The Value Zone

The prices in most of our aircraft markets have settled at a bottom where buyers could recognize value and have confidence that the free fall of prices had ended.  The result has been that aircraft have been selling again since the beginning of this year.  There are a few make/model markets, however, that have been slower to find a footing.

Several months ago I told a few clients for whom we had very limited activity on their aircraft that there were either no buyers at any price or all of the aircraft in their respective category were still significantly overpriced.  None of the other sellers in the same make/model segments were experiencing any activity either and none of the aircraft were selling.  It is a hard conversation to have when there are no real data points to look to when trying to reprice a market.  At the same time, I have seen the same consistent phenomenon throughout this downturn.  And over just the last few weeks, as many of the sellers in those respective markets have reduced their prices (including our clients), many of these aircraft have gone under contract (and we have significantly increased activity on our listings).

There are still many hardships in our industry, limited aircraft financing being one of the biggest, however, when prices are right, there are some buyers.  The consistent phenomenon is that once buyers recognize the right value, they step in.  Until the prices in a specific make/model category reach that value zone, the buyers stay away from the respective market. This isn’t about just selling at low prices.   This is about finding the right value zone where amongst the global fleet of aircraft of all makes and models, certain make/model markets should be priced to demonstrate appropriate value against the competitive markets.

As I said at the beginning of this post, most make/model markets are already in the right zone and aircraft have been selling again.  It is only a few holdout make/model markets that are finally finding their footing.  And, finding it is making all of the difference!