Business jet buying frenzy calms with more second-hand planes for sale

Buyer “hysteria” for preowned business jets during the pandemic that triggered a recent wave of bidding wars is now easing, with more corporate aircraft coming up for sale, brokers say.

The uptick in supply of pre-owned jets from historic lows will be in focus as corporate plane makers Textron Inc, General Dynamics Corp's Gulfstream and Bombardier Inc unveil earnings in coming weeks, with investors looking for any early signs of softening demand for new planes.

While U.S. business jet traffic remains above 2019 levels, the combination of listed planes and aircraft sold through word-of-mouth is giving buyers more choice, while price increases have at least temporarily flattened.

“The market is kind of taking a breath,” said Paul Kirby, Executive Vice President at QS Partners, a whole-aircraft brokerage and dealership.

“You had this kind of hysteria that some buyers were going to miss the next airplane.”

Fuelled by a cutback in commercial flights and crowded airports during the pandemic, the rush by wealthy travellers toward private transport was so marked last year and this past winter that some buyers were snapping up secondhand planes before fully inspecting the wares.

“You saw that whether it was a US$2 million airplane or a US$50 million airplane,” Kirby said.

According to data from U.S.-based AMSTAT, a market research company specializing in business aircraft, the percentage of global business jets for sale on the pre-owned market was at 3.4 per cent in April, up from a historical low of 3.3 per cent in February. The 10-year-average by comparison is 10.2 per cent, AMSTAT said.

A buyers' market can dampen demand for new jets from plane makers like Gulfstream, Textron and Bombardier since buyers have more pre-owned options, and the price gap between old and new widens.

General Dynamics, which reports quarterly results on Wednesday and Bombardier which reports on May 5, declined to comment ahead of earnings. The aviation unit of Textron, which reports on Thursday, was not immediately available for comment.

Don Dwyer, a managing partner at Guardian Jet, which does aircraft brokerage, said popular models still command strong pricing, but said he is seeing fewer bidding wars. Buyers are also now doing inspections and planes aren't selling as fast.

For example, Dwyer said he is bringing a pre-owned Bombardier Challenger 300 family jet to market that he predicts “won't last two weeks.” But just a few months ago, it would have been snapped up before coming to market.

According to AMSTAT data, the percentage of Challenger 300s for sale hit a low of 0.7 per cent in November 2021. It's now 2 per cent.

While the market remains strong, Kirby said some plane owners want to sell due to the challenge of finding pilots and parts as both U.S. business jet and commercial travel rebounds.

“Our clients are struggling to hire and retain qualified pilots, even at compensation levels well above historic averages,” he said.

OUR CLIENTS ARE STRUGGLING TO HIRE AND RETAIN

QUALIFIED PILOTS.