NARA Perspective Blog: Pre-owned aircraft rise like Phoenix rising

By Rollie Vincent
President, Rolland Vincent Associates, LLC

The phoenix is an enduring symbol of regeneration in cultural and spiritual lore.  Popularized again in the blockbuster Harry Potter series of books, the mythological creature is an appropriate image for the rebirth of the business aviation industry.

Rising from the ashes of 2009, transactions of pre-owned business jets continue their long and steady climb-out.  Inventory and transaction levels have now returned to pre-recessionary levels, fully six years after the darkest days for the U.S. economy at the beginning of 2009.

By many measures, we have passed through a difficult, frustratingly slow recovery.  This has tested the patience – and the business models - of aircraft brokers, dealers, financiers and others who make their living by serving the growing demand for business aviation.  Growing, you say??  How can this be? 

In 2014, there were almost 2,400 pre-owned business jets that exchanged hands around the world – i.e. whole retail sale transactions – accounting for about 12% of the fleet.  Transaction volumes in 2014 were up 10% year-over-year, and an impressive 74% over the recessionary trough of 2009.  Total bizjet inventory for sale is now hovering around 11% of the world fleet, back to the pre-2008 levels.

There are now more than 21,000 unique operators of fixed-wing turbine business aircraft around the world, and more than 12,000 of these operate at least one business jet.  From 2009 through 2013, the number of business jet operators grew 20% worldwide; operators of large cabin business jets grew 29% over this same timeframe.  In fact, the large cabin operator base has grown at 7% CAGR over the last 10 years – certainly nothing to cry into the ashes about.

So why all the misery?  Why, for some folks, does this “recovery” not feel like, well, a recovery?  Two interrelated things come to mind: 1) Buyers are still tentative, or (egad!) prudent; and 2) Prices are still soft, or (egad!) declining. 

If there is one thing that seems to be missing from this recovery, might it be the marketplace exuberance that many of us remember from days not long past?  Put simply, many people lost a lot of money (more than most of us will ever be able to count) in this recession, and this happened recently.   Many lived through a bewildering time when their businesses were denied access to credit, and when their assets – real estate, machinery, and aircraft – literally cratered in value.  Many experienced a loss of financial control that was de-stabilizing and probably frightening.  Given that these events occurred just a few years ago, is it any wonder that we are still, collectively, emerging from a pile of ashes? 

For many prospective buyers, it is a new day, with renewed liquidity and confidence.  Thanks to vigorous competition and heavy R&D investment, a plethora of new aircraft is already here and on the horizon to entice buyers, who will move on and up from their current models.   For those involved in pre-owned business aircraft transactions, the times are good and getting better to create new opportunities to help more businesses and individuals enter the market.

About Rollie Vincent
Rolland (Rollie) Vincent is President of Rolland Vincent Associates. He has almost 30 years of experience in business, regional and international aviation, including Bombardier, Cessna, Learjet, Flexjet, and ICAO.

With a background in market research, economics and statistics, he has held senior leadership positions in marketing, strategy, business development, and consulting. His roles have included Vice President of Strategy & Business Development at Cessna, Director of International Airline Analysis at Bombardier Aerospace, Director of Marketing, Strategy & Business Development at Flexjet, and Director of Strategy & Communications at Learjet.

Rolland has an MBA in international business and marketing, and a BA and MA in urban and economic geography from McGill University.

Posted August 4, 2015
Written by Devri Pitts