Colibri: Historically low levels of pre-owned fleet for sale
Analysis from pre-owned broker, Colibri Aircraft, reveals that only around 4.65% of the pre-owned jet fleet is for sale – the lowest level since records began in the 1980s. In numbers, around 1134 private jets are for sale globally, compared with approximately 1,839 in June last year, a decline of more than 38%.
Low inventory, plus a drop in new jet deliveries – down 20% from 2019, the lowest number since 2004, highlights the high levels of demand in the private jet sector.
Oliver Stone, MD , Colibri Aircraft said: “Buying private jets is extremely difficult right now, particularly for European compliant aircraft. Multiple buyers and a shrinking inventory of available aircraft have made a very competitive market.”
Stone said he recently tried to purchase a late model Challenger 650 for a client, and at least six offers were made for this aircraft, which ended up trading close to its headline asking price. “To say that the market is competitive at the moment is an understatement,” he said.
Why there has been a decline in the supply of private jets? Stone explained the decline has been led by the US, which “re-opened far quicker” than other parts of the world.
“Key factors driving the dramatic drop in the supply of private jets for sale was a strong desire to travel in an environment with far lower risk of Covid transmission and a significantly reduced airline service making airlines less convenient, which meant that more owners of private jets wanted to keep hold of their aircraft and a large number of first-time buyers entered the market,” said Stone.
In addition, surging asset prices in stock markets and real estate, historically cheap debt due to government stimulus, and depreciation benefits that applied to private jet purchases removed many of the financial pressures owners might have been under to sell. “It also encouraged new buyers to act,” he said.
Also, inventory declined so rapidly Colibri found that current owners are often holding onto their current aircraft as they struggle to find a suitable replacement in such a supply-constrained environment.
A big reason for the popularity of the pre-owned market compared with new aircraft is the price. Colibri Aircraft has seen depreciation as a constant feature of aircraft since the financial crisis in 2008.
To illustrate this point, of the top 20 best-selling jet types last year, 14 of these models were trading for under $2.5m. Given that the lowest price for a new private jet (a single engine, light jet) is around $3m, it suggests that many buyers are taking advantage of the value of pre-owned aircraft.
Another difference is the purchase cycle. Pre-owned aircraft have a shorter purchase cycle taking several weeks once the right aircraft has been identified. For clients where timing of entry into service is critical, pre-owned jets normally offer a faster path to do so. This was especially true during and in the legacy of Covid-19.
Finally, the difference in size of the inventory available between pre-owned and new is large. Inventory of new aircraft available each year is determined by OEMs which usually try to keep a certain inventory level to maintain stability. As a result, new buyers have only around 700 aircraft per year to choose from, according to Colibri. Compare that withthe pre-owned market, which currently comprises over 20,000 jet aircraft and growing. The size of the pre-owned jet fleet leads to a larger number of transactions each year.
At a glance:
- Around 4.65% of the pre-owned jet fleet is for sale – the lowest level since records began in the 1980s
- Around 1134 private jets are for sale globally, down 38% on last year
- Drop in new jet deliveries – down 20% last year