Imagine—we are already almost halfway through this year! Although we started off the year a bit rocky, with the U.S. government shutdown and instability in the stock market, things seem to still be moving along on a very positive trajectory for the preowned business jet market. Some of the “frenzy” of 2018 is gone from the market, but the transactional activity is still very strong.

Also, some of the pricing has settled down from a place that was marking quarter after quarter of relatively flat change in residual loss rates. This year, we should see a reasonable residual loss rate of 5 percent to 8 percent. This is all very healthy and brings back a sense of reality to our marketplace.

One other very interesting phenomenon that we as an industry need to get our collective heads around is fleet percentage for sale and how we can no longer just set an equal percentage fleet-wide to create what we all used to believe was balance. In the past, 10 percent of any given fleet for sale created what we believed was a balanced market—not to be labeled a sellers’ market or alternatively a buyers’ market.

We owe it to our respective research of any market to now look at the total units produced by specific market, as well as the number of transactions within that specific group within a six-month period, and then decide if the percentage of units for sale against the entire production fleet really is balanced. For instance, in the Gulfstream G650 market, where there have been approximately 360 units delivered, and the G550 market, with 589 units delivered, would we all feel balance if 36 or 58 units, respectively, were for sale?

My team and I did that exercise and still believe we are in a balanced market. Some markets have as few as 5 percent of the delivered airplanes for sale, while some have as many as 14 percent. A closer look will reveal that some airplanes with a higher number of units for sale might also have a corresponding higher number of transactions in the preceding six months.

Again, a dynamic marketplace should be judged with dynamic markers. The old methods of judging a market might not be as relevant today. It is a bit like Colorado weather in the spring—if you don’t like it, just wait an hour and it will change. Prices, buyers’ or sellers’ markets, residual loss rates are all dynamic considerations to a market. Sitting back and just relying on yesterday’s strategies will not serve you as a participant in a dynamic marketplace.

Jay Mesinger discovered a passion for flying when he was in high school. In college, he learned he had a gift for business. In 1982, he combined his love of flying with his business acumen to create what is now Mesinger Jet Sales.