At JetSwiss, we love to use analogies and metaphors to get our point across. In recent editions of the Pulse, you might have learned about the card game “Shoot the Moon” or received a lesson in the astronomy of our galaxy. That theme is going to continue this month, so bear with us while we try to educate and entertain.
Anybody with young kids or grandkids is likely aware of the game called “Chubby Bunny.” For those of you that are unaware, a kid will stuff their mouth with a marshmallow and attempt to say, “Chubby bunny!” This continues by adding one marshmallow at a time until their mouth is so full that they either spit them out laughing so hard or the game stalls because nobody can coherently say the phrase anymore. Usually, the game ends in laughter and an eruption of marshmallows.
The Pilatus market is currently stuffing its mouth with marshmallows. Since the calendar turned to 2023, the market has seen the addition of 16 airplanes for sale. For those who have been tracking the Pilatus market as we have, this is astounding. At one point in time, there were only 16 airplanes for sale across the globe! However, sellers are still pricing their aircraft as if there are only 16 airplanes available. Prices for the recent additions to the market have averaged 120% of their original sticker price. When the market peaked around Q2 of 2022, PC-12s were selling anywhere from 105 to 125% of their original price. During this time, inventory was scarce, inflation was lower, and interest rates had not yet skyrocketed. Further, 32% of the available market has been for sale for over 100 days. Of those aircraft we’ve seen 11 price reductions, averaging a 9% discount off their initial asking price. These factors have led to a temporary market stall as buyers stay patient and watch what is developing. Will the market continue to stuff its mouth with marshmallows (additional airplanes for sale) or will it spit them out (dropping their price) because it became too full? Our money is on the latter.
How do you navigate this market? If you’re selling, the market has shifted to the point where you’ll have competition. It’s more important than ever to hire a professional who knows the aircraft, will price it correctly and will implement a comprehensive marketing strategy. Gone are the days of throwing an airplane onto Controller.com, receiving a bidding war, and avoiding the potential pitfalls of a pre-purchase inspection. The attitude of “take it or leave it, my way or the highway” will lead to 250+ days on the market, multiple price reductions, and a poor transaction experience. If you’re looking to acquire a Pilatus, staying patient, trusting your advisor, understanding market dynamics, and putting procedures in place to avoid landmines will determine whether you have a successful transaction or not.
All in all, the market remains strong. Airplanes are still selling for approximately 100% of what they sold for new. There is just a very noticeable shift. Airplanes are coming onto the market at a greater clip than they’re departing. Looking forward to more action in the months ahead.
The JetSwiss Team