Historically low levels of pre-owned private jets for sale

Vilnius, Lithuania. 23 July 2021. Analysis (1) from Colibri Aircraft, the private jet broker which specialises in the marketing, resale and purchase of pre-owned private aircraft, reveals that only
around 4.65% of the pre-owned jet fleet is for sale – the lowest level since records
began in the 1980s. In total, around 1134 private jets are for sale globally, compared
to approximately 1,839 in June 2020, a decline of over 38%.

This low inventory, plus a drop in the number of new private jets being delivered –
down 20% last year from 2019 (the lowest number since 2004), means that despite a
difficult market for commercial aviation and travel in general the private jet sector has
been experiencing high levels of demand.

Oliver Stone, Managing Director, Colibri Aircraft said, “Buying private jets is
extremely difficult right now, particularly for European compliant aircraft. Multiple
buyers and a shrinking inventory of available aircraft have made a very competitive
market. We recently tried to purchase a late model Challenger 650 for a client, and
at least six offers were made for this aircraft, which ended up trading close to its
headline asking price. To say that the market is competitive at the moment is an
understatement.”

Commenting on why there has been a decline in the supply of private jets,
Oliver Stone said, “This decline has been led by the USA, which re-opened far
quicker than other parts of the world. Key factors driving the dramatic drop in the
supply of private jets for sale was a strong desire to travel in an environment with far
lower risk of Covid transmission – there are as many as 680 fewer person-to-person
interactions when flying by private jet compared to commercial (2) – and a
significantly reduced airline service making airlines less convenient, which meant
that more owners of private jets wanted to keep hold of their aircraft and a large
number of first time buyers entered the market.

“In addition to this, surging asset prices in stock markets and real estate, historically
cheap debt due to government stimulus, and depreciation benefits that applied to
private jet purchases removed many of the financial pressures some owners might
have been under to sell their aircraft in more normal circumstances and also
encouraged new buyers to act.

“Finally, as inventory declined so rapidly we found that current owners are often
holding onto their current aircraft as they struggle to find a suitable replacement in
such a supply-constrained environment, further decreasing the aircraft that are
coming available for sale.”

New versus pre-owned

One of the biggest reasons for the popularity of the pre-owned market compared to
new aircraft is the price difference. Colibri Aircraft says depreciation has been a
constant feature of aircraft since the financial crisis in 2008, and a pre-owned aircraft
typically offers significant savings on the purchase price.

This proposition of similar utility for a lower purchase price has driven the pre-owned
market’s popularity. To illustrate this point, of the top 20 best-selling jet types in
2020, 14 of these models were trading for under $2.5 million. Given that the lowest
price for a new private jet (a single engine, light jet) is around $3 million, it suggests
that many buyers are taking advantage of the value of pre-owned aircraft.

Another difference is the purchase cycle. New aircraft manufacturers will normally
have pre-sold several months of their annual production quotas and as a result
buying a new aircraft usually entails waiting several months, or more, for it to be built
and delivered. Pre-owned aircraft have a shorter purchase cycle taking several
weeks once the right aircraft has been identified. For clients where timing of entry
into service is critical, pre-owned jets normally offer a faster path to do so. This was
especially true during 2020 where many new buyers wanted to have an aircraft to
avoid airports and needed a faster entry into service than a traditional new purchase
would provide.

Finally, it cannot be overlooked that the difference in size of the inventory available
between pre-owned and new jets is substantial. Inventory of new aircraft available
each year is determined by OEMs who, in general, try to keep a certain inventory
level to maintain stability. As a result, new buyers have only around 700 aircraft per
year to choose from. The contrast from the pre-owned market, which currently
comprises over 20,000 jet aircraft and growing, is significant. The sheer size of the
pre-owned jet fleet leads to a larger number of transactions each year as owners
buy, upgrade or leave ownership.