Pre-Owned Update: April 2006
Duplicating the superheated activity that defined the pre-owned market last year doesn’t look likely as this year’s used landscape begins to take shape. Early indications during the first quarter point to a market cooling to a more normal level. After a few consecutive years of lower-trending inventory, which as recently as January dipped below 1,600, the market has turned tail and now is closer to the 12-month moving average.
Interest in all segments that exhibited strength last year continues to be active, yet in keeping with the overall increase in choices right now, some models can currently be found in greater supply, while the perceived value of others has further thinned their ranks.
Greater choices among some large-category aircraft were not unexpected as last year’s run on aircraft left only one way to go. The slightly increased availability is still low by historical standards, yet last year’s stellar performers–including the Challenger 604, Global Express, Gulfstream IV-SP and GV–can all be found right now in greater numbers than a year ago.
The perception that the GIV market has cooled stems not from the year-ago level of 21 aircraft for sale, which is where it stands right now, but from last fall, when for a three-month stretch the level held steady at 14. Pricing in this group runs from the high $14 million to $20 million range. Similarly, the number of GIV-SPs available has increased just a few from last year but is more than double the low, low levels of last summer, when the inventory ebbed at six. In fact, the current level of 14 represents approximately 5 percent of the number of GIV-SPs manufactured. GVs, on the other hand, jumped from two last year to 10 now.
Like the GV, Challenger 604s swung from 12 for sale a year ago to 22 now. Pricing runs from the low $17 million range to the low $25 million area. The 604 has reportedly completed its decade-long production run and has bowed to its successor, the 605. Current availability amounts to 6 percent of the 350 built since 1996.
In the midsize arena the Hawker 800XP has added girth since last year, its inventory growing from 20 to 28, which still represents only 6 percent of the nearly 500 aircraft manufactured since the first one rolled off the line in 1995. In the light-jet category the CJ2 surprised last month by increasing to 19 available, more than at any time since its arrival on the used market. A few days later that figure recoiled to 16 for sale. Mid $4 million to low $5 million is the order of the day, but if offerings trend toward higher ground the stability this market has exhibited for quite some time might adjust accordingly.
Hot Market for Some Aircraft
While some aircraft are bouncing off their respective inventory lows, others seem to be making an assault on it. For example, Gulfstream’s G200 reached 20 for sale roughly a year ago when only 100 were in service, translating to a saturated market. Choices have since diminished to seven as the in-service fleet has increased to more than 125, reducing availability from 20 percent to roughly 5 percent in little more than a year.
Another hot property is the Citation X, which after growing to 18 last year at this time has ratcheted down to eight, with one sale pending, representing roughly 3 percent of the active fleet, which now exceeds 250. Pricing runs from about $11 million for a single-digit serial number up to nearly $19 million for a 2004 model with fewer than 1,000 hours logged.
Another Cessna standout on the used market is the Excel, which six months ago offered up 15 of its fleet of 372, by any measure a paltry percentage, yet availability has since been reduced by half, making it one of the most in-demand aircraft among a host of other popular possibilities.
You can’t talk about aircraft in demand without mentioning the perennially hot Falcon EX market–any EX, a 50, 900 or 2000EX. There are only about 71 2000EXs in the fleet right now, so the fact that only one is on the used market isn’t astounding. On the other hand, the 50EX has been in production for 10 years, and while the total number produced is not significantly more, it too presents just one offering to the used market. The Falcon 900EX, which has also been around about 10 years and has a fleet size similar to that of the 2000EX and 50EX combined, currently is unavailable in used form. At present, the trio offers fewer than 1 percent of its collective production total.
The Falcon 2000 may be basking in the heat provided by its predecessor, as only four of 228 of its ilk are for sale, nearly even with its 12-month supply average. Unlike the 2000, the earlier Falcon 50s and 900s don’t appear to be caught in the wake of their follow-on models, as both are present on the market in close to normal numbers.
If there was a first-quarter surprise it came a year ago as building buyer momentum exploded. In contrast, the first quarter of this year was more predictable, taking on the characteristics of a stabler market. However, it will take a while for last year’s adrenaline rush to wear off before a necessary adjustment to the new speed kicks in.