Hi Everyone,
It’s hard to believe we’re already in May. At JetSwiss, we’ve had the busiest first half of the year in the history of our company, which we’re very thankful for.
May is filled with flowers, better weather, and of course Mother’s Day. If you think back to when you got your first pilots license; this was the season/time of year that got you excited about flying and training. Of course, May also means graduation season–both young and old. Just when I thought I was done with graduations, the mailbox reminds me otherwise! So, every May I ask for two things: (1) a personal driver to escort me to all the various graduation parties (planning for the possibility for getting ‘over-served’), and (2) a stack of $100 bills for the “Congratulations” cards. You know the drill…
In the Pilatus Village, we are currently dealing with a market comprised of a different set of cards. As I’ve stated many times before, our job is to take all the cards that we are dealt and play them in the smartest way possible for our clients. Lately, those cards have read like a holding pattern: TAXES AND TARIFFS. These two topics have caused many folks to seek more clarity before making a move. On the one hand, I understand this perspective. But when we dig a little deeper, the logic starts to contradict itself. Almost every client we speak to agrees that the market will take off after taxes and tariffs are settled. Most also believe that the resolution is just a few months away. We believe this as well. So, the big question becomes, what are we waiting for? Are we waiting for a large monumental event?
The truth is many of these same folks have built a successful life and business by taking calculated risks. They’ve made large and small decisions based on accumulating information and following their gut, rarely contradicting themselves. Are they waiting for demand to exponentially increase over the next six months? So, why would they contradict themselves now?
The Pilatus Market
Let’s talk about numbers. The last time our industry experienced 100% bonus depreciation was 2017-2022. This tax environment helped the aircraft world “take off.” Many of you may remember the boom that our market experienced at that time. Values were skyrocketing and at its apex, there was less than 1 month worth of inventory available. Today we have 8 months worth of airplanes for sale. Traditionally speaking, this is a healthy market at 4-5% of the fleet for sale.
The good news is that our lawmakers are suggesting that we’re on the verge of 100% bonus depreciation returning. Historical data suggests this will have a major impact to our market. While we don’t expect to see prices jump like they did in 2021 and 2022, we do fully expect good inventory to get picked from the market quickly. Further, we need to consider tariffs. There are currently 102 PC-12’s and 18 PC-24’s available. 42 of those PC-12’s and 9 of those PC-24’s are based outside the United States. Aircraft outside of the U.S. are subject to a minimum of a 10% tariff upon import to the U.S. That is 42.5% of the available fleet! From a dollar perspective, if these aircraft were sold into the United States, our consumers would be paying a total of approximately $30M in added tariffs. It seems rather logical to assume that the aircraft currently based in the United States just became a lot more interesting.
So, as you venture off to your kid’s graduation, move them out of dorm rooms, and stuff cards with $100 bills and words of encouragement, think about this: what’s the negative in starting the conversation today? A simple call or Zoom meeting costs you nothing. A small amount of your time can yield a large amount of information. Right now, we’re at a rare crossroads–it’s a smart time to buy, and a great time to sell. Don’t contradict yourself, follow your gut and take action. JetSwiss is a great place to start!
Fly safe,
Bub &
The JetSwiss Team