For 10 years, the number of used business jets sold on the market has been steadily declining.
It reached less than 2019 of the January 9% sales team's inventory level, a low that has never been seen in the past 20 years.
It was only half of 2009, when nearly one commercial aircraft was on sale during the financial crisis, and it was being denigrated to have one corporate aircraft because of a decline in confidence.
It is believed that things are just beginning and moving towards a more typical historical average of 12%.
Calling the high and low of any market a risk, however, after nearly a decade of tight inventory, I feel that we are already at the bottom, and in the foreseeable future, the inventory of second-hand business jets will begin to rise gradually.
There are three key reasons for continued inventory growth.
First, the U. S. economy is beginning to show signs of fatigue. S.
Is the largest supplier of used aircraft.
With the deterioration of confidence and the prevalence of discretionary spending on airplanes, this will lead to an increase in inventory.
Although the new tax reform preferential policies introduced in 2017 have brought benefits to the state-owned market, it is believed that buyers who have benefited from this preferential treatment have already purchased, thus reducing the future state-owned demand.
The following is a simple analysis.
The contracted inventory prior to 1990 and 2000 lasted seven and six years, respectively.
As shown in the figure, the current 2009-2019 10-
This year's inventory contraction has exceeded 3-
4 years, which statistically suggests that corrections should be made in this cyclical business.
Finally, a new mission of the Federal Aviation Administration (FAA)
All commercial aircraft will be required to be equipped with new, expensive electronic equipment to show the whereabouts of the aircraft
B. By the end of this year.
Some owners will sell their planes instead of paying for them.
This will help to steadily increase inventory levels throughout the year, including bad aircraft that will not be sold soon.
As for the impact of the increase in the use of aircraft inventories, it is not expected to have a significant impact on the sales of new aircraft, as the typical new aircraft buyers are not interested in the increase in old aircraft.
For used aircraft brokers, less pre-
Sales activities that can be expected to have, because the increase in inventory indicates that more people want to get rid of ownership rather than enter.
Finally, don't expect the prices of used aircraft that have also been in trouble over the past decade to pick up sharply.
In the past, the dynamics of supply and demand have supported used prices, but the economy with good basic capital has caught up with commercial aircraft, and the weak residual value has now become the norm.
Now, the price of a new business plane is the same as that of a Buick car.
All in all, the trilogy of economic, historical averages, and regulatory changes will soon come together to raise the inventory levels of old aircraft to more historical averages.
The level will rise at a faster rate than the decline, but will not have a significant impact on new aircraft sales.
Buyers of used aircraft will not find a lot of benefits because most of the increase will come from older aircraft whose prices have fallen sharply, while sellers will find their aircraft to stay longer in the market.