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Dual Markets

by David Wyndham 1. September 2007 00:00
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What is going on in the fixed-wing turbine aircraft sales market? It seems like we have two different markets at once. However, that leads to opportunities.

The turbine aircraft market is split. Most everyone knows that new aircraft sales are strong. So much so that new aircraft sales teams have nothing to sell unless you are willing to wait, and wait. With almost zero new models available for quick delivery direct from the manufacturer, people are looking to the closest thing: late model equivalents. Late model jets and turboprops are hard to come by, are selling quickly, and thus are in a seller's market (for most models). Folks are either interested in these because they can't get new, or with a multi-year wait for their new aircraft, are buying used to have while the await delivery of the new model.

Older turbine aircraft, 10-15 years and older, have a generally ample supply and are selling for very reasonable prices. This is a buyer's market. But folks are still not buying. Not naming names, but some older model types have been on the market for well over a year on average. Newer aircraft have updated avionics, updated or improved systems, have lower operating costs and higher scheduling availability (spend less time in maintenance). So newer aircraft are more desirable and are commanding higher prices.

But as demand increases and supply decreases, prices increase with these newer pre-owned aircraft. At some point the older aircraft with its drawbacks becomes a worthwhile deal - buy it at a low cost, invest in upgrades, and end up with a viable aircraft. Apparently we aren't there yet as buyers are still paying premiums for newer models and staying away from most of the older ones.

So opportunity #1 is with aircraft in the 10-20 year age group. Find one in good condition with and with good maintenance records, get a reasonable deal and budget in for upgrades and possible component overhauls. Within six months you will have an aircraft with no major inspections due for a few years. The problem there may be that the refurbish and after-market shops are busy. So before heading down that path, find out how long a wait for that new interior, or avionics modification. Also, plan on doing this if you will keep the aircraft - not flip it. Even older aircraft in great shape are taking a relatively long time to sell.

I can't stress enough the need for a thorough pre-buy with any pre-owned aircraft. Do your homework, understand the costs beyond the acquisition, and be prepared to spend after the sale.

Turbine opportunity #2 may be in patience. Some of the economic news is mixed. As a rough barometer, if the stock market declines, the aircraft market will follow in about six months. If you are in a position to wait, that may be a good plan. I'm no economist, but sooner or later the market will turn. When it does, and if you are still in a position to acquire an aircraft, there may be some good deals on positions for new aircraft deliveries from companies looking for a quick infusion of cash.

If you are in the market now because you have to acquire an aircraft now, your options are either pay top dollar for top quality pre-owned, or be thrifty and very careful and get an older aircraft that you go into with eyes wide open as to the after-purchase costs and disadvantages of owning the older, but still useful, aircraft.

Are you in the market for a pre-owned aircraft Globlair.com's Aircraft Exchange is a great place to begin your search. They list aircraft from right off the factory floor to turbine aircraft that are in service, you should be able to find the right aircraft for your company.

What is your opinion of the current turbine market? Are you seeing different market trends other than what I have discussed? Let us know, please use "Reply to this Article" link below.


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