2014, A Year in Review

By Carl Janssens, ASA 

With only a few weeks remaining in 2014, the pre-owned business aircraft market has definitely experienced recovery from the 2009 recession. Sales are up, days on market have been more refined and the opportunities for finding discounted pricing are increasing. The recovery appears to be in full bloom; however, depreciation still remains unchecked. What was said last year is true: “Flat is the new recovery.” Prices for the most part have not returned to the good old days of a bull market. Granted, the Gulfstream 650 has been an exception to the otherwise flat trend pattern, but the G650 is new technology and design that has been well received in the global jet market. And, looking forward to the new G500 and G600, this will no doubt follow in the same footprint of the G650. As for their legacy brethren, the G-IV and G-V, one can expect values to decline as the new technology enters the labor force. 

And speaking for the labor force, one should expect to find business aviation in the trenches of making good business happen. Where else can you find oneself on the east coast and about eight hours later on location somewhere in Europe? Consider the advantage that business aviation provides in allowing companies to deploy that in-person human factor, which is at the core of what makes an economy grow and business flourish. 

Medium jets, such as the Lear 75XR and the Citation Sovereign+ have been respectful in maintaining minimal depreciation in the value equation. Mission, capability and operating costs have been examples of defining better value retention when compared to predecessor models. Light jets, such as the Phenom 300 and Citation CJ4 have likewise demonstrated favorable stability in the marketplace with limited numbers of inventory being offered for sale.

The turboprop market has likewise been on a stable path of recovery. Late model King Air 350, 250 and 90GT series are nearly at a premium, with value retention the best it has experienced in the last few years. The Pilatus PC12 has also had a remarkable year. Mission, technology and capability have been a PC12 choice platform for operations and in doing so as demonstrated stabilized values in 2014.

The piston market in the twin category likewise is proving to have a better year in retaining value. For the most part, limited airframes being manufactured are indirectly helping the retention level of values. 

For legacy pistons, those aircraft that are 20-years-old or more are all selling at competitive days on market. A market priced aircraft in the category won’t last long. Some buyers prefer the former “steam gauge” technology over the expansion of glass in the cockpit. This also equates into not only stable values, but also possibly leaning toward a premium value for the well-equipped, maintained and priced piston in this configuration. 

The helicopter market continues to draw its strength from competition on a global level. Time and condition along with remaining useful life on components are significant factors driving this market. 

In all, 2014 will go down in the books as a year for recovery in the pre-owned aircraft market.

This article originally appeared in the Winter 2014 issue of Marketline. Click here to read the full issue.

Current Market Strength (CMS)

CMS represents an aircraft’s current strength in the market. An A+ rating indicates the aircraft is enjoying a very firm market. Prices for an A+ aircraft are steadily rising, and holding times are very short or nonexistent. At the opposite end of the spectrum, a C- aircraft is one experiencing a very soft market. Its price is commonly discounted, and it often sets on the ramp in excess of eight months before selling. It is important to remember that Current Market Strength is not a forecast. It is valid only at Marketline’s effective date of release. See chart below.