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JETNET reveals slow start for pre-owned BizAv jet sales

May 7, 2013, Utica, NY – JETNET LLC, the leading provider of corporate aviation information, has released March 2013 and 1st Quarter 2013 results for the pre-owned business jet, business turboprop, helicopter and commercial airliner markets.


May 7, 2013
By Helicopters Magazine

Topics

May 7, 2013, Utica, NY – JETNET LLC, the leading provider of corporate aviation information, has released March 2013 and 1st Quarter 2013 results for the pre-owned business jet, business turboprop, helicopter and commercial airliner markets.

Market Summary
Highlighted in Table A are key worldwide trends across all aircraft market segments comparing March 2013 to March 2012. Fleet For Sale percentages for business jet and business turboprop market sectors were down in the March comparisons, but increased slightly in the helicopter markets.

Business jets are showing a slow start in the 1st quarter of 2013, with a 4.2% decrease in pre-owned sale transactions, and are taking more time to sell (71 days longer) than last year, with a 3.3% decrease in average asking price. Business turboprops decreased 8.8% in pre-owned sale transactions, with a double-digit increase in average asking price of 18.7%.

Both turbine and piston helicopters saw double-digit declines in sale transactions YTD, at 34.8% and 21.5% respectively. Turbine helicopters recorded a double-digit decrease in average asking price at 38.4% in the YTD comparisons through March 2013.

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Commercial airliners are reported here for the first time by JETNET in Table A – Worldwide Trends, and include For Sale numbers for both commercial jets (includes airliners converted to VIP) and commercial turboprop aircraft. The number of pre-owned commercial airliner sale transactions, 469 for the 1st quarter of 2013, showed a double-digit increase of 21.2% compared to the 1st quarter of 2012. However, commercial turboprop sale transactions declined by 25% in the same 1st quarter comparisons. Also, the average days on the market increased by more than 114 days for commercial airliners, and 7 days for commercial turboprop aircraft in the same quarterly comparisons. Both were on the market for more than a year before selling.

Table A – Worldwide Trends

For Sale Inventory Levels by Weight Class
Business jets for sale by weight class are shown in Chart A, from the 1st quarter 2007 to 1st quarter 2013. The light weight class dominates business jets for sale at 40%, or more than 1,000 out of the nearly 2,500. The light weight class has decreased in total percentage for sale, from 49% to 40% today. The most significant change in the for-sale percentage is in the heavy weight class. In the 1st quarter of 2007 the heavy weight class represented 19% or 313 aircraft for sale and today accounts for 28% or 693 business jets for sale, more than doubled over this time period. Of most concern is that the total number of business jets for sale remains unchanged and very high today at almost 2,500 compared to 1,662 in the 1st quarter 2007, resulting in a buyer’s market.
Chart A – Pre-Owned Business Jets For Sale by Weight Class

Full Retail Sale Transactions and Average Asking Prices
March 2013 retail sale transactions have continued to increase. They are now above the 2,200-transactions mark since mid-year 2012, based on a 12-month moving average trend line, after showing a sharp rebound from the low point in mid-year 2009. In January 2011 the 12-month moving trend lines met for the first time since June 2008. Since a brief recovery in the 3rd quarter of 2011, the average asking price has continued to decline, a big concern to sellers, but has not dipped below the average of $4.50 million. In fact, the average asking price on a 12-month moving average over the past 18 months remains in the $4.50M to $4.75M price range. It’s still a buyer’s market, with ample inventory of most business jets at near low average asking prices, as shown in
Chart B.

Chart B – Pre-Owned Business Jets – Retail Sale Transactions vs. Average Asking Price

Turbine Helicopter Full Retail Sale Transactions
In the 1st quarter 2013 comparison to 1st quarter 2012, turbine helicopter full retail sale transactions fell from 351 to 229, or 34.8%. This is the lowest number of quarterly transactions in this seven-year comparison.

Chart C – Pre-Owned Full Retail Sale Transactions Quarter-over-Quarter – Turbine Helicopters

Good News
Real gross domestic product (GDP)—the output of goods and services produced by labor and property located in the United States—increased at an annual rate of 2.5% in the 1st quarter of 2013 (that is, from the 4th quarter to the 1st quarter, as shown in Chart D), according to the "advance" estimate released by the Bureau of Economic Analysis (BEA).

Chart D – U.S. Gross Domestic Product – 2009 to 2013 by Quarter, Continuous

The BEA report is welcome news and shows that the U.S. GDP is heading toward the 3.0% growth mark (when business aviation does well). The advance estimate of the U.S. GDP release showed the economy grew for the 15th straight quarter.
In the 4th quarter of 2012, real GDP increased 0.4%, as reflected in Table B.

Table B – U.S. Gross Domestic Product – 2009 to 2013 by Quarter

Financed vs. Cash
There can be no doubt that the reduction in available financing for used aircraft purchases has had an adverse impact on the business and helicopter aviation re-sale markets. As 2013 unfolds there remains a large inventory of business aircraft available at very affordable prices. The percentage of financed versus cash retail transactions for business jet aircraft was roughly split 50/50 from 2000 through September 2008. But then in late 2008 came the start of the economic meltdown, at which point securing debt financing for pre-owned business aircraft purchases became increasingly difficult. Thus the pendulum swung in favor of cash as the method of most pre-owned jet transactions. Today the ratio of financed versus cash transactions for used business jets stands at 23/77. This is based on a four-quarter total moving average trend, as reported by JETNET from U.S. FAA-filed financial documents.
There has been little change in the percentage of financed business jets over the past four years, as shown in Chart E.

Chart E – Business Jet Full Retail Sale Transactions – Financed vs. Cash
Since 1988, JETNET has delivered the most comprehensive and reliable business aircraft research to its exclusive clientele of aviation professionals worldwide. JETNET is the ultimate source for information and intelligence on the worldwide business, commercial, and helicopter aircraft fleet and marketplace, comprised of some 100,000 airframes. Headquartered in its state-of-the-art facility in Utica, NY, JETNET offers comprehensive user-friendly aircraft data via real-time internet access or regular updates.

For more information on JETNET LLC log on to jetnet.com or contact Michael Chase, 214-226-9882 mike@jetnet.com or contact Paul Cardarelli, JETNET Director of Sales and Marketing, at 800-553-8638 (USA) or paul@jetnet.com; International inquiries, contact Karim Derbala, JETNET Exclusive Agent, EMEA, at 41.0.43.243.7056 or karim@jetnet.com


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