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Trying to untangle the preowned marketplace in 2024

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Wayne Starling
Executive Director, International Aircraft Dealers Association

SalesAs 2023 wrapped up, the marketplace for preowned business aircraft was a jumble. Some aircraft dealers were still coming on strong after a period of prolonged record-setting success. A few saw things slow down quickly after the high-flying days of post-pandemic bizjet sales when transactions were through the roof.

Will the 2024 market be upbeat, choppy, turbulent, or stable? Stability is a very good bet, but not necessarily guaranteed. Every quarter, the International Aircraft Dealers Association (IADA) surveys its members to get a sense of where the used aircraft market has been and where it’s headed. Since this group handles more than half of the world’s preowned aircraft sales, their insights are especially important. They paint a much clearer picture than any single dealer.

From the IADA survey, market projections for the next 6 months skew a little lower. And the market looks like it will be a little more seller-driven than buyer-driven going into 2024.

Legacy aircraft sales slower, lower

“Isolated legacy aircraft sales have slowed, and thus supply is building. However, prices are not diluting at a corresponding pace, but falling,” says Johnny Foster, President & CEO of OGARAJETS, an IADA-accredited dealer in Georgia. “This segment will likely lead to a pull-back in the market. We had a full pipeline through year-end and are carrying an additional 25% of business into the Q1 2024. However, new business feels like it is slowing. That said, this is typical of the Q1, so I am not concerned.”

“I can’t imagine we can keep pace in 2024. But then, we have been saying this for the past 3 years,” adds Aviation Tax Consultants Principal & Founder Daniel Cheung, CPA, a Verified Products & Services IADA member in Arizona. “I think the market will slowly get back to normal.”

Is stability coming?

pricing


Most respondents anticipate a slight decrease in pricing, a slight increase in supply, a stable to slight decrease in willingness to inventory, and mixed results in demand projection. IADA survey participants include IADA-accredited aircraft dealers and the IADA-verified professionals who support sales transactions, as well as the bizjet industry, including financiers, lawyers, tax and title consultants, maintenance providers, and support services. At the end of 2023, their opinions were mixed.

It should be noted that the perception survey was administered prior to the Federal Reserve’s decision in mid-December to maintain interest rates at their current level. The Fed also signaled possible rate cuts in 2024 and a scaling back of the fight against inflation. That is somewhat noteworthy in that some financiers have pointed out that all-cash deals are on the increase.

There are deals to be made

While there may be some uncertainty surrounding the future impact of interest rate cuts, there are some very good reasons for aircraft buyers to seek out the best deals. “Quality aircraft, at the top of each market, Level A, are selling. Level B and C quality are slower to sell, and D will not sell,” explains Axis Jet Founder Matt Bosco, a dealer in California.

“As the market continues to normalize, buyers have the opportunity to select from a larger supply of aircraft than has been available the past several years, at pricing that is more attractive,” notes Holstein Aviation Co-Founder & President Shawn Holstein, an IADA dealer in Indiana. “Having a trusted aviation partner to help navigate the current market environment is critical to success.”

Among the uncertainties in 2024, in addition to finance rates, are the effects of regional conflicts in Eastern Europe and the Middle East, business aircraft inventory levels, and a presidential election in the United States. The Russia-Ukraine war has affected aircraft traffic in Ukraine, and it has also had a detrimental impact on the large Russian domestic and international aviation industry. In addition, the Israel-Hamas war has had a negative effect on that region’s reliance on aviation.

“The market in Sub-Saharan Africa appears to be remaining fairly robust at present, even with increasing inventory and predictions of softening pricing,” points out CEO Neil Howard of Absolute Aviation, an IADA dealer in Africa. “Strong demand is coming from operators who fly tourists in and out of remote or not easily accessible safari camps in aircraft such as the Cessna Grand Caravan. This is a sector which continues to grow and attract foreign tourists, even among regions where there are regional conflicts, and therefore some safety risks.”

Where is the inventory headed? 

Importantly, IADA dealers are tracking inventory levels closely as a sign of the overall health of the preowned aircraft market in 2024.

“Inventory levels began to level off early in Q4 2023, and we also saw an uptick in buyer demand, which is typical for this time of year,” says jetAviva CEO Emily Deaton, an IADA dealer in Florida. “We enter 2024 with fairly low levels of inventory and stable aircraft values – presenting a good dynamic for sellers in the first half.”

“Certain markets are more balanced, some markets continue to be low-inventory and more seller-driven, but, in general, a much more balanced market is coming,” adds Essex Aviation Group President & CEO H Lee Rohde III, a dealer in New Hampshire.

Aircraft Sales Director Jim Worrell of Jet Access Group, an IADA dealer in Indiana, comments, “Elections always cause buying paralysis. This one will be no different.”

It’s true that, historically, an election year usually gives fence-sitting buyers a reason for delaying their purchases, including new aircraft buyers. But, this year, who knows for sure?

Getting a good deal

While uncertainty is typically not good for business, with the right counsel, savvy buyers and savvy sellers could very well find an opening for a high-value deal.

Summing up, Leading Edge Partner & Senior Exec VP Aircraft Transactions and Consulting Frank Janik says, “Our brokers and consultants are as busy as ever working to put together deals. Now we just need buyers willing to pull the trigger and buy.”

Janik adds, “In short, we have a pricing chasm between most buyers and most sellers. The majority of buyers are not in a hurry because they are waiting for lower prices or even ‘The Big Correction,’ and most sellers are not in a hurry because they are under no financial duress to sell and don’t feel the need to lower their expectations.”

Clearly, the 2024 market for preowned business aircraft is complicated. We are eager to see it unfold.


WayneWayne Starling is the executive director of IADA. He has specialized in aircraft finance for nearly 20 years, recently as senior VP and national sales manager for PNC Aviation Finance. He has served as a board member of IADA’s predecessor organization and also on the board of the National Aviation Finance Association (NAFA). Starling has also served on the NBAA Leadership Council.