September marks the end of summer and the start of 4th quarter activities. In the airplane business, this means planning for increased interest and activity. Every year, end-of-year tax planning results in increased interest in business aircraft. This has been amplified in recent years with 100% bonus depreciation. That policy is set to expire at the end of this calendar year and is not expected to be renewed given the current political landscape. As a result, the industry fully expects the end-of-year to be as hectic as ever.
If you are a buyer, you must understand that you will not be alone. The market is already experiencing record low inventory levels. In fact, 65% of JetSwiss transactions since Q2 of 2020 have been private sale projects. While the feds have tried to curb spending and inflation with interest rate hikes, there is still plenty of cash in the economy; and airplane buying activities will not be deterred. Combine these factors with a lack in airline performance (to put it nicely) and fractional ownership programs that are stressed on all levels, and you have a recipe for strong aircraft sales demand. Marketplace and environmental landscapes to keep in mind include service centers at max capacity, limited prebuy inspection slots, ancillary services stretched thin (such as escrow agents, lenders, and insurance agents), and limited marketplace inventory. All these factors mean that the process for a 2022 acquisition (and corresponding delivery ‘in service’ date) needs to start today!
If you are a seller, having a proper marketing strategy in place to maximize value will be pivotal. Did you know that 36 of the 78 PC-12 transactions this year never reached the retail market? When comparing these sales, the airplanes that were on the retail market collectively averaged a 5% higher relative sales value than those which sold quietly (ie: selling to your neighbor, family member, or business colleague). This higher sales value does not account for additional savings which may have been procured through a traditional sales process. Point is, while it may seem quick and easy to sell the airplane to your cousin or neighbor, it’s not always financially the smartest decision.
Buying and selling an airplane is a complex process. Not only are we dealing in millions of dollars, but the liabilities involved far exceed any sales price. Having a team behind you that knows how to navigate landmines and facilitate an efficient process is the smartest money a buyer or seller can spend.