It is absolutely amazing to see what the prices on the pre-owned jet market have done. What’s even more amazing is the lack of people standing in line to take advantage of these deals…
So far only a few of the aircraft markets have been picked through. Like what happened a couple of months ago with the G V’s. A few savvy buyers bought airplanes, for less than you’ve heard, and now everybody else is left scratching their heads. There are a handful of airplanes in each market that are ripe for the picking, but nobody’s getting in to them? Crazy!
I’m sure a few of you are aircraft owners… why wouldn’t you want to take a hit on the resale of your existing airplane, and make up for it twice on the upgrade? The only way out of this is for people to start buying again. Its going to happen, but wouldn’t you want to be one of the ones that buys a $4.8M CJ3, $11M Sovereign, or a $19.0M 2000 EX?
I’d like to hear your thoughts if you own an aircraft and have been considering your options.
You answered your own question…No one is upgrading now because they are getting killed on the resale. Whatever you lose on the resale gets added to the purchase to determine true cost. The only buyers are the super wealthy who can wait to sell their “other” aircraft when the market picks back up and they know they can steal it from you now. Just like the current real estate market. It’s a jungle out there.
Thats not the case… people are upgrading, but I want to know why MORE people aren’t upgrading. Guys that are taking hits on their Citation V to the tune of about $800K are heading in to the Encore because they can save $3.0M on the acquisition.
I just don’t think a lot of these guys know that the prices on the newer stuff has come down in such a tremendous way, thats all.
Trust me they know… I believe, and I speak this from a corporate aviation manager’s point of view, that there are several dynamics involved.
I’ll go first with the one that angers me the most…the ignorant, naive politicians and media that have vilified the use of corporate aircraft. I could rant on about it, but I won’t. Those that don’t get it won’t, as sadly they’ve fallen into the same ignorant perception that the politicians and MSM spew. It’s just one of the factors that is causing the large number and devaluation of available aircraft, and the peripheral fall of the aviation business sector in general.
Next is the overall downturn in the world economy… We all hear about and deal with this everyday. It’s cutback, cutback, cutback… We’ve all seen our cost of living, and the cost of doing business, go up…but our incomes have either stayed relatively flat, rolled back, or even gone away. The domino effect reaches far and wide. Those that do not believe in trickle-down economics are living under a rock. It’s a difficult time and the recovery will be long and hard… pardon the pun, but figuratively true just the same…
Those that are in a position to upgrade or buy face several other challenges. An existing aircraft owner that wants to upgrade has to face the reality of disposing of the existing aircraft in a glutted, depressed market. And even at give-away pricing there just is’nt that many players. The few buyers out there, and those looking to upgrade, then have to battle with the lenders to secure financing. There are lenders out there writing paper but the conditions are much more stringent, and at rates that are notably higher. Several years ago it was cheap to borrow money on aircraft, and today it’s just not as attractive. Even solid businesses and individuals that are a good credit risk are finding it difficult to borrow.
Will it all come back around to glory days again?..to a degree. When and how difficult is it going to be to get there?..now where did my crystal ball go… Oh yeah, it shattered…
And that’s azav8r’s perspective from the cheap seats…
Our owner is doing his annual “get me information on…” right now. The G5 sure looks good to me, especially at these prices. I give us at least 50/50 that we will still have tip tanks a year from now.
