Bryan Comstock is a published industry expert. He has earned the respect of buyers, sellers and industry
insiders through his years of writing for FLYING Buyers' Guide, Aviation
International News and Business Jet Traveler.
Below is Bryan's latest article written for and published by Aviation International News.
Pre-owned Update: July 2015
by Bryan A. Comstock - July 3, 2015, 4:11 AM
Despite an inventory build among pre-owned aircraft in the first half of the year, some models are downright hard to find. The acceptance and growth of business aviation has long since extended the boundaries of the U.S. Years ago 30 aircraft for sale signaled a saturated market, but with extensive production runs on many popular aircraft, in many instances 30 aircraft now accounts for only 10 percent of the fleet, as is the case with the Challenger 300.
With more than 500 in operation, the 34 G550s for sale represent 6 percent of the fleet. Only one third of the current Challenger 300 choices offered for sale are based in the U.S., followed by Europe with nearly as many and the remainder spread about other parts of the globe. The number of U.S.-based G550s for sale stands at 16, followed by Europe and Asia with nine and seven, respectively. One recent entry to the G550 market went under contract in about 30 days, which speaks to how active this model type is, contrary to the perception some have when they see more than 30 of a particular model type for sale. A disparity between the two models above is in the quarterly value fluctuations as provided by Vref, which shows Challenger 300 values holding steady on all but the latest model year, while the G550 values show a negative seven-figure quarter-over-quarter change. Eight G550s have sold in the last six months and they ranged in price from $25 million to just over $48 million for a 2013 model with about 350 hours. Six of the eight were N registered.
Though the production run of the 2000EX EASy is much smaller than that of the Challenger 300 and G550, its supply is slightly tighter, offering up just six to the used market, out of a fleet just over 100. As you might expect, Europe controls two-thirds of the market offerings, with the U.S. accounting for the remaining two choices. None of the 26 EXs are currently for sale. EX EASy demand is high, with 12 selling over the last six months. Early EX variants are bringing either side of $10 million while the later EX EASy models can command prices in the high $20 million range.
PRICES SLIDE FOR SOME
Not every aircraft is faring as well, and the one model caught in a downdraft is the Global 6000. Even before the announced production line adjustment of the Global 5000 and Global 6000, sales activity in the used market was lackluster. The first recorded sale last year on a late model was more than $50 million, but a subsequent and comparable deal reportedly brought just $48 million and more recently numbers circulating around two 2014 models were in the $46 million range. The most recent sale occurred in June on a European-based 2011 model with 1,400 hours. One industry counterpart shared with me recently that on a recent search for an off-market 6000 he received a higher-than-normal response rate from potential sellers, which could add to the half dozen options currently for sale.
On the lighter side Learjet 45s are trending, with only 20 available now, down from 38 last September. Consider that only half of them are N registered, or just under 7 percent of the U.S.-based fleet, while globally that figure climbs a couple of percentage points. Sales over the last six months have ranged from $1.2 million to $2.9 million and have averaged $2.22 million, according to research firm AircraftPost. The successor model Learjet 45XR is going in the opposite direction, increasing from 14 late last year to 22 today. The lack of sales over the past six months is one of the reasons. The few that sold averaged around $3.5 million.
The G150 is also notable, dropping from 14 for sale last November to only five today. Eight have sold over the last six months and have ranged from a low of $4.5M to a high of $8.5 million and an average of $6 million. While the current Vref shows a knock in value of nearly $300,000 across the board, I have to believe the next issue will reflect the sales activity.
With an inventory build during one of the more active quarters, we can expect to see a continuation of this as we transition to the slowest quarter of the year. How that will relate to pricing a few months from now is anyone’s guess as the trends seem to have had only one direction for years. Talking with the owner/client of a GIV-SP, an aircraft whose prices have been battered, I had to convey that his aircraft might be worth as little as $4 million, clearly much lower than he had anticipated; with this information he decided not to place his aircraft on the market now. Embellishing the numbers to a client to win a listing is deceptive in any market, but in the current market has the added distinction of being foolhardy. While it seems counterintuitive to provide a client with information that will likely talk him out of listing, it more than likely serves a greater good by not saturating the market with unsellable listings and false expectations.