If anyone’s looking for further evidence of a strong economy, here’s a sign: Wealthy individuals and companies are starting to snap up used private jets before they get too expensive.
Take Steven Myers. A private-equity financier and a licensed pilot, Myers had been patiently looking to buy a jet for years. But when he began noticing a drop in the number of planes for sale a few months ago, he moved quickly to buy a Cessna CJ2. (Myers wouldn’t say how much he paid, but the 2002 model he bought is listed at about $2.4 million).
“On this particular airplane,” said Myers, who run Los Angeles-based Dolphin Capital Holdings Inc., “I probably would have made a worse deal if I had waited.”
The private-jet business collapsed after the 2008 recession as companies scaled back on travel to cut costs. Prices had been driven to astronomical levels in the earlier boom and too many planes were built. When the crash came, pre-owned aircraft lost value at a dizzying pace.
But now buyers are coming out of hiding, encouraged by expanding businesses and lower corporate tax rates. It hasn’t hurt that President Donald Trump, long synonymous with luxury private jets, is seen as someone friendly to the industry. Barack Obama had often criticized private-air travel, helping keep the small-jet industry in a longer funk than other high-end segments of the economy such as watches and sports cars.
Sense of Urgency
Prices remain depressed from the heady days, for sure, but no longer are planes with for-sale signs lingering for months. Used-jet buyers are gripped with a sense of urgency not seen since before the financial meltdown.
In April, the average asking price for pre-owned jets, from small to large, rose 1.5 percent from the previous month to $9.7 million, according to JPMorgan Chase. They jumped another 2.4 percent in May. Still, used-jet prices are down almost 25 percent since the third quarter of 2015, the report said.
“What we’re left with now is very light amount of inventory in the pre-owned sector of quality, late-model business jets,” said Joe Carfagna Jr., president of aircraft brokerage Leading Edge Aviation Solutions. “It shifted from a buyer’s market to a seller’s market around the end of the year.”
That can be seen in the number of used planes up for sale. It’s now 9.3 percent of the current fleet, the lowest level in about 15 years. Back in 2009, it peaked at 17 percent, said Rolland Vincent, who provides a widely read market analysis called JetNet iQ.
Price Depreciation
In turn, depreciation has slowed considerably. During the recession, used-plane prices were dropping as much as 6 percent each quarter, said Jay Mesinger, chief executive officer of Mesinger Jet Sales. Well-maintained aircraft are now depreciating at a more normal rate of about 1 to 2 percent each quarter.