Aircraft Values – They can’t be determined in a vacuum.
I am on a flight headed home after closing on the sale of a Falcon 2000 that we have been representing for sale. The Falcon 2000 market and the recent activity in it are a good example of how our aircraft markets are starting to find their footing one make and model at a time. There was a six month stretch this year where there was very little activity at all in the Falcon 2000 market. This past summer after several months of no activity we sat down to discuss the market with each of our clients. We believed that there were one of two things going on; there were either no buyers at any price or the entire Falcon 2000 market was still overpriced.
Based on evaluating traditional pricing spreads between different aircraft types it became obvious that the Falcon 2000 market had not adjusted far enough at that time to fit correctly into the product line up of all corporate aircraft types. We needed to look not just at competitive Falcon 2000s, but also other aircraft types that were experiencing activity to understand what prices of Falcon 2000s should have been. If the buyers in the market could not recognize value because they were able to source other competitive aircraft at more respectively competitive prices then they were not going to buy Falcon 2000s. The Falcon 2000s did not need to be priced exactly the same as these other aircraft, but they did need to be respectively competitive within the overall market for buyers to recognize value.
And, as it turned out, there were some buyers in the market; prices had just not adjusted to a respectively competitive place to make it a compelling market to pursue. Over the last two months there have been several Falcon 2000 sales. All of them have sold at prices that were lower than the sellers initially hoped for, but within respectively competitive price ranges where buyers were able to recognize value which is what made them ultimately step in. The Falcon 2000 market has finally found its footing in the competitive landscape and it offers incredible value for buyers in both capital costs and operating costs. One market at a time we are on our way to a healthier aircraft marketplace.
I hope you have a great Thanksgiving!