When is the Best Time to Sell Your Aircraft?
The private jet market has been extraordinarily active for the past two years, as anyone who has looked to purchase an aircraft can attest. As prices went up and available inventory stayed low, that has made for a challenging time for aircraft owners to decide when the optimal time would be to sell their planes.
That stability of the market has now arrived. If an owner is ready to move up to their next aircraft, or realize a gain on their current asset, it’s a good time to get in touch with an experienced broker, such as Hatt & Associates.
Previously, owners were holding out – hoping to see the 10% price increases over recent transactions. But, like other active markets in other industries, eventually the large comparative prices slow down and supply meets demand.
So why is it a good time to look at selling one’s aircraft now? Prices are still great for sellers, without much risk of missing out on a large increase in the next six months. And older model aircraft have started to see some of their prices drop. This is likely the high-water mark for the foreseeable future.
While available inventory is increasing from historically low levels, it’s nowhere close to the pre-2021 normal level of 10%. It has come up from its lowest levels, but still hasn’t topped 5%. Keep that in mind when deciding to sell. Just because some areas might proclaim that inventory is up 40%, that’s coming off a period where less than 2% or even 1% was available.
Becoming a Buyer and a Seller
Most of the people who have entered private aviation service in the past three years will never return to commercial airlines for their travel needs. The advantages of time, productivity and flexibility are just too great, especially as airlines still struggle to meet route and flight demands with reduced pilot staffing.
That means a continued emphasis of businesses and individuals who enjoy the benefits of private aircraft ownership looking for additional planes or an upgrade to the ones they started with. This group is looking for aircraft solutions and are making offers on newer planes quickly.
Another reason that might have caused an owner to hold on to their plane in the past was the lack of available replacement options. With increased inventory, it can now be the right time to make the move to a bigger aircraft or one that’s more specialized for the mission at hand.
Upgrading to the next aircraft also makes sense for tax considerations, as 80% bonus depreciation is available to offset potential gains in 2023. Starting the buying process now ensures enough time to mitigate this year’s burden well in advance of Fall tax planning.
Transactions are also able to go through more quickly at this point as accompanying maintenance, inspection and installation backlogs at MROs are starting to ease up. Supply chain issues and delays had been a reason for some owners to hold on to their aircraft longer.
Leaving Aircraft Ownership
For clients who were ready to leave aircraft ownership behind, one obstacle had been the lack of availability in charter services to answer their future travel needs. It was hard to be assured that a charter option would be there when needed, because casual private aviation users were pushing nationwide bookings to unprecedented levels.
The charter market has also stabilized. A current aircraft owner can realize their gains in selling their plane, and still feel comfortable that charter will be available when they need it. There’s also more flexibility in charter availability, meaning it makes sense for some clients to choose that option when their needs are fluctuating. Send two people or the whole team – now charter can fulfill that.
For owners who have been holding onto the aircraft seeking charter revenue, that stabilization of the market means there are fewer opportunities to generate additional income.
To find out if this is the right time to sell your aircraft, or how we anticipate the market changing, contact Hatt & Associates to advise you on the best options.