What Goes Around Comes Around During Economic Recoveries
Vol. 24, No. 3 | September 13, 2011 | Go to Charts
by Carl Janssens, ASA | Aircraft Bluebook — Price Digest
Pick your adjective.
A wide disparity exists in today’s pre-owned business aircraft market, and just about any adjective will accurately describe some part of the market.
Great can be used to describe late-model large-cabin global business jets, which include models such as the Global XRS, Dassault Falcon 7X and Gulfstream G550.
Then there is the awful when dealing with a legacy business jet punching through its 30th anniversary of service.
For a while now, there have been at least two distinct markets. This scenario is not news, yet many in this industry seem puzzled about market dynamics.
Why does the pre-owned market appear to be good, bad and confused? The answer is the closed traffic pattern around the economy. As the recovery stumbles along, confidence remains shaky. We can’t break out of the pattern. To make matters murkier, the preseason presidential election rallies are in full swing with the all-out campaigns next. Oh joy.
For this edition of Marketline, I could not find an angle that hasn’t already been explored by someone else. I went to the Bluebook archives and pulled out an Aircraft Bluebook Marketline from 1992 for inspiration, and I think I have found a good way to predict what’s next in the economy. Even in this lethargic economic recovery, what goes around comes around. Historically, there has always been an economic recovery followed by a peak and then another slow down.
Marketline has done a pretty good job at reporting trends. The pre-owned market knows its position in this cycle. Someone out there is bound to make the calculated decision to buy now rather than later realizing the upswing is on the way.
Increased — 9
Decreased — 353
Stable — 561
The jet segment experienced few positive moves. Early Citation Sovereigns edged upward. The Gulfstream G550 saw the greatest value increase — by more than $2 million.
Decreases affected all categories. The majority of the jet market was reported as stable, though.
Increased — 23
Decreased — 74
Stable — 508
The turboprop market continued to demonstrate signs of stability, which are good signs of an economic recovery in progress. Turbine-powered ag planes continue to be nearly nonexistent in the resale market. Late-model twins, such as the Beech King Air 350i and the B200GT, likewise are nearly unavailable. Inventories available for sale held in check or slightly increased when compared to the previous quarter.
Increased — 58
Decreased — 17
Stable — 582
Increased — 144
Decreased — 225
Stable — 2174
The piston segment has had the least amount of price change activity. Even though sale prices were stationary when compared to last quarter, transactions were on the rise. (Refer to the graphs that follow.) Bargain hunters also appeared to have given up their quest for the deal of the day and have taken their place on the fence to wait and see. Wait too long, and it might cost more to buy tomorrow.
Increased — 65
Decreased — 92
Stable — 910
Helicopters are continuing to show some signs of stabilization. Reported values for the majority of this segment remained unchanged when compared to the previous quarter. The Robinson R44 and R22 continued to edge upward about $8000 to $9000 in retail value.
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