Given the interesting market conditions that 2018 presented aircraft buyers and sellers, a frequent conversation with our clients was on the overall health of the private jet market. When looking and analysing our marketplace, the number one thing to remember is the health of the private jet market is directly linked to the health of the overall economy. Private Jets are one asset class out of thousands that are all reliant upon a buoyant economy. As such, we are taking a look at the private jet market with an eye on how it relates to general economic swings. As the private jet market has been through a material improvement in 2018, it is important to remember that all things, particularly asset classes, are cyclical.
We are looking at one of the more salient indicators of the health of the private jet market: the percentage of the jet fleet for sale. By looking at this over a 33 year horizon, stretching back to 1985, two things immediately stick out: first, how cyclical the market is and second, where we are today indicates a stronger market than has existed in the last 20 years; stronger even than the boom that existed in the run-up to the financial crisis in 2008.
Interestingly, the low points on this graph (indicating a small percentage of the jet fleet for sale) roughly correspond with the top of boom markets, such as during the lofty valuations of the dot-com era and the 2007 peak of the mortgage and housing boom in the USA. The high points on the graph (indicating a high percentage of the jet fleet for sale) roughly correspond to the depths of recessions, such as during the dot-com bubble bursting and the financial crisis.
The data indicates that today’s market shows us at a point that is stronger than we have seen in many years. Given the cyclical nature of markets, it is tempting to look at a graph such as this and predict an imminent economic correction, affecting all asset classes including aircraft. It is important to remember that this is just one statistic and markets do not always act rationally – a correction could be many years away.
However, for both buyers and sellers, we think it is important to remind people that with some 11 years passing since the last peak, economies, markets and cycles always change. And while historical data is good at seeing trends and what has happened historically, it is terrible at predicting when things will happen. But change is a constant that affects all economic booms, recoveries and busts; this will be no different.
Blogs are written from real world experience by Colibri Aircraft’s individuals. If you have any questions or comments about the topic of this blog, please feel free to contact us at enquiries@colibriaircraft.com
