JetNet reviews business aircraft markets amid COVID-19 crisis

JetNet LLC, purveyor of aircraft fleet and market intelligence, has released its review of the market for business aircraft in the first half of 2020 and amid the global COVID-19 crisis. To add context to these findings, Paul Cardarelli, JetNet vice-president of sales, offered these comments.

Business aviation wants equal access to Canada's major airports, especially during periods of construction or runway work. "Their default is airlines can come and go as they please, and we'll put bands in place for non-airlines," said one operator. Eric Dumigan Photo
The year-over-year sales for the first six months of the year is down 19 per cent in 2020 from 2019, according to JetNet. Eric Dumigan Photo
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“Make no mistake, the market for business aircraft is under stress and this crisis is not helping. But many of the underlying reasons for this stress were in place prior to the crisis. So far this year brokers, dealers and sellers of business aircraft are showing restraint to not overreact to the negative stimuli that now surround the market. They are taking a short-term position on the crisis — a temporary anomaly that can be waited out. As a result of this discipline many key market metrics have yet to turn exceedingly negative,” said Cardarelli.

Inventory — There are at the time of this writing 2,264 business jets offered for sale, 10.07 per cent of the in-service fleet. This is technically a buyer’s market but just barely so and has held steady between 10.1 per cent to 10.3 per cent since April. While there has been an increase of aircraft coming to market in 2020 it has not been so much as to move market into gross over supply and it is nowhere near the recessionary days of ten years ago when the inventory of business jets for sale swelled to nearly 18 per cent.

Pricing — Although softer than in 2019, there is no wholesale degradation of prices for aircraft listed for sale on JetNet in 2020.

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Retail Sales – Down 19 per cent (from 1,169 to 947) for pre-owned business jets sold and leased in the first six months January to June year-over-year 2019 vs 2020. Certainly, that is substantial. But brokers and dealers report that phones have been ringing with calls from buyers. Therefore, the reduction in sales seems less about declining demand and more about sellers not yet capitulating to distressed market offers.

What has changed this year is the composition of what’s selling — a bit older, a bit larger, and less expensive than last year. For January to June of 2019 the composite of pre-owned business jets sold was a 2004 model priced at US$4.4 million with the light/super light jet category leading the market with nearly a 30 per cent share of all pre-owned business jets sold. In 2020, the composite is two years older, a 2002 model priced at US$3.7 million with mid/super mid-size jets as market leader at 27.25 per cent of all jet sales, up two per cent year-over-year. The light/super light and large/long categories are off in market share this year by 2.7 per cent and 0.5 per cent respectively.

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