“We must not confuse the present with the past. With regard to the past, no further action is possible. ”
Hopeful signs for sellers
Activity in the preowned market continues unabated, yet at a measured pace. In fact, inventory levels are now about where they were in October 2008 (and climbing for almost a year), when the calamity on Wall Street reverberated around the globe and dealt a devastating and unprecedented blow to the new and used aircraft business.
The large-cabin, long-range-aircraft market bounced back relatively quickly, but other segments of the field are still reeling. Moreover, to the extent that any part of the business has recovered, it has largely been just in terms of inventory levels. Prices have mostly not yet rebounded, but those for some models may finally be starting to creep up.
The market is improving for some medium-size aircraft, including the Gulfstream G150, Hawker 900XP and Citation Excel, all of which have less than 10 percent of their respective fleets on the sales block at present. The number of available G150s (a thinly traded model because fewer than 100 are in operation) has dropped from a peak of 13 two years ago to four today–and three of those are based outside the U.S. During the same time frame, the number of available Cessna Citation Excels has fallen from 45 to 28. The number of for-sale Hawker 900XPs, meanwhile, has dropped from a high of 12 at the beginning of the year to just seven today.
The fact that the 900XP is in short supply is no surprise, given that it's a current production model that its manufacturer introduced just a few years ago. Still, it offers one more sign of an improving market.
Despite the reduced number of choices of these models, prices remain in check. It's hard to tell whether they're depressed or whether they're simply appropriate now that the ether has been eliminated from the market.
The recovery of the mid-size-jet segment should foster improvement for some other categories. As the market for one aircraft category tightens and prices firm up, buyers often begin to consider other, better-priced options.
With the second quarter of 2011 now in the rearview mirror and the historically slow summer upon us, we may see a small increase in business jet inventories. If we do, don't consider it much of an indicator of future direction. A better barometer will be available at summer's end, when the market typically resets and a picture of the full year begins to emerge.