Welcome to the third quarter! This is when things start to get interesting as we march through the second half of the year. The market is beyond intriguing right now. So much so that I’m struggling to provide a proper adjective to describe what we are seeing, and more importantly, what we are feeling.
Of the two scenarios below, which market do you think sounds like a stronger environment?
Scenario #1:
- 105 PC-12’s for sale
- 5.0% of the fleet for sale
Scenario #2:
- 52 PC-12’s for sale
- 4% of the fleet for sale
Obviously, the latter scenario is stronger. But what if I told you both of those scenarios are representations of the marketplace right now? Given the current tariff environment, the US market can immediately eliminate all foreign-based aircraft from its competition. There is a 10% duty on all Pilatus aircraft imports into the United States. So when we look at the market, we really have to look at it from a different lens: first being the worldwide market, and if you’re in the United States, then just the US.
Scenario #2 is eerily similar to January 2021. What followed was a run on airplanes, which took the market to historically low inventory levels and a historically high increase in values. Needless to say, that was a global market and we’re not suggesting prices will jump 20%, but it would be foolish not to make some correlation between the two. 100% bonus depreciation was available then and it is now. Inflation was approaching 2% (on its way up) then and is approaching 2% (on its way down) now. The S&P 500 was at an all-time high and trending upward then, and it is doing the same now. Pilatus was rolling out a new product then (NGX) and they are doing so now (PRO). All of these factors and so many more have a real impact on the pre-owned airplane market.
Other subtle indicators tell us where the market is trending. As an example, we take great pride in evaluating an asset’s retail value. In 2024, we performed 75 Pilatus Appraisal Reports (PARs) for owners. Among the owners who decided to sell, their aircraft averaged just over 98% of the sold value we had suggested. Due to tariffs and recent demand, our two most recent deliveries achieved 103% of their original projected value (pre-tariff). This validates the observations we’ve noted above.
We’ve adjusted for market demand in the past, and we should be going to the spice rack for a ‘touch’ of it to account for the change in demand here domestically. Our accuracy cannot be fully explored unless we use a market demand component with our algorithm. No one could have predicted that tariffs would play such a significant role in today’s market, but they have.
In conclusion, the phones are ringing at JetSwiss. The market is moving and shaking. Values that have been very stable for the better part of 18 months could be seeing some slight fluctuations here domestically, and signs point to a high level of engagement amongst clients looking to acquire an airplane. I guess my golf game can wait until next year. It’s time to buckle up for the ride ahead.
Fly safe,
The JetSwiss Team