With the 2021 calendar changing from June to July, aviation’s year of economic recovery was already half over, and if the current state of the pre-owned aircraft market is any indication, that recovery is showing a healthy rate of climb as the industry and aviation community ascends out of the depths of the COVID-19 pandemic.
The comparisons of the pre-owned market to the red-hot US real estate market are many, with lower inventories and higher demand driving up prices. Anyone that has tried to buy a home recently would recognize the pre-owned aircraft market as being equally competitive, with cash offers beating out buyers who wish to finance their next airplane. This surge has aircraft brokers like David J. Fill II, president and CEO of Fill Aerospace Solutions seeing a significant uptick in activity as 2Q21 ends.
“The market is hot right now,” Fill said. “Sellers are demanding asking prices nowhere near VREF or bank values, and buyers are paying those prices. And we are seeing very few tire kickers at the moment—buyers that are looking are ready to pull the trigger with cash in hand, not unlike the housing market.”
Inventory is generally low, Fill explained, and while there are still piston and twin-engine aircraft out there to buy, “nearly all of it is overpriced,” he said. “One thing we are seeing are a lot of airplanes that haven’t flown in years that need lots of work coming to market with a ‘fresh annual’ because of the demand and inflated prices increasing the likelihood that the airplane will move quickly.”
Segments of the pre-owned aircraft market that are very hot according to Fill are single-engine piston models like the Cessna 172 and Piper Cherokee family, high-performance pistons like the Cirrus SR22T and Beechcraft Bonanza, single-engine turboprops like the TBM family, Epic E1000 and Pilatus PC-12, twin turboprops like the King Air line, and single-pilot Cessna Citations.
To illustrate just how much demand there is now, Fill points to a recent sale of an Epic E1000 turboprop. “We had a King Air listed on Controller that sold the day before, and we hadn’t even had time to pull the ad yet. Another customer called asking about it, saying he needed an airplane right now. We had just placed the Epic up for sale and had not even taken photos of it or listed it anywhere. The customer signed a purchase agreement for the Epic sight unseen and wired his deposit into escrow that same day. The Epic listing never even made it online.”
The “days on market” numbers that Fill and other aircraft brokers are seeing reflect just how hot the market is right now. “In 2019, reasonably-priced aircraft would close in 30 days or less. Now we are seeing most airplanes that are priced right being under contract in less than a week,” Fill said.
When the COVID-19 pandemic hit in early 2020, Fill said it was as if someone flipped a switch and the phones stopped working for about a month, with buyers backing out of deals in the works and sellers putting their listings on hold. “Everyone was just waiting to see what was going to happen, not only pandemic-wise but also to our economy,” Fill said. “A month or so later, things fired back up again and 2020 ended up being our busiest year on record. By September, prices were trending upwards because people were working from home with plenty of time for flight lessons and other activities. We saw a lot of owners taking big steps up from piston singles to single-engine turboprops. Despite 2020 being our busiest year, we had less than 20 percent of our clients finance aircraft—there was lots of cash being spent on aircraft.”
For anyone hoping to put a new (to them) pre-owned airplane in their hangar, Fill has some worthwhile advice for buyers. “Don’t settle for junk,” he said. “These prices will come down eventually and when they do, people who are buying high right now will take a hit. Every airplane out there for sale right now is asking high prices, so do your research and hire a pro that can guide you through the process and save you from making a big mistake. Whether you are looking to buy that first trainer or move up to a large cabin business jet, patience and market knowledge is your friend right now.” The new aircraft market also survived the 2020 pandemic reasonably well, as noted in Flying’s 2020 Buyers Guide.
