Trouble…or just a bump in the road?

May 1, 2016 - 3:15 PM

After five years of slow growth, preowned-market sales volume headed into negative territory last year. Aviation data service JetNet reports fewer retail transactions were conducted in 2015 than in 2014, the first such decrease since 2009. Last year, 2,458 preowned business jets were sold, says JetNet, versus 2,569 in 2014—a 4.3 percent decline. Only the large-cabin category saw an increase in transactions (5.6 percent, from 770 units to 813). Activity dropped the most for light jets (11.5 percent, from 969 to 858 transactions), while turbine helicopter sales dipped 1.9 percent, from 1,434 to 1,295. Data from market service Vref indicates the same trends, according to publisher Fletcher Aldredge.

In another sign of market slack, the percentage of the fleet for sale rose last year for the first time since 2009 (when the number peaked at 16.3 percent), rising to 11.5 percent from 11 percent in 2014. Tempering the reversal, notes JetNet, the shrinking inventory of the previous five years reflects not just preowned-transaction activity, but also growing fleet size, with some 600 to 700 units added annually, while only about 200 airframes per year have been retired during the period.

If you’re looking for any sign of market resilience, you might note that business jets spent an average of 44 fewer days on the market (313) last year than they did in 2014, while the average asking price rose 11.6 percent. But the average preowned aircraft sold was newer last year than in 2014, which likely accounts for the asking price increase, according to JetNet. 

For now, micro trends continue to drive transactions. As the U.S. market for large-cabin jets strengthened over the past year, for example, “there was less emphasis on a forward-galley requirement, which is more popular with overseas prospects,” according to Andrew Bradley, president of Global Sales at Avjet.

Meanwhile, Rich Newton of Cleveland’s Axiom Aviation advises sellers to have their engines in a maintenance program. “I’ve seen several sellers pay the big bucks to enroll the engines prior to selling the airplane, recognizing that with the competition out there it would otherwise be a very difficult sale,” says Nelson, who is an accredited appraiser. 

If you’re on the buy side in this market, “you really need to define your mission profile, near term as well as long term, and buy as much technology as you can,” says Dennis Rousseau, president of market data provider AircraftPost.

JetNet believes 3 percent global growth is needed for business aviation—and preowned transaction activity—to thrive and concludes that this benchmark “may not be on the horizon in 2016.”


James Wynbrandt is a private pilot and longtime BJT contributor.