The tight inventory of used business jets is about to relax in the midst of economic and regulatory changes, according to a new report from Brian Foley Associates. "We are now in my thoughts," said Brian Foley, president of the company AIN.
A 10-year run of declining used jets for sale is ready to gradually reverse itself from the current level of 9 percent of the fleet for sale to a historical average of 12 percent, according to the report. "It will not be a large inventory of equipment," he added.
Signs of early economic fatigue in the US – the country with the largest concentration of business jet buyers – is one of the reasons that led Foley to this conclusion. He said that the effects of the tax reform in 2017 that & # 39; the market of the second-hand market & # 39; have relaxed, worn down and buyers who have benefited from it have already made their jet purchases.
These are also historical trends. The last two jet aircraft used decreased, in the 1990s and 2000 the contract duration was six to seven years. The current contraction "has already exceeded those periods by three to four years, which statistically suggests that a correction is overdue in this cyclical company," the report notes.
And the threatening ADS-B mandate – which will come into effect in the US early next year, followed by Europe in the middle of 2020 – will force some jet owners to offer their aircraft for sale instead of complying with the rule because of the costs. "This will contribute to steadily rising inventory levels throughout the year, consisting of unwanted aircraft that will not be sold quickly," the report says.
But according to the report, it is expected that slowly rising stocks will not affect the sale of new aircraft, because those buyers are not interested in older second-hand aircraft.
Used prices will not increase much, if any, because "basic capital good economy has been overtaken by business jets and softer residual values are now the norm", says the report. "A new business plane is now no different than a Buick car."