Transactions Increase While Values Decrease in Pre-Owned Market

There should be some optimism in our industry.

Buyers and sellers are finally coming to terms with what the market will bear for a given aircraft. And with that, the pre-owned aircraft market is seeing more completed deals. The gridlock of available inventory is starting to show some movement.

Values, on the other hand, remain soft with few signs of recovery.

Some of the factors that could be making an indirect impact on values relate to finance. Major lenders are adapting to the 20-year rule. That is, the age of the aircraft and term of the loan cannot exceed 20 years. Prior to the economic meltdown, it was a 30-year rule. Of course, there are exceptions to every rule, but this 20-year rule will continue to have a softening effect on value in the pre-owned market.

Another factor that might have a driving effect is the increase in cash buyers. Cash is a hard snare to turn away from if you are selling an aircraft. In return, the cash buyer will demand exceptional equipment at a discounted price.

To a lesser extent, aircraft foreclosures might have an impact on the industry. Time and condition do account for values in the marketplace. If an aircraft is sold outside the box of reason, then civil litigation will probably ensue.

You, the market itself, the live dynamics of what makes this whole process happen, may have your own opinion too. Let us know your thoughts. 

Time and condition will play the upper hand in this market, especially when dealing with aging aircraft. Anything more than 20 years old in this market is a senior citizen.

For the most part, values for this segment remained unmoved when compared to the previous quarter.

As with their twin brethren, time and condition also have the upper hand in supporting value. Do not just look at the sale price. Also pay close attention to restorations, upgrades and modifications.

For the most part, the single category was stable.