of Soar Aviation Law noted the unprecedented need to retain trade attorneys for aircraft transactions.

“I think in the spring, I was asked to do a presentation on tariffs, and they wanted a deck. I’m like, I’m not putting anything in writing because by the time I write it, it won’t be true anymore,” Applegate said.

The legal landscape is further complicated by generational wealth transfers bringing in new buyers with different expectations. These purchasers often attempt to minimize professional support, believing artificial intelligence tools provide adequate guidance for complex aircraft acquisitions.

“This next generation of buyers is different. They are able to go to ChatGPT and ‘understand’ how to buy an aircraft. They don’t necessarily think they need the large team,” Applegate observed. “Oftentimes, they want to go team-light, which I think leads to challenges in the transaction.”

Tax Incentives

New aircraft demand has received significant stimulus from bonus depreciation legislation, according to Andy Solem with Honda Aircraft. The tax advantage has created immediate urgency among buyers seeking to capitalize on favorable depreciation schedules.

“When that tax bill got passed, we started getting calls directly saying, ‘I’m looking for some bonus depreciation this year. What have you got?’” Solem reported.

However, the market is confronting reality regarding aircraft values following the pandemic-era boom. Many owners who purchased during that period expected continued appreciation, failing to recognize that aircraft typically depreciate like other major assets.

“I think jets are like cars. They usually don’t appreciate in value after you buy them. They depreciate,” Solem explained. “It’s a large asset, and they’re not collector items.”

Buyer Inflexibility

Contemporary purchasers demonstrate limited flexibility regarding specifications and timing, creating premium pricing for aircraft meeting exact requirements. The traditional willingness to accept modifications or wait for customization has largely disappeared.

“These buyers, they want what they want, and if they can’t get what they want, they don’t buy it,” Solem said. “And changing anything on a business jet is horrendously expensive and across the board takes a long time.”

This buyer behavior extends to first-time purchasers who increasingly bypass traditional progression paths from charter to fractional ownership to small-cabin ownership. Many now purchase large-cabin aircraft directly, often based on unrealistic expectations about charter revenue offsetting ownership costs.

Appraisal challenges frequently arise from misunderstanding the relationship between expenditure and value, particularly regarding maintenance and upgrades. Crick noted that this remains the primary source of disagreement in valuations.

“Most of the disputes are around the difference between cost and value,” Crick said. “Just because you have a major check done…that’s expected.” The timing of major maintenance events significantly influences transaction patterns, with buyers preferring aircraft that have completed required inspections rather than inheriting upcoming maintenance obligations.