Used Private Jets More In Demand, Implies Stronger Economy

Credit: Airly

Private Jets spell luxury and comfort whilst travelling. And, now they are catching the eye of affluent travellers and corporations who are taking the advantage of soft pricing and reduced depreciation of second-hand (used) planes.

In the backdrop of US business growth and lower corporate tax rates, buyers are encouraged to delve into pre-owned aircraft, which has the average price rising 1.5% to US$9.7 million in April. This development is an evidence of a strong economy, which is reiterated by wealthy individuals and companies demanding used private jets before they get clear.

Private Jets More Affordable
After the 2008 recession, the private-jet business collapsed and companies scaled back on travel to curtail costs. The earlier boom found prices augmented to astronomical levels and also featured many planes being built. So with the crash, pre-owned aircraft rapidly lost value. Meanwhile, encouraged by expanding businesses and lower corporate tax rates, buyers are encouraged to look into pre-owned aircraft.

Sense of Urgency
In the backdrop of depressed prices, planes are not having the for-sale signs lingering anymore. A sense of urgency is featured in the buyers of used jets. And, the average asking price for the pre-owned jets (small to large), increased 1.5% from the previous month to US$9.7 million. Moreover, the used-jet prices have reduced to almost 25% since the third quarter of 2015.

Price Depreciation
The depreciation has also reportedly slowed down. According to sources, the used-plane prices were dropping by around 6% each quarter, during the recession. Currently, well-maintained aircraft are depreciating at a normal rate of around 1% to 2% each quarter. The upward trend is a relief for business-jet makers like Embraer, Bombardier, and Dassault Aviation. The jet makers also have cut production rates and offered discounts to reduce the glut of aircraft.

Reduced Competition
Meanwhile, the used aircraft side is observing less competition. In the context, manufacturers are still selling planes at discounts to new aircraft sales in the past.

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