Aircraft Inventory Challenges Require Experience and Connections
The secret of private aviation is out. As more and more travelers have discovered the myriad benefits of flying their own plane, it has put a squeeze on aircraft available for purchase in the marketplace.The past two years have created a sellers’ market for preowned aircraft. When there are fewer aircraft on the market, how does one acquire a plane? By working with experienced brokers who have the connections to help buyers handle aircraft inventory challenges.
Our team at Hatt & Associates has a network of connections throughout the world of global aviation. That’s important in this time of nearly unprecedented aircraft shortages. Industry market observers consider that there is an even sales market when 10% of the private aircraft are available for sale. Currently the number is closer to 3%, with many aircraft types at close to zero.
To overcome this, we work with brokers and dealers around the world, and talk to retail customers. The aircraft a U.S.-based buyer needs isn’t likely to be in the same state, or even region. It might be out of the country, in places where business aircraft have historically been available such as Western Europe, but also in emerging markets such as Jakarta, Indonesia.
Mostly, though, finding the right aircraft requires staying ahead of the curve. That means keeping track of aircraft before it ever gets to the larger market. We analyze how new aircraft entering service will impact currently owned aircraft that can become acquisition targets. Knowing which individuals and businesses are likely to upgrade their fleets gives Hatt buyers an advantage to getting the plane they need.
At Hatt, we have invested in developing relationships, and will go anywhere in the world to find an aircraft. Clients benefit from connections made over decades in the business, with operators and dealers of every major business aircraft manufacturer.
With the right help, buyers are still able to find the aircraft they need, but it’s not without some caveats. The type of aircraft is likely available somewhere, but a single-owner, U.S.-registered aircraft might not be. In that case, leaning on the international expertise of aircraft professionals is key to properly vet the quality of the aircraft, and to find possible problems with the transaction.
Just because there is a sellers’ market doesn’t mean buyers should pay a premium for aircraft that will need upgrades or modifications to accomplish their missions. One aspect of this current market is that prices of aircraft have actually risen to the value of the asset. Pre-2020 many aircraft were actually underpriced, considering their importance to business, productivity and flexibility. The market has especially raised the value of older aircraft.
Even with that in mind, it’s important to not overpay just because an aircraft is listed as available. With so many transactions being completed before an aircraft officially hits the open market, buyers need to have a team with the analytical strength and research to determine what a listed aircraft is truly worth.
A number of factors are likely to keep aircraft inventory low going forward. While the market is slowing its acceleration, there are still reasons buyers are facing challenges.
Manufacturers, or OEMs, are still on a backlog for new aircraft delivery. Some of those delays are due to planned work, while others are impacted by global supply issues. Regardless of the reason, it can take years to take delivery of a new aircraft. That affects the preowned market with fewer total aircraft available, and fewer aircraft entering their first resale.
Airlines continue to cut routes and face crew shortages, making commercial service less attractive to travelers. That should push more buyers into the aircraft market, as well.
Finally, many are recognizing how valuable aircraft are as physical assets, with interest rates increasing, stocks dipping and inflation continuing to rise. Buyers have to contend against others who are looking to hard assets in uncertain economic times.
Current aircraft owners looking to capitalize on the market value need seasoned aviation professionals to maximize their return, and to avoid a possible sticker shock for a replacement aircraft. We can help buyers plan for and take advantage of bonus depreciation deductions that allow aircraft to offset business taxes. Hatt also offers consultation services for fleet planning to develop a road map for acquisition and replacement.
Contact our team to assist you to locate the right aircraft for your needs. Lean on our worldwide network of connections to find a solution.