Aircraft Sales Insights

A Service of Dallas Jet International

The Aircraft Sales Market is Improving for Large-Cabin, Newer Airplanes

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We’re seeing that the aircraft sales market is improving, at least for some aircraft, as evidenced by the number of transactions we’re completing at DJI. Improvement has been particularly dramatic in the first quarter of this year, especially since the first two quarters of each year are traditionally slower – there is generally a push of transactions in the last quarter of each year.

aircraft sales market is improving

You can see from the chart that first quarter sales for 2011 have eclipsed the first half year in the previous two years.  The trend line displayed is conservative, since the last period reported is a quarter rather than a half year. Other brokers are reporting similar results.

This is a good sign indicating aircraft values will improve as surplus inventory is sold. Buyers are back in the game, but they are being selective.  Demand is improving most for large cabin aircraft that are well-equipped, low time, and newer than 10 years old.   Demand for small to mid-cabin and older aircraft remains flat to slightly appreciating. Demand is still depreciating for aircraft older than 20 years that are higher time and less well-equipped.

Gulfstream 550 Transaction Values

A Gulfstream 550 is a newer, large-cabin aircraft.  We saw the values dip in 2010 and then begin to recover in 2011 as pictured above.

Older & smaller aircraft transaction values

This chart shows the continued (but possibly reducing rate of) decline of values of mid-sized, older aircraft.  The Hawker 800XPs on the market tend to be in the range of 10 years old or so, and Falcon 50s were made until 1996 (replaced by the Falcon 50EX) and are therefore at least 15 years old.

Aircraft Sales - time on the market

Again, we see that larger, newer aircraft are spending less time on the market than mid-sized older models.

Chart - Number of aircraft on the market

We see owners re-entering the market, up from a low in 2010.  While demand will continue to strengthen for large, new aircraft, we suspect that prices will remain low for the smaller, older aircraft for the near future due to the increasing number of aircraft entering the market.

Of course, you don’t always have a choice of when to buy or sell an aircraft. The market is one of many factors you need to consider, as well as your business transportation needs, budget, cash flow and other timing considerations.  We use extensive, custom research to make the most successful transaction possible out of every aircraft purchase or sale.

If you have the option, now is a great time to sell if you have a larger, newer, better–equipped aircraft.   Now is a great time to buy if you’re looking for a mid-size or smaller cabin, older aircraft.

Brad Harris

Brad Harris is founder and CEO of Dallas Jet International. Mr. Harris holds a Bachelor of Science Degree in Professional Aviation and Airway Science and a Masters Degree in human resources from Louisiana Tech University. Mr. Harris entered the aviation industry in 1989 as a corporate pilot for a Fortune 500 corporation. In 1993, he started a successful aircraft leasing and renting company which expanded to a successful aircraft management company in 1995. In 1993, Mr. Harris began his aircraft sales career and, in a very rapid fashion, became one of the most highly respected aircraft brokers in the World. In 1998, Mr. Harris started an aircraft sales, consulting, and brokerage company that is known today as Dallas Jet International. Mr. Harris is a current airline transport pilot who is type-rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker 125, Falcon 10, Citation 550/500, Beechjet 400, 400A, Lockheed Jetstar II, Diamond Jet and King Air 300/350. In the many different aircraft markets, Mr. Harris parlays extensive hands-on knowledge and experience into clear results for his clientele. In addition to Mr. Harris maintaining a career focus on aircraft sales, he also has extensive experience in aviation consulting and management. Included on his client list are several clients for whom Mr. Harris and his firm have set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets. He and the firm are currently managing a Gulfstream V, a Gulfstream IV, a Falcon 50, a Citation II, a Citation ISP, a Citation Mustang, a Hawker 400XP, and two King Air 350’s.What most people do not know about Mr. Harris is that he possesses significant entrepreneurial experience in real estate and commercial insurance. This business experience, combined with his unparalleled experience in all facets of corporate aviation, has been the foundation of success for Dallas Jet International and its clients.

The (Air)Speed of Business

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Most people are surprised when they hear me say that the airplane business often moves at lightning speed.  In one of the worst down markets since the inception of business aviation, it would seem logical that everything moves with the speed of a tortoise.  When you analyze the aggregate numbers of the current market and the rate and volume of transactions, it truly is moving slower than normal.  Values are at record lows, with some markets continuing subtle descents.  So, how can our current business environment be associated with speed?

Speed will get you the very best airplanes.  What we are seeing today is that most airplanes that are transacting are on the market for a very brief period of time, as compared to the airplanes that are not transacting.   I’ve seen airplanes last as little as 2 days on the market, even in this environment.  Quality always goes first.  It is the broker’s job to get our clients first in line to this quality, “best deal” airplane.  We do this by being nimble, quick, decisive, and proactive.  Each day we study and research the various business aircraft markets, and  educate our clients on the statistics of the markets as well as past and predicted trends.   By providing that “market intelligence”, we give our clients the confidence they need to act swiftly when the right deal presents itself.

How does the best deal present itself?  My experience indicates that it presents itself in one of 3 ways:

  • Unannounced, aggressive price reduction. A seller makes the decision to aggressively reduce their price after watching their aircraft sit on the market for months with little to no interest.  The reasons for the price reduction could be many, but the bottom line is that there is a sudden price reduction.  The relationships that DJI has with all of the various brokerage firms who, like us, represent sellers, prove invaluable here.  Guess who the seller’s broker is going to call before they announce the price reduction to the retail open market?  They are going to call me and many of my peers first.  Because of these relationships DJI will always have news of a price reduction before the open market hears about it.  By capturing that information early, we can position our clients first in line to the deal.
  • A transaction falls through, suddenly making a quality airplane available again. There is always a relatively high chance that an aircraft deal can fall through.  Our motto is to never give up on a good deal.  It’s not sold until it’s sold!  DJI’s staff tracks pending deals in the various business aircraft markets.  By doing this, we will know a deal is falling through before the open market.   Again, this knowledge allows us to act quickly and swiftly to get our buying clients first in line to the best values.
  • An airplane is being newly offered.  If you wonder how a $10 or $20 million airplane can sit on the market for only 3 days, wonder no more.  I can assure you that the buyer and the respective agent knew about that airplane well before it hit the market.  Again, the market intelligence that we provide will get our clients first in line to the deal.  A large number of the best value aircraft transactions are consummated before even being published on the open market.

The only way to acquire this solid market intelligence and capitalize on the best value aircraft is to retain the professional services of a broker such as DJI, that conducts this level of research.  Speed and market intelligence provide our buyers an unmatched competitive advantage over unrepresented buyers in this marketplace.  The best deals are won with quickness and confidence, even in a Buyer’s market.

As our readers may know, approximately 50% of DJI’s brokerage business is representing sellers.  In a future article, I will write on the importance of speed and market intelligence in the aircraft selling process.  The consequences for sellers are significant if they do not have the proper information to act swiftly and confidently in the marketing and pricing of their aircraft.

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.