What high inventory means for aircraft sellers
In the last six months, there have been large spikes in inventory across multiple aircraft models. This has created a supply/demand imbalance that is proving tricky for sellers to navigate.
Buyers are very aware of the marketplace through online listing sites and are cognizant of the number of aircraft for sale and if that number has increased in recent months. In these market conditions where they have witnessed this increasing inventory, buyers understand they have more leverage. With more aircraft pursuing a relatively consistent number of buyers, sellers need to compete more on both the price and the terms they are offering.
PRICE
In these supply saturated markets, we recommend clients lead the trend on value correction, not follow. If you wait months to reduce your price when others have already started to do so, you will always be behind market values. All it takes is one or two sellers to actively compete on price or terms and the marketplace shifts dramatically and can leave you behind. Predicting future movements of the market is very hard to do so look at the data to see if there are enough transactions occurring to justify the market keeping values stable, or if supply far exceeds the demand and therefore price reductions are almost certain to occur.
TERMS
While providing attractive terms in a transaction will rarely be the sole enticement for a buyer, having un-attractive terms is almost certain to prevent a buyer from proceeding. One of the common themes in the extremely under-supplied market of the peak post-Covid boom was sellers’ refusal to allow buyers to conduct proper due diligence to the aircraft. Those days have passed, but we find that some sellers are trying to restrict the ability of buyers to conduct proper due diligence. In markets with significantly increased supply, this serves to only deter buyers. Consider flexibility in terms of the Pre-Purchase Inspection scope, location of inspection, ferry costs and a variety of other items. While price will be what entices someone to buy, terms will be what convinces them to actually go through with the purchase.
Remember that a longer resale time means more cost to an owner. Time is money as you continue paying for maintenance, pilot salaries, operating costs, management fees, etc. In a market with inventory rising so quickly, a lower price that results in a faster sale can end up being more financially beneficial for a seller when the final accounting is taken into consideration.
Determining your real motivator for the sale is important in a supply heavy market. If you really want to sell your aircraft, you will need to act accordingly with regards to your market. If you are not willing to take what you perceive as a hit on the price, then remove it from the market and enjoy it until you are more committed to competing in the market conditions of the day.
We tell clients to carefully look at what will make a buyer fall in love with their aircraft. Buyers fall in love for one of two reasons: 1) there is some unique attribute about your aircraft that is not otherwise available in the market, or 2) they fall in love with the price. Buyers can be choosy so look at your aircraft and determine what sets it apart such as a recent inspection completed, Starlink installed, low hours, a uniquely beautiful or new interior, or upgraded avionics. These are the sorts of things buyers fall in love with. Conversely, it may be that your aircraft does not have a standout attribute which means your price point will be the biggest factor to attract someone to move on your aircraft.
From a buyer perspective, know that desperation in a seller is rare. Most owners sell their aircraft out of convenience not necessity, and it is very rare to encounter an owner that needs the money. If you come in at an offensively low offer, you will be disregarded and not taken seriously. Be reasonable in your initial offers, and remember that while the market has more supply now, you still are not the only buyer. A heavily discounted first offer usually does far more harm than good with regards to your chances of buying an aircraft.
For buyers and sellers, your broker should be keeping you up to date with your latest market conditions. This knowledge will enable you to make the best and most beneficial choices for you.
Cessna Citation CJ4 – aircraft for sale
Gulfstream G450 – aircraft for sale
