Banyan recently attended several industry conferences along with some of the most respected aircraft dealers and financial institutions. The reports from these conferences were both encouraging and concerning. The encouraging news (for the dealers) was that aircraft sales transactions had increased appreciably during the first quarter of 2012. According to data released by the market information firm JetNet, pre-owned business jet and turboprop inventories continued to subside in addition to the “average-days-on-market”. Similar findings were reported by the research firm Amstat whose research revealed fewer aircraft available for purchase today than 1-year ago. This is a continuation of a trend we’ve also observed in our own inventories. These are simple trends that indicate fewer available aircraft will soon mean higher prices, or at best, sellers that are less willing to deal.
It’s been our observation that finding “great deals” in most of the various jet and turboprop markets is becoming far more challenging. Many previously cautious aircraft dealers have started purchasing aircraft again for inventory. Most of the dealers we’ve spoken with have reported a flurry of activity in the first quarter. These are all very encouraging signs and we can only hope it’s sustainable. We’re all wondering if this is just pent-up demand? Historically, aircraft sales have tracked closely with the stock market and this year is proving no exception. This trend appears to be applicable only to pre-owned aircraft. Ironically, new delivered piston, turboprop and most jet aircraft deliveries are all down. The large cabin jets are experiencing robust sales with Asia being a leading consumer.
The discouraging news came from the banking community. It seems that new regulations being enacted within the banking world will make it even more challenging or at least costly to finance private aircraft. The days of buying an aircraft with a small 10% down payment financed over 20-years are probably gone for good. Only the strongest of borrowers who don’t need the financing will qualify for those kinds of terms. Credit is available but the conditions need to be right. With the likelihood that credit will soon be tightening and used aircraft prices will be rising, now’s the time to buy!!!!
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