JETNET September 2011 pre owned market information


JETNET has released data for September and for the first nine months of 2011

has released September 2011 and the first nine months of 2011 results for the
pre-owned business jet, business turboprop, and helicopter markets.

market summary highlighted in Table A are key worldwide trends across all
pre-owned aircraft market sectors, comparing September 2011 to September 2010
as well as year-to-date (YTD) figures.

Key Metrics:

For Sale
inventories continue to slowly decline (September, 2011 compared to 2010)

  •  Business jet inventory For Sale at 13.8% (down 1.3 points) from 15.1%
  •  Business turboprops For Sale
    at 10.1% (down .6 points) from 10.7%
  •  Turbine helicopters For Sale at 6.6% (down .4 points) from 7.0%
  • Piston helicopters For Sale at 6.4% (down .2 points) from 6.6%

Full Sale Transactions show mixed results (YTD 2011
compared to 2010)

  •  Business jets (up 11.0%) showed double-digit percentage growth
  •  Business turboprops are down .9%
  •  Both turbine (down 11.6%) and piston helicopters (down 17.6%) show
    double-digit declines

Average Asking Prices show mixed results

  •  Piston helicopters are up 5.6%
  •  Business jets (down 19.7%), business turboprops (down 12.9%) and turbine
    helicopters (down 13.8%) all show double-digit percentage decreases

Average Days on the Market figures are at very high

  •  All market sectors are over 300 days average on the market before a sale
  •  All market sectors have increased the average days in September, except
    for business turboprops which took 25 fewer days

the pre-owned market continues to show improvements, all indicators have been
slow to recover in the first nine months of 2011. These figures are, however,
much improved compared to the lows recorded over the past two years, as the For
Sale inventories have declined and Full Sale Transactions have improved.  

JETNET Worldwide Trends September 2011

Real gross domestic product (GDP) increased at an annual rate of 2.5
percent in the third quarter of 2011 (that is, from the second quarter to the
third quarter) according to the “advance” estimate released by the US
Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3
percent. The “advance” estimate of the US GDP is welcome news compared to the 2nd
quarter’s 1.3% percent, but still well below the 3.0% percent GDP growth mark
(when business aviation does well).

Table B shows business
jet results for September 2011 compared to September 2010 for pre-owned
business jets for sale and full sale transactions. The For Sale inventory
continues to decline, and full sale transactions are down 7% in September 2011
compared to September 2010.

In the first nine months of 2011, asking prices
remain soft (down 19.7%) compared to the same period in 2010. To determine if
older business jets might be contributing more to the asking price decline, the
fleet was split at “20 years and younger” and “21 years and older”. The results
were surprising; the “20 years and younger” age group contribution to declining
average asking prices was significantly greater (down $1.5 million or 18.4%)
than the “21 years and older” age group (down $206,000 or 13.6%) as shown on
the last two lines in Table B compared to the same period in 2010.

JETNET Pre Owned Biz Jet September 2011

The 12-Month Moving Total Trends for both pre-owned business jet
aircraft retail sale transactions and average asking price from January 2004 to
September 2011 are illustrated in Chart A.

As of September 2011 business jet retail transactions are 8.9% below
the peak set in February 2008. These results are a sharp rebound from the 2009
lows and are good indicators that the correction process is in motion.

The past three or four years for the pre-owned business jet market have
not been normal. Some sellers had unrealistic pricing expectations even as the
market went into serious decline, and the For Sale inventory grew to record
levels as a result of the economic meltdown.

These differences are illustrated in Chart A as the sale transactions
declined from 2,260 in June 2008 to 1,426 in June 2009. The Average Asking
Price continued to increase, reaching a peak of $6.65 million in the later part
of 2009. However, sale transactions only started improving when the average
asking price started declining. In January 2011 the 12-month moving trend lines
for each met for the first time since June 2008.

JETNET Retail Sales v AAP September 2011

By the end of the 2nd quarter of 2011, the 12-month trend
for average asking price had started to show signs that the bottom had been
reached and had actually increased sharply.

However, this was a short-lived trend. The current quarter results have
shown a flat trend line in the 12-month total sale transactions, and a reversal
and sharp decline to $4.58 million in the 12-month average asking price trend
line at the end of September 2011.

Pre-owned business jet asking prices are more in line than they were 18
months ago, but the current reversal in average asking price is a big concern
for the seller (indicating that a correction is still underway).

From the buyer’s point of view, the current market is a good time to
buy a pre-owned business jet. It is still a buyer’s market, with ample
inventory of most business jets at near record low average asking prices.