2023 began with a sense of uncertainty in the private jet industry. Many wondered if the post-pandemic surge in demand could sustain itself or if a decline was imminent. While the degree and manner of this decline were unknown, the feeling lingered.
We watched, waited, and carefully monitored the changes in the market. Inventories did increase, with the number of aircraft on the market for sale doubling on average each month. However, pricing remained surprisingly steady in many segments. As the final numbers roll in, it appears that a strong Q4 buoyed transaction numbers, leading to a more successful and stable year than many anticipated.
As we look to the year ahead, we should first address the elephant (and donkey) in the room—the Presidential election. This event often brings a degree of uncertainty, but it also presents opportunities. Policy makers have hinted at potential interest rate cuts and the return of 100% Bonus Depreciation, which can stimulate the market. While uncertainty leading up to the election might cause a temporary slowdown in transactions in Q3, we believe that the benefits of interest rate stability and bonus depreciation will ultimately outweigh this, leading to a robust Q4.
The theme for this year is balance. Inventory levels have normalized, and we anticipate them to remain relatively stable. Aircraft pricing should return to a more normalized depreciation schedule, and the dynamics between buyers and sellers should continue to be evenly weighted.
The larger end of the market, which experienced more significant shifts in inventory and pricing last year, is gearing up for heightened variability in 2024. With Gulfstream’s upcoming entry into service of the G700 and the resulting trade-ins for G550 and G650 models, we anticipate continued inventory increases and pricing adjustments within this segment
One constant that continues to affect our industry is capacity constraints. Supply chains face pressure due to geopolitical tensions in the Middle East, impacting shipping routes. Labor shortages, a challenge faced across various industries, will also cause delays and affect availability not only at service centers but also in tax, legal, and escrow processes. In such an environment, time becomes the most valuable commodity in any transaction, and we anticipate needing more of it to navigate aircraft deals in 2024.
To our buyers, we want to assure you that the pricing cliff many feared is not on the horizon. Aircraft are reasonably priced, with excellent options available. Sellers no longer hold all the cards, and the pre-owned market is inviting—come and explore the opportunities it offers.
Sellers, take note that merely taking a casual photo of your aircraft won’t suffice anymore. Prepare to compete, price your aircraft right, and give yourself the time required to close deals successfully.
2024 has all the makings of a solid year for the pre-owned aircraft sales industry. For those of us who weathered the pandemic storm, rode the post-pandemic boom, and saw the market stabilize in 2023, we all deserve a year of smooth sailing and blue skies.
At jetAVIVA, we remain committed to providing you with exceptional service and opportunities in this ever-evolving industry. We look forward to partnering with you for the exciting journey that lies ahead in 2024.