jetnet releases business aviation market information

November 14, 2019

JETNET LLC, the leading provider of corporate aviation information, has released September 2019 and the first nine months of 2019 results for the pre-owned business jet, turboprop, piston, helicopter, and commercial airliner markets.

JETNET has reviewed key worldwide trends across all aircraft market segments, comparing September 2019 to September 2018. For the first nine months of 2019 there were 6,402 pre-owned jets and helicopters sold. This is a decrease of 954, or 13% fewer sale transactions compared to 2018, across all market sectors. The Piston Helicopters market was the only one to show an increase, gaining 4, or .6% more used helicopter transactions.

“Fleet For Sale” percentages for all market sectors, except for Business Jets and Piston Helicopters, were down in the September comparisons, increasing 1.5%, or 131 aircraft overall. Business Jets showed the largest increase in the percentages For Sale compared to the other markets. Business Jets For Sale percentages are at 9.8% compared to 8.9% last year at this same time, an increase of 0.9 percentage points.

The increase in Business Jets For Sale percentage shows the industry remains below the 10% mark and in a seller’s market. Inventories of pre-owned business jets for sale have increased and are now headed to the 2,200 mark as well, at 2,187 for sale.

Business jets are showing a decrease (16.9%) in pre-owned sale transactions (including leases) in the first nine months of 2019 compared to the same period in 2018. However, business jets are taking 9 fewer days to sell, 276 days on average, compared to 285 days last year. Business turboprops average days on the market increased by one day compared to last year as well, while sale transactions declined by 12.2%.

Business piston aircraft have been reported as well. JETNET does not cover all piston aircraft inventory or sales. Two observations are noteworthy. The percentage for sale is more than 10%, and YTD full sale transactions are down 19.9% compared to the 2018 YTD numbers. Average days on the market for piston aircraft saw an increase of 28 days compared to last year.

Turbine helicopters showed a decrease of 9.7% in YTD sales transactions, whereas piston helicopters saw an increase in YTD sale transactions of less than 1%, at 0.6%.

As reported by the revised GAMA report, new business jet shipments were 333 (316 previously reported) in the first six months of 2019, compared to 260 in the same period in 2018. This revised report showed 52, or 18.5% more, business jets in the first six months of 2019, as Dassault Falcon Jet reported 17 deliveries not previously reported. The new business jet delivery growth in the first six months of 2019 compared to a decline of 308, or 21.5% fewer used business jet transactions. The next GAMA report is scheduled for November 13/14 and will report the first nine months of 2019.

Historically, there has been a one-year lag in new business jet deliveries versus pre-owned sale transactions. However, we find ourselves on new ground, as used inventory levels were once correlated with new sales such that most new owners needed to sell their existing aircraft before a new delivery took place. Of course, this is still true, but pre-owned inventory levels are no longer a reliable indicator of new sales. This relationship may no longer hold as true, due to the sharp decline in the realized used aircraft residual values. The price differential of new versus used has made used more attractive. However, most aircraft brokers will explain that the reduction of pre-owned sales in the first 9 months of 2019 is not so much about declining demand as it is about a lack of aircraft to choose from for the discerning buyer at the right price.

Of course, other factors are in play as well, such as when the U.S. enacted the 2017 Tax Cuts & Jobs Act into law on December 22, 2017. Under the new act, taxpayers may be able to deduct up to 100 percent of the cost of a new or pre-owned aircraft purchased after September 27, 2017 and placed in service before January 1, 2023.

This 100% expensing provision is a huge bonus for aircraft owners and operators. After December 31, 2022 the Tax Cuts & Jobs Act decreases the percentage available to depreciate qualified business jets each year, reducing it by 20% annually until December 31, 2026.