by Mark Huber, AIN International, February 6, 2017
JetNet reported that pre-owned business jet inventories fell and prices rose modestly in the fourth quarter, with the total number of jets listed for sale falling 1.95 percent, from 2,422 to 2,374, quarter-over-quarter. Meanwhile, the average asking price for business jets increased by 5.07 percent from $4.62 million in the third quarter to $4.86 million at year-end.

The turboprop inventory also declined quarter-over-quarter, falling from 1,217 to 1,181 aircraft, a drop of 2.98 percent, while the average asking price declined fractionally by 0.5 percent, to $1.24 million.

According to JetNet, the number of jet transactions increased 10.8 percent quarter-over-quarter, to 499, while average days on market showed only a minuscule decline, falling from 289 days to 285 days. The story for turboprops was very different, with the total number of sales declining slightly quarter-to-quarter, dropping from 220 to 216, but average days on market plummeting by 21.8 percent, to 229 days.

JetNet noted that certain aircraft classes and models continued to display price weakness, with 560-series Cessna Citations dropping another 4.77 percent quarter-over-quarter and light jets such as the Embraer Phenom 100 (-3.38 percent) and the Beechjet 400A (-1.36 percemt) continuing to slide. As a whole, average asking prices for midsize jets fell 2.03 percent, to about $1.8 million. However, large-cabin-jet asking prices surged 6.82 percent. Yet within the class there were exceptions, like the Falcon 7X, dropping another 3.4 percent.

“The big story has been and will continue to be the softness of pricing,” said JetNet iQ managing director Rollie Vincent. “Pre-owned transaction values continue to drop, but we are seeing a little bit of firmness at the lower end in turboprops and light jets. But in [the] midsize and large [segments] there is no sign yet of a turnaround given the steepness of the depreciation curve. We are not through the oversupply; it is going to take a while. New production has to come down more in the next few years, and we just have to work through the pre-owned inventory.”

Going forward, Vincent sees recent U.S political developments as a potential mixed bag for the market. “There’s quite a bit of enthusiasm regarding promises made by the new Trump administration with regard to lower corporate taxes and the emancipation of corporate profits held offshore,” he said. “However, some of the trade saber-rattling that is going on is very discouraging. We’re worried about what that means. The Mexican market has gone very quiet for bizjets and that’s the number-two market in the world. Canada is in the top five. If we rip up the North American Free Trade Agreement, look out. Things are going to change. There are a lot of things that are very uncertain right now.”