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: October 2016
by Bryan A. Comstock - October 4, 2016
By most accounts this past quarter was uncharacteristically busy and the traditionally busiest quarter is now upon us, but with the twist and turns of a frothy stock market and upcoming U.S. Presidential election it’s anybody’s guess how the used jet market will perform. It’s clear, however, that low pricing and tightening, but still plentiful, supply continues to attract buyers.
Some markets run hot and cold. Take the Falcon 2000 market right now. In August last year there were only six for sale. Today there are 32. That number has doubled since the beginning of the year, rising from 15. The 32 for sale today equates to about 14 percent of the number in operation. They are selling at rate of one per month, which places the current supply at a 24-month absorption rate. Prices have averaged in the low-$4 million range, according to AircraftPost. The aircraft that have sold this year must have been priced right, as their average time on the market was a respectable 139 days. Pricing alone will bring buyers back in droves like last year. Models seem always to fluctuate between overbought and oversold, with pricing the catalyst that drives the markets in both directions.
On the other end of the spectrum is the venerable Citation XLS, which continues to remain stable compared to many of its counterparts. In fact, supply sits at 15 right now, and only half of those are U.S.-based. The inventory represents just shy of 5 percent of the number in operation, making a decidedly tight market. Pricing runs from about $4 million to the mid-$5 million range and sales are moving at about one per month.
By contrast, the number of Hawker 800XPs for sale is growing and now stands at 58, or 12.4 percent of its active fleet and represents a two-year high. Seven- to 10-percent availability is generally considered normal in terms of supply of any model type. Asking prices range from $1.4 million to $3.9 million and the average is $2.33 million, down $250,000 year-to-date. The current supply translates to a 24-month absorption rate. Year-to-date there have been 28 transactions of 800XPs or 3.5 per month, compared with 30 transactions for the same period last year. Sale prices have ranged from $1.5 million– to $3.5 million.
The successor 850XP has fared much better over the past 12 months, fluctuating between seven and 10 offerings on the market, with nine currently for sale, equaling 7.5 percent of the fleet. Six of the nine 850s available are registered in the U.S., a shift in the geographic distribution from more overseas sellers in previous months. Asking prices range from $3.2 million to $5 million.
Five 850XPs have traded this year compared versus seven last year. Sale prices are grouped in a tight range from $4.2 million to $4.6 million, with the average 850XP selling for $4.28 million after 210 days of market exposure. The low was a 2006 model with 4,000 hours. A 2007 model with 1,900 airframe hours represented the peak selling at a reported $4.6 million in July.
Challenger 604 offerings swelled to 45 in July, but then retreated below the six-month moving average as buyers swooped in on deals. There are 38 available, or 10 percent of the active fleet. The majority of the supply is located in North America (25), with the remainder in Europe, the Middle East and Asia-Pacific. Roughly half have the upgraded -150 APU and about 45 percent have Wi-Fi. Asking prices range from $3.5 million to $8.7 million. Sales activity shows a rate of two per month and given the current stock, that’s about a 20-month supply.
A similar percentage of Challenger 605s are available, with most of them parked outside North America. In fact, only one third of the 30 for sale reside within N.A. That might be in part the result of economic conditions in North America from 2008 to 2010, coupled with an increase in buying activity abroad. Asking prices range from $9 million to $17.5 million (the high representing a 2013 delivery).
The supply of Global 6000s sits at just 6 percent, but lackluster sales mean that the 12 being offered represent a 33-month supply. Prices range from the mid-$30 million range and carry up near the mid-$50 million range and just one quarter of the current offerings are U.S.-based. Its market counterpart, the G550, after enduring some excruciating pain in the price department, seems to be closing in on a level that is attracting buyers. When earlier this year some early G550s fell through the $20 million floor the airplane began to receive heightened attention. That hasn’t moved the inventory needle much yet though, as choices are perched squarely at their 12-month moving average of 33 aircraft. That number represents 6 percent of the 530 in operation. Prices range from about $17.5 million to $41 million, and that wide spread is simply an indicator of the long production run the G550 has enjoyed.
Barring any market disruptions, which may prove to be an understatement given the upcoming election, activity looks poised to continue. The confluence of low pricing, low interest rates and strong stock market point to a continuation of greater activity in the used jet market through year-end.