Seller's Market
It is a seller's market, but with the right financing, engaged buyers can purchase used aircraft in superior condition, invest in new generation aircraft, or even upgrade existing aircraft for optimal operations and extended usage.
“Purchase interest in used aircraft is also very strong, but inventory availability of the most attractive models – especially those built within the last five years – is about as scarce as an available slot for a Cessna 172 VFR arrival at JFK or LHR...As a prospective buyer, the recent 'good ol' days' of plenty of available inventory at attractive and downwardly negotiable price points are already consigned to the history books."
- Rolland Vincent, President of Rolland Vincent Associates[1]
Decreasing Used Aircraft Inventory
Diminishing inventory levels reflect a limited availability of used aircraft in the marketplace.[3]
Of used aircraft, approximately 6.8% of the heavy jet fleet is for sale, while 8.5% of the medium jet fleet is available and 10.8% of the light jet fleet is up for grabs.
Potential buyers may find purchasing a new aircraft more enticing, especially with attractive new models revealed at recent air shows.
With so few late-model business jets on the used market, buyers are wise to consider one of the many new models on offer from the various OEMs, most of whom have reserved at least a few unsold delivery positions in the hope of closing year-end deals,"
- Rolland Vincent, President of Rolland Vincent Associates[1]
ADS-B Compliance Updates
The Federal Aviation Administration's (FAA) ADS-B compliance update may also influence purchasing decisions.
It is estimated that more than half of all aircraft have not been updated to comply with the FAA's looming ADS-B deadline, which would transfer additional costs to the buyer of a used aircraft and pressure them to invest time and capital for the ADS-B installation.[4]
ADS-B upgrade costs can range from $50,000 to as much as $200,000 depending on current avionics installed.[4]
For new buyers, acquiring aircraft without ADS-B upgrades also implies operational delays and interruptions. With the ADS-B compliance due date approaching, expert installers are at capacity for performing ADS-B installations and installer availability is not anticipated to improve soon.
“The ADS-B backlog situation is like Black Friday. There is a huge amount of aircraft, and only limited capacity to install the ADS-B systems – which is like hundreds of people waiting for the doors to open at a department store on Black Friday. Only so many people can fit through. Inevitably, some people will be left behind. And for aircraft, this could be as long as a two-year wait,"
- Christopher Benich, Honeywell Aerospace head of aerospace and regulatory affairs.[4]
Used Aircraft Refurbishment Boom
Numerous aircraft owners have been refurbishing their aircraft, leading to a refurbishment boom[2], with some expert shops reporting at least 50% higher demand for services.
Aircraft owners planning to buy new aircraft are refurbishing their existing aircraft to retain asset value and sell the the used aircraft at an elevated price.
A few customers also wish to recover walls or the headliner with Alcantara or Ultrasuede, and a few want IFE upgrades — for example, to replace HD-ready screens with 4K displays, Blu-ray and video on demand,"
- Alexis Ott, AMAC Aerospace's senior manager of sales and key accounts[5]
Increasing Aircraft Prices
Asset Quality Ratings (a ratio of asking price to maintenance costs required) have been trending upward for medium and large jets with a slight decline for small jets.[1]
The average asking price for newer aircraft segments in all three cabin size categories is also trending upward, with newer heavy jets up 17% year over year and newer medium jets up 13.5% year over year.[3]
What Are Your Aircraft Financing Options?
Whether you're buying new aircraft, acquiring refurbished aircraft, or scouring the market for used business aircraft to meet business needs, having the right financing option can help you take to the skies sooner.
Learn more about your financing options for new, refurbished, or used private aircraft by connecting with an experienced PNC Aviation Finance representative.
