Predicting Used Aircraft Values

From Wheels Up - The Business of Aviation
Forbes.com

The worst of the global financial crisis is over but the damage done to the private jet market remains. The Cox Jet Index* fell from 310 to 179 between February 2007 and May 2008. It has rebounded sharply (see charts below) especially in the past couple of months. In the past twelve months the index is up 14%.

A substantial inventory overhang remains. At the beginning of October 2007, there were 2,469 turbine business-aviation aircraft available for purchase (advertised, both ‘on’ and ‘off’ market, worldwide). That was about one out of every ten. That number began climbing as the recession wore on, and reached a peak just after Independence Day 2009.  Today there are 4,100 available for purchase, which is one out of every seven. What’s that done to aircraft values? They’ve fallen in half. Before the financial crisis, the composite/average lowest asking price was $9.2 million. Today it’s $4.7 million, a 51.12% drop in value.

With interest rates at an all-time low and with the Fed effectively printing $600 billion in an attempt to push us as far away as possible from the darkness that was the financial crisis, what pricing outlook can BizAv users and speculators expect to see?  Don’t expect anything close to a 10% market value rise per annum over the next five years. We might get half that, so let’s use 4% per annum, as my prediction. This results in the following market changes by the end of 2015 (all figures in $US):

For the full story, visit: Predicting Used Aircraft Values