Fri, Oct 21, 2022
Despite Increasing Sales, Overall Fleet Quality Rating Remains “Excellent”
Asset Insight has published their 3rd quarter 2022 Market Report covering recent developments in the pre-owned business aircraft market, marking a continued increase in demand despite greater economic bumps in other markets.
Inventory for used aircraft has continued to rise since March 2022 while lagging below 2021 levels for the same time period in each category of aircraft. Fleet-wide, inventory increased by more than 11%, while the average Ask Price rose by 8.9% to a 12-month peak. Of note, Asset Insight notes that “unlisted aircraft sales are reportedly down substantively, and young, low-time inventory remains scarce.” Uneven demand is still the norm, with mid-size jets seeing “an astounding 140% year-over-year increase.
One metric of particular interest, their Maintenance Exposure to Price Ratio (ETP), has set another 12-month best at 52.7% for the 134 fixed-wing aircraft as well as 881 aircraft covered in the report. Generally, an ETP ratio over 40% represents “excessive embedded maintenance in relation to Ask Price”, something that Asset Insight says “hinders aircraft marketability”. Nobody wants a multi-million dollar outlay for a continued money pit, after all. During quarter 3, aircraft with an ETP ratio greater than 40% were listed for sale nearly 89% longer than those whose ratio was under 40% - an average of 331 days on the market compared to 175 for lower-maintenance aircraft.
Overall, the average time to sale improved by 25% in the business aircraft market, with an average of 227 days on market.
“The Pre-Owned Business Aircraft market continues to defy the generally accepted laws of supply and demand,” said Tony Kioussis, president of Asset Insight, LLC. “As we enter the final quarter of 2022, we have to ask ourselves: what will give and when? Will we see inventory continue to climb and price increases naturally ebb? Will we see prices continue to climb while fewer aircraft enter the for-sale fleet? Or, will the Business Aircraft Market continue to redefine basic economic principles? 4Q 2022, and 2023, should be quite illuminating.”
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