Traditionally speaking, the month of July is the slowest month in terms of airplane transactions. This can be attributed to people on vacation whose end-of-year planning has yet to commence. The Pilatus market is not immune to these traditional market dynamics. With that said, there are several indications that lead us to believe the fall will be much like what we saw in the first half of the year. Inventory levels have been on a slow and steady incline over the past few months. We’ve seen approximately a 25% increase in inventory in the last 4 weeks. Interestingly, pricing has remained steady. Our market intelligence suggests the PC-12s that have been transacting have held value over the last couple of months. The dramatic rise in values we saw beginning in late Q3 2021 and continuing until today, has flatlined. The market has pushed back on those who priced their airplane with “predator” like intentions. There are multiple examples of these airplanes having sat on the market for north of 100 days. This stat is unheard of in a healthy market – where, if priced correctly, an airplane would be under contract in a matter of weeks. While inventory levels are still historically low, they are providing buyers with some breathing room and giving them the ability to have choices in the marketplace. This factor combined with flatlining values provides consumers with buying confidence and better terms. As end-of-year tax planning will commence in short order, we fully expect another strong end-of-year push with high-quality, properly priced airplanes selling for top dollar and quickly.
In the /45 market segment, the airplanes that are currently ‘deal pending’ have an average asking price that is roughly $300k higher than the deal pending average. The /47 market has a similar trend. While the /47 has always delivered a premium resale value because of its NG airframe characteristics, buyers are not willing to stretch financially just to acquire one. Also, many of the /47s available in the current market have higher airframe time and have been flown on charter certificates. The inverse is true in the NG market. Buyers are willing to pay a premium for higher pedigree aircraft and somewhat struggle with the value proposition in older aircraft. A cheaper price doesn’t necessarily intrigue the marketplace.
Regardless of the market segment, buyers see value in lower time, younger, and better-equipped aircraft. We don’t see this changing – ever. Buyers can achieve value in the older segments, but they will need to work much much harder to determine their specific ‘value proposition’ on an older aircraft. Do your homework!
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