Friday, June 30, 2017

Wanna Buy a Business Jet?

In a recent article on the FT website, business jet broker Colibri Aircraft says that there has never been a better time to buy an aircraft. They also say that prices are at an all-time low.

They compared the average sale prices of six different aircraft in every April between 2014 and 2017. One of the aircraft they looked at, the Citation Mustang, saw a 10% decrease in value.

But it was the top end of the market that saw the steepest declines.

Colibri also looked at the Bombardier Global XRS. In April 2014 the average asking price for a pre-owned XRS was around $31 million, but by 2017 it had fallen to around $20 million, a drop of around 34%.

Whilst this sounds like good news for buyers, for sellers of aircraft it is the opposite. The Colibri research also shows that the average time to sell an aircraft is getting longer as well.

In April 2015 and 2016 the average time of an aircraft on the market hovered around the 300 day mark. In April 2017 this was closer to 400 days.

For both buyers and sellers the lower prices and longer time on market can lead to a vicious circle.

The more choice a buyer has, the more value they want. Brokers have seen buyers expressing interest in an aircraft, only to hold back on completing a transaction because a better aircraft has come along.

For sellers, rejecting a lower offer for an aircraft can lead to months longer on the market, which in turn lowers the value of the aircraft. Sometimes even lower than the offer they originally rejected.

(Alud Davies - Corporate Jet Investor)

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