Spring Thaw

As winter loosens its grip and spring arrives, a similar thawing process is taking place in the heretofore frozen tundra that the used-aircraft market had become. Trading has increased because sellers have accepted the new price territory that has been established-or is being established, depending on what model we're discussing. From small-cabin aircraft to large, buyers are enjoying the transition away from a seller's market.

The charts and table on this page tell the story. Values of some models have dropped more than 50 percent below their highs. As that was happening and the nation's economic forecast brightened slightly, buyers began to realize that aircraft they might have considered purchasing two years earlier for several million dollars more were on sale. Price buyers moved in on some early examples of the more popular models and quickly established market floors, allowing subsequent sales to trade off those levels. It was the complete lack of sales in previous months that created ambiguity in the market and paved the way to buyer apathy. That apathy may not have been the catalyst for the freefall in pricing but it certainly contributed to the erosion of values.

While we're now generally in a buyer's market, there are exceptions, such as the Gulfstream G550 and Citation XLS, whose inventories have been reduced substantially since buyers have reemerged. With further buyer action in what is typically an active second quarter, we may soon see more models with reduced choices and a corresponding increase in prices-something that seemed inconceivable even six months ago.

It remains unclear, however, whether some aging aircraft will participate in an upswing. This segment is more about cost of operation than it is about acquisition price and that's probably a good thing, as fewer and fewer lending institutions seem to be chasing 20-year-and-older aircraft finance business.