July 11, 2024
The number of preowned private jet transactions completed in the second quarter of 2022 dipped from 316 to 310.
However, a strong Q1 left the first half used private jet transactions up 13%. There were 598 deals, according to data from members of the International Aircraft Dealers Association (IADA).
“While closed deals in the second quarter of 2022 remained healthy, a decrease in acquisition agreements and deals under contract indicates the market is returning to normal levels from the frenzied pace of 2021,” says IADA Executive Director Wayne Starling.
Still, several top brokers believe several key factors will sustain demand.
Jetcraft’s Chad Anderson notes, “Commercial air service has not improved. If anything, they have further degraded. The ultra-high-net-worth population continues to increase, and fractional/charter company demand continues to stay high. The extra quality supply that comes to market in 2022 will get absorbed, creating price stability. But we do not expect continued price increases realized previously in 2021.”
Paul Kirby of NetJets-subsidiary QS Partners adds, “The historically strong charter market continues to fuel light and mid-cabin segments as there are simply not enough airplanes in the fleet to satisfy demand. Until such time as charter demand wanes, those markets are likely to remain strong as operators continue buying aircraft for core fleet.”
However, there are questions about how long the good times will continue.
Kirby continues, “The macro-economic uncertainty, combined with rapidly rising inflation and stock market volatility, has created a sense amongst buyers of a looming market correction. This sense is also starting to impact interest levels as buyers believe waiting will result in more favorable pricing.”
Kyle Wagman of Leading Edge Aviation Services observes, “We have hit a part of the market cycle where things have leveled off, a plateau of sorts. With interest rates rising and buyers that are wary of getting their toes wet in this market, I sense a cool down till fourth quarter.”
At the same time, SVP Private Bank’s Mike Francis sees conflicting indicators.
“Outlook seems a bit messy at the moment, as many positive signs are there are negatives. A looming recession, inflation, supply chain issues, and fuel prices are all drags, and there are more. Demand, I expect, will continue. Even if it falls off a bit, I’d in some ways prefer that as it’ll help the market get back to its normal equilibrium. I’m seeing a lot of potential buyers get turned off to the prospect of buying a jet due to the premium they need to pay and/or the lack of inventory.”
In December, Jetcraft upped its five-year forecast for pre-owned private aircraft sales from $49 billion by 17% to $57 billion.
Last week, executives speaking at Corporate Jet Investor’s Town Hall were muted in their outlook. They see slackening charter demand and increased costs pressuring the market.
Steve Varsano of The Jet Business told listeners he had seen 17 price reductions over the past several weeks, something that had been absent from the market over the past year.
