The current state of the pre-owned corporate aircraft sales market is unique in its history. There has been a near-perfect storm of events and conditions that are challenging the basic precepts of how corporate aircraft are bought, sold and remarketed. So what factors are affecting the used aircraft market? Never have there been such a high percentage of aircraft available for sale. Never have there been such dramatic price swings as in the past few months. In short, available aircraft for sale are plentiful, buyers are few. Internal Factors Many factors have contributed to the current state of the market, both from within and outside the industry. Internally the industry is facing equipment, regulatory, financing and manufacturing issues. Many of the early corporate aircraft built in the ‘60s, ‘70s and even 1980s are reaching the limits of their useful lives. Outdated avionics equipment, noise compliance issues, increasing maintenance costs and parts availability limit the use of these aircraft and they are rapidly becoming economically unfeasible to operate. You can find many of these aircraft for sale at historically low prices. They can be good value for those who are looking for an inexpensive purchase and operation until obsolescence. Life the US, Europe is also a relatively mature market, but the issue of aging aircraft is not such a problem. Generally Europe has more stringent equipment requirements than the US. These restrictions make the costs of importation prohibitively expensive for many older aircraft. Regulatory compliance has become increasingly complex. Advanced avionics equipment is now required for aircraft to be able to operate safely in high traffic zones. Noise regulations limit aircraft operations and sometimes prohibit certain aircraft, mostly the older fleet, from operating in more restricted, more densely populated areas. Again there is a disparity between European and US certifications which limits aircraft sales between the two jurisdictions. External Factors The major external impact on the price of used aircraft for sale is of course the financial crisis. The world economic system is more interconnected than ever and when the US economy started its decline in 2008, the repercussions were felt throughout the world. Demand for aircraft not only slowed in the US, it slowed in most parts of the world. Even growth areas such as India, the Middle East, Eastern Europe, and especially Russia retracted as much as more developed economies. Many lenders have either pulled out of the industry totally or have significantly tightened their requirements for financing. This has sharply reduced the supply of funds available, leading to decreased sales. Further exacerbating the issue is the fact that some owners cannot refinance their assets and are forced to sell their aircraft as distressed sale pricing. Dan Smith. “The Market for Used Aircraft: Is Spring Here Yet?” Business Aviation News. 21 Sep. 2009 [http://www.businessaviationnews.com/pdf/The_Market_for_Used_Aircraft.pdf].
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