Asset Insight Q2 Report: Drop in Business Jet Prices

Average ask prices for medium jets such as this Cessna Citation XLS+ decreased slightly in Q2 2020. Textron Aviation

Asset Insight, a valuations, audits, analytics, and consulting firm that produces reports on the valuations and marketability of business class aircraft, has released their Q2 2020 Asset Insight AI2 Market Report. The report shows a “considerable” drop in the asking price of many preowned aircraft during Q2 2020, while stating that “days on market” increased as much as 54 percent for some aircraft in the same time period.

The report analyzed all aspects of 134 fixed-wing models and 2,360 aircraft listed for sale, and after crunching the numbers, analysts found that the data “was not surprising” considering the effects of the COVID-19 pandemic on the aviation markets.

“Market data is reflecting what most businesses have known, that the COVID-19 pandemic has considerably slowed transactions of pre-owned business aircraft,” said Asset Insight president Tony Kioussis. “We’ve all been living in an unusual time, both professionally and personally. The decrease in transactions was anticipated by all of us in the industry. We started to see an increase in activity during late June, which could bode well for the industry. With the strong quality of aircraft listed for sale, this time should certainly be seen as an opportunity for buyers.”

Kioussis added that Asset Insight’s tracked fleet of aircraft listed for sale increased 8.2 percent during the first half of 2020, with large jets experiencing the greatest inventory fleet increase of 15.3 percent year-to-date, followed by 9.2 percent for small jets, 7.6 percent for turboprops and 2.9 percent for medium jets. “Transactions posted during the second quarter were significantly fewer than the first quarter, as well as substantially below the number generated during Q2 2019,” he said.

The Q2 Market Report dated July 2020 showed that year-to-date, prices for large business jets have decreased 9.6 percent, while small jet prices fell 8.8 percent. Medium jets fared slightly better with a 5.2 percent price decrease, while turboprop prices fell 5.1 percent.

Turboprop ask prices decreased an average of 6.9 percent in the last three months according to an Asset Insight report. Pilatus Aircraft

One very interesting element of the Q2 Market Report is their calculations of the Maintenance Exposure to Ask Price Ratio (“ETP Ratio”) which is determined by dividing the aircraft’s ATFE Value (the financial liability accrued with respect to future scheduled maintenance events) by its “ask” price. According to the report, as the ETP Ratio decreases, the aircraft’s “value” increases (in relation to its ask price). Aircraft whose ETP Ratio is 40 percent or greater are believed to have accrued an excessive level of “maintenance asset exposure” in relation to their ask price.

The average ETP Ratio for the “for sale” inventory of large jets was 64 percent, with the medium jets average ETP Ratio at 73.4 percent, and small jets ETP Ratio at 85.8 percent. Turboprops had the lowest average fleet ETP Ratio at 45.9 percent.

Overall, ETP Ratios decreased slightly in Q2 2020, which improved the inventory’s marketability. While average “days on market” worsened an additional 0.6 percent during Q2, the tracked fleet’s ETP Ratio improved to 69.9 percent, compared to Q1 2020′s 71.1 percent. During Q2, aircraft whose ETP Ratio was 40 percent or higher were listed for sale nearly 54 percent longer (on average) than aircraft whose ETP Ratio was below 40 percent.

Looking at the “Large Jet” market segment covered in the report, we see that the June 2020 “Asset Quality” was considered outstanding, with an average ask price of $12.01 million. The average ETP Ratio for this category was 64 percent. Gulfstream’s G650 had the lowest “days on market” at 143 days, closely followed by Cessna’s Citation Latitude at 152 days.

In medium jets, the Asset Quality was considered excellent, with an average ask price of $3.16 million. Gulfstream’s G250, with “days on market” of 156, just edged out Bombardier’s Challenger 350 at 157 days on market. The report’s “Small Jet” category also showed an excellent Asset Quality, with an average ask price of $1.86 million. The Cessna Citation CJ3+ was the fastest mover at 135 days on market, closely followed by the Cessna Citation CJ4 525C at 136 days.

The asset quality of the turboprop category fell into the “good” range according to the Market Report, with an average ask price of $1.54 million. The Beechcraft King Air 350i spent fewer days on market at 142 days, closely followed by the Daher TBM 850 at 145 days. The Cessna 208B “Grand Caravan” at 510 days and Piaggio P-180II at 502 days spent the longest time on the market.

In addition to publishing their Quarterly Market Reports, Asset Insight recently began broadcasting a new aviation podcast series covering the Aircraft Ownership Lifecycle, offering the business aviation community the opportunity to select episodes and topics on their schedule, and according to their interest and business segment. “As many of us work from home to maintain safe social distancing, our podcasts allow people to remain connected,” said Kioussis. “These podcasts can also assist new personnel entering the industry; people that would otherwise find it challenging to secure such information.”

Dan Pimentel is an instrument-rated private pilot and former airplane owner who has been flying since 1996. As an aviation journalist and photographer, he has covered all aspects of the general and business aviation communities for a long list of major aviation magazines, newspapers and websites. He has never met a flying machine that he didn’t like, and has written about his love of aviation for years on his Airplanista blog. For 10 years until 2019, he hosted the popular ‘Oshbash’ social media meetup events at EAA AirVenture Oshkosh.

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