With 2025 well underway and 2024 in the history books, it’s helpful to take a moment and reflect upon the industry as a whole. Studying the macro environment at moments like this can help understand occurrences on the micro level. Looking at transaction volume, supply of aircraft for sale, regional and global fleet growth, popularity of aircraft types, and transaction timing provides useful information on what has happened and what to expect in the year ahead.
By and large, transaction numbers are back to pre-Covid levels, signalling the end of the demand bubble that inflated so spectacularly, and prices have again reverted to yearly depreciation. While the demand parameters have changed massively since the beginning of 2020, rising to unsustainable highs and now reverting to the mean, we are back to trading conditions reminiscent of the decade prior to 2020.
What has not reverted back to its pre-covid norms are operating costs. These have increased significantly over the last 5 years and show no sign of stopping. The increases in costs are across the board – maintenance, parts, programs, services, etc. It is not only costs that have increased, but downtime for maintenance as well. Parts shortages are still common and result in increased time on ground during maintenance meaning an inflated hourly cost that strains even tolerant owners.
The rise of costs is something that I believe will affect the older and lower value aircraft hardest. Manufacturers and vendors are finding more reasons to cease supporting parts and systems that are 20 years or older, meaning upkeep for these systems will get more difficult, time consuming and expensive. For aircraft with a lower value, it becomes harder to justify spending ever greater proportions of the asset’s value simply on keeping it flying. Just given the lower basis of the older and smaller planes, we are seeing this cost inflation contribute to more decisions to walk away from ownership entirely. It is sadly a trend that we predict will become more common as time and costs march ever onwards.
But the industry as a whole is healthy. Manufacturers continue to increase output, and demand seems to be robust especially from large fleet operators such as NetJets and Flexjet. Transactions in the pre-owned world are stable, and the market is not skewed heavily in either the buyer or the seller’s favour.
Safe Travels.
Oliver Stone
Managing Director
– This article is taken from Fly-By Newsletter Issue 25.