2013 has been a good year and going into 2014 we can see both positive trends and challenges still ahead.
Some of the positive signs that we have seen over the last twelve months include more first time buyers, more sales activity, full maintenance and refurbishment shops, a very strong 2013 NBAA Convention and new product developments. Our firm has always done a lot of first time buyer work and we enjoy the process, but there have been very few first time buyers in the market since the great recession. That has started to change in 2013 and we helped many first time buyers buy all kinds of aircraft from small to large this past year. We also have several new first time buyer acquisition projects getting ready to kick off right after the first of the year. Additionally, we, like many of our friends and colleagues, have seen a dramatic increase in the level of activity for most of the inventory that we have been representing for sale. Maintenance facilities have also been experiencing great success this year as many people are investing in upgrades and refurbishment projects and most all internationally capable aircraft will need significant upgrades and investments in the near term to meet future avionic requirement changes. This year’s NBAA Convention was the most successful ever for our firm with back-to-back client meetings and discussions of very real near-term projects and we heard the same from many people. We also sold an aircraft as a direct result of being able to meet with a buyer’s broker in person at the show. And, several manufacturers announced new aircraft that they will build in the next few years (i.e. Falcon’s 5X) and others having started to deliver new aircraft in 2013 like Gulfstream’s G280s and G650s.
While 2013 was very positive in many ways and we can see great opportunities ahead, we still face a lot of challenges. There is still a lot of available aircraft inventory in most make and model markets. Companies and individuals are buying aircraft, but only because prices have fallen to a place where they recognize value and in many make and model markets they are still falling. If sellers think that this activity will lead to higher aircraft prices and they raise their sales price expectations buyers will go back to the sidelines. Many of our industry market reporting resources have spoken lately about shrinking inventories and higher asking prices. That is very concerning because what they are reporting is only a partial story and it paints and inaccurate portrayal of what is really going on. In many cases inventories are shrinking because owners are using their aircraft more or unwilling to accept fair market prices and consequently removing their aircraft from the market. Many of the remaining unsold aircraft are those that have higher than fair market prices and they are not selling, but instead sitting. No one wins awards in our industry for setting records for days on the market. The reporting sources should be reporting that figure (days on market) alongside asking prices to tell the full story. The truth is that only those aircraft whose owners’ expectations and pricing strategies are truly aligned with the real market conditions are those that are selling. The lack of financing for many aircraft and buyers also continues to be a drag on aircraft sales.
Aircraft manufacturers are also still struggling in many make and model categories trying to sell new aircraft and hopefully build a backlog. The high numbers of available pre-owned aircraft, particularly in the small and mid-size aircraft categories, are making selling new aircraft very challenging. Additionally, many of the emerging markets that our industry thought would help support new aircraft sales have slowed down dramatically over the last two years. The greatest demand for aircraft of all types continues to be in the United States.
I would be remiss if I did not also point out in this 2013 recap the exciting changes that we have made this past year. Everything in life evolves and in 2013 we have modernized our name, our look and our website. Our people, our professionalism and our excellence do and will continue to remain the same. When you have a few minutes, please visit our new website (www.jetsales.com) and check out the innovative ways that we present the aircraft that we represent for sale.
Overall, we are excited about 2014. The positive trends in the industry are strong and continuing to gain momentum. We are moving into this next year with enthusiasm, but also paying close attention to the challenges we all face as we continue to help our clients make smart informed decisions while completing their sales and acquisition goals. We look forward to speaking to you and working with you in 2014. Happy Holidays.