Entries in Gulfstream G-550 (12)
Vol. 26, No. 1 | March 11, 2013 | Go to Charts
IN THIS ISSUE
Bluebook Perspectives: Pre-Owned Transactions on the Rise
Into the Blue: Aircraft Bluebook At-a-Glance, Piper Malibu Meridian, PA-46-500TP series
Ask Aircraft Bluebook: Can I access Aircraft Bluebook from outside the United States?
PRE-OWNED TRANSACTIONS ON THE RISE:
By Dennis Rousseau | President and Founder | AircraftPost.com
For the fifth consecutive year, pre-owned transactions for current generation business jets have shown a year over year increase. However, market inventories, expressed as a percentage of the fleet, are on the rise, while the average selling price continues a downward trend.
When we factor age-based depreciation over a 30-year lifecycle, we can garner some semblance of normalized value at any given point. However, when we consider economic events such as those over the last four years, values and selling prices can take a drastic downward turn. At the end of 2012, the average selling price for pre-owned, current production aircraft was reflecting a 17% decline in market value. Out of production aircraft slipped further to 33% under normalized values.
There are a number of factors contributing to the state of our market(s). The increase in transactions and current pricing suggests buyers are realizing substantial value in select aircraft. For example the G200, with its stand-up cabin, 3000 nm range and Pro Line 4 cockpit, had a record 27 transactions in 2012, an increase of over 300% from 2011. A 2008 year model, with a list price new of $22M, sold for $10M in the 4th Quarter 2012, with under 800 hours total time. The same $10M could buy a 2001 Challenger 604 or Falcon 2000 with 3500 hours, or a 2004 Challenger 300 with 7500 hours. Buyers seem to be looking more laterally with the perception of ‘how much value can I buy for the same dollar.’ Obviously, the newer aircraft open up greater financing opportunities as well.
Compared to 2008, when pre-owned aircraft were selling for more than they cost new, 2012 continued to adjust prices to a level commensurate with the global economic climate. On average, pre-owned business jets are selling 25% under normalized markets, which seems to be one of the driving factors for the increased transactions. Further, according to GAMA new business jet deliveries for the first nine months of 2011 and 2012 were 427 and 428 respectively. When current production pre-owned aircraft are selling for 40% less than they cost new, this can also stimulate the number of pre-owned transactions.
For the start of 2013, pre-owned inventories are on the rise; however activity levels (pre-purchase inspections, LOIs, Offers to Purchase, et al) are showing formidable signs for consistent activity.
Aircraft Bluebook – Price Digest here for you
Please contact Aircraft Bluebook if you have any specific concern in a particular aircraft market. We will be happy to share with you the most up-to-date information available for your market segment. Call us toll-free at 877-531-1450 or direct at 913-967-1956.
CURRENT MARKET STRENGTH
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.
All of the listed aircraft have a composite score that is presented in the Used Aircraft Market graph. Data points are represented in relationship to the respective new delivered historical price that is equal to 100%. The measure of change is reported in the actual percentage of value in relation to new. The delta between reporting periods can be concluded as the percentage of change.