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Aviation History
2002
2002 - 2656.PDF
Used aircraft The unrelenting bad news of the past 18 months has resulted in slow trading in secondhand aircraft, with prices falling and companies keeping aircraft for longer KATE SARSFIELD / LONDON Over 15% of the Dassault Falcon 50 fleet is up for sale These are anxious times for the used business aircraft market. It was the first to feel the economic slump after the 11 September ter rorist attacks, while the Enron and Worldcom accounting scandals earlier this year have left the trade in its most depressed state for more than a decade. "Things started to slow down when the first recession hit in March 2001," says Rick Engles, president of international business aircraft broker Vance and Engles. "Up to that point we had had a remarkable period of growth, but now there's two years' worth of supply for almost every type of business jet looking for a buyer." Engles says more than 30% of the exist ing business-jet fleet is up for sale. "Around 3,500 aircraft are available. For example, of the 82 |Bombardier| Challenger 600s still flying, 33 are for sale; of the 500 Learjet 35s in service, 100 are available; and of the 250 [Dassault] Falcon 50s flying, 40 are looking for a buyer." The Chicago-based company's co-owner and chief executive Jim Vance says the bad news of the past 18 months has produced one of the slowest markets in the broker's history. "As inventories have grown, so the value of corporate jets has dropped. Since March last year, prices for certain types have plummeted by more than 30% and sellers are typically forced to accept less money for an aircraft than they paid for it," he adds. Large banks have the option of leasing out the aircraft while waiting for the mar ket to recover. Private individuals and small companies that paid a higher price for an aircraft 18 months ago are less fortu nate, as the amount of their outstanding loan probably exceeds the current value of the asset. "A Challenger 600 which would have sold for $11 million last year would now fetch around $6.5 million," says Engles. "A Gulfstream IV with a $23 mil lion price tag 18 months ago would sell for about $18 million today. Even a low-time Cessna Citation X, one of the aircraft least affected by the market downturn, would sell for around $2 million less than before." In a report published last month, US analyst JP Morgan says the asking price for in-production business jet models, such as the Citation X, is down an average of around 8% year-on-year, and their resale value continues to weaken. "Price deterio ration is evident in all three market seg ments [large, medium and small aircraft] - but large types have been hit the hardest, now down by an average of 10%," the report says. The turboprop market is also reeling, according to Johnny Gantt, chairman of specialist turboprop dealer Gantt Aviation. 56 3-9 SEPTEMBER 2002 FLIGHT INTERNATIONAL www.flightinternational.com
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