Preowned Annual Report

Business Jet Traveler » December 2013
While buyers have held the upper hand for several years, we may now be witnessing a slight shift toward more equal power for buyers and sellers.
While buyers have held the upper hand for several years, we may now be witnessing a slight shift toward more equal power for buyers and sellers.
Tuesday, November 26, 2013 - 4:45pm

As inventories decline, a buyers' market may be fading.

This year turned out better for business jet sellers than some analysts had predicted, as quite a few models staged impressive gains. Gulfstream’s G550, Bombardier’s Challenger 300 and Cessna’s Citation CJ3 are among the aircraft that exhibited clear signs of a market traversing the slippery slope of the bust-to-boom cycle.

That doesn’t necessarily mean that their values increased, but their inventories shrank—a change that generally leads to price appreciation sooner or later. For some models, the inventory reduction represented a fresh development. In other cases, the decline continued a trend that had begun before 2013.

Resigned to the misery that the market has dealt them over the last five years, sellers seemed to resist brokers’ advice that they needed to reduce their asking prices in order to have any hope of rolling out of their current aircraft and into other ones. The only way to achieve equilibrium has been to lick the wounds on the sell side and take advantage of market forces on the buy side of the equation. For example, a GIV owner—who may have seen his aircraft’s value plummet from $15 million to $5 million in five years—might take some comfort from knowing that he can now buy any GIV-SP for what he paid for his current model and might even be able to get into an early GV for $15 million or so.

Of course, the first question such buyers ask is, “Has the market stopped going down?” Having answered that query incorrectly at least twice since 2008, I now usually reply, “Values are so low today, what does it matter?” Admittedly, that’s easier to say when you’re not the one with seven-figure money at risk.     

What’s next? Some believe that 10-year-old and newer aircraft may be oversold and could actually tick up in the next 12 months. Though others might consider that notion preposterous, keep in mind that people usually start saying we have a buyer’s or seller’s market when we’re actually beginning to see a change in the other direction. While buyers have held the upper hand for several years, we may now be witnessing a slight shift toward more equal power for buyers and sellers. 


Bryan Comstock (bcomstock@bjtonline.com) is president of Jeteffect, a jet sales and acquisitions firm headquartered in Long Beach, California.

 

Viewing this report requires Adobe Reader be installed on your device. If it's not currently installed, click here to download.
Download Adobe Reader

FILED UNDER: 
Share this...

Add your comment:

By submitting a comment, you are allowing AIN Publications to edit and use your comment in all media.

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
 

Quote/Unquote

“[New billionaires in fast-growing countries] have to buy longer-range airplanes. If you’re flying from Mongolia to Nigeria, it’s either a three-day journey flying commercial or a nine-hour flight on your jet.”

-Steve Varsano