Market Update July 2022

Market Update July 2022

Date

July 15, 2022

Author

Emily Deaton, CEO JetAviva

July and August have historically proven to be slower months in the annual sales cycle.

And for the tenured sales person who knows to expect this, it can still make anyone who earns a living on commissions a little tense as vacations, heat waves and holidays make everything feel a little sluggish. This summer, the aviation market as a whole seems to be taking a collective breath. And frankly, it’s needed on many levels. After a two-year run of record demand and declining or non-existent inventory levels, there is change in the air — and it seems that it will come upon us rather quickly.

Inventory levels are climbing. They have been doing so quietly since February — yet the rate of climb jumped enough in June to get people’s attention. Case in point: in the two weeks prior to the drafting of this article, across all business jet makes and models, 98 aircraft were newly added to the market.

For some historical context, inventory levels had been in a state of steady decline since July of 2020. In the markets we track closely here at jetAVIVA,1 the number of aircraft for sale peaked at over a thousand units before pandemic-driven demand became a factor, and reached the bottom in February 2022 with a mere 258 aircraft available to choose from before the numbers began inching upward.

In addition, aircraft are starting to remain on the market for longer and we are beginning to see something from the days of old: price reductions. It is important to note that pricing data always lags…valuations of aircraft are dependent upon sold comps, and accurate sold data can be hard to come by and take time to collect. At jetAVIVA, we have a team of analysts that earn their keep by mining that data for us in real time. But they also track something else that is perhaps more valuable: “take pricing.”

For the past year, the price point being asked for by the seller was the only number they were willing to take – and they were expecting multiple offers and a bidding war to drive that number even higher. Not so now. In many markets, savvy buyers can make offers below ask, and have the pleasure of negotiating again.

Still, we are on the front end of this data and in the early days of what has the makings of a trend. But, there are still plenty of pockets of opportunity. In certain markets you can be the only aircraft available for sale, and as a seller, still be in the driver’s seat. In other markets (the Pilatus PC-12 NG, and Phenom 100 come to mind as easy examples), we are “past the peak” and buyers should be paying attention.

Additional inventory and pricing stabilization are healthy changes for the aircraft market — and can be good news for both buyers and sellers.

Sellers should bear in mind that buyers, of which there are still many, have had enough of overly-inflated values, demanding conditions, and lack of options; and have opted to sit on the sidelines. These shifts in pricing and availability will unlock opportunity and bring buyers back into the market. Properly priced aircraft can still move quickly and while generating good returns.

Buyers — in all honesty, now is the time. This summer is a great time to consider making an aircraft purchase. Contractual power is with buyers right now in many market segments, but it will shift back to sellers in the fourth quarter as timing pressures, tax incentives and limited pre-buy availability will increase demand, reduce opportunity, and limit your options.

I do not know what next year will bring, but I do know that if the last two years have taught us anything, it is that nothing is certain. Pandemics, geopolitical tensions, supply shocks, market volatility, labor shortages, and capricious lockdowns have created disruptions that extend far beyond business aviation. Here at jetAVIVA, we use data and our collective industry experience to enable our clients to make informed decisions. We can’t predict the future — but based on what we do know — we expect cooler temps and cool heads to lead the way out of this summer slowdown into a brisk and busy Q4.

1Challenger 300/350. Citation Mustang, M2, CJ, CJ1, CJ1+, CJ2, CJ2+, CJ3, CJ3+, CJ4, Encore, Encore+, Excel, XLS, XLS+, Latitude, Longitude, Sovereign, Sovereign+, X, X+. Embraer Phenom 100/E/EV, Phenom 300/E, Legacy 450/500, Praetor 500/600. Falcon 2000(S/EX/LX/LXS), 7X, 8X, 900(C/DX/EX/LX). Gulfstream G-IVSP, G200, G280, G300, G350, G400, G450, G500, G550, G650. Honda HA-420, Elite/S. King Air C90 (A/B/GT/Gti/GTx/SE), B200(C/GT), 300, 350. Pilatus PC-12 (45/47/NG/NGX), PC-24. Piper M500, M600, Matrix, Meridian, Mirage. Socata TBM-850, TBM-900, TBM-910, TBM-930