AINsight: A Year of Rewards for Bizcraft’s Patient Buyers

Wouldn’t it be great if we as a business aviation industry could boast an award for patience? Over the past two years, we have witnessed rapid, unstoppable growth that no one was prepared for. The FAA is struggling to perform basic functions such as filing aircraft registration documents, while pilot and mechanic shortages have driven up wages due to supply-demand imbalances, and even hangar space is a scarce commodity.

These flawed supply equations have not only driven up the price of business jets, but have allowed sellers to dictate processes that do not favor buyers, such as limited inspection rights. This is compounded by critical supply chain issues that delay pre-purchase duration and all other commissioning criteria. The timing of overhaul of the engine also has a negative impact.

The mad desire to buy at such a shortage brought no reward to the buyer, except for the reward of overpaying and depriving the process of critical parts in order to obtain a tax benefit.

So what will be the reward for those who are going to make a deal to buy a plane in 2023? Simply put, there is little doubt among those of us who watch this market on a daily basis that aircraft shipments have been increasing by several percentage points over the past few months. This increase in supply, which I believe will continue to increase, will add immediate balance to a once very unbalanced market.

We told our contract buyers to wait until late 2022 because we believed the reward would come. I’m happy to announce that it’s here!

The days of arguing that the market favors the seller are almost gone. But I also don’t think it should be called a buyer’s market right away. The pendulum didn’t swing, and maybe it didn’t swing that far, but it definitely swung closer to the middle. Much nicer to work with balance again.

Sorry sellers, you missed out on the madness and buyers will once again have the opportunity to negotiate the outcome of the transaction in a more traditional manner. This means not just being forced to agree to pay the full asking price or, even worse, getting into a bidding war, but being able to negotiate a more balanced and favorable opportunity to inspect the aircraft and being able to negotiate a more balanced and favorable time frame for the purchase.

Yes, some sellers will back off, but I believe they will have to back off from those sellers who understand the importance of a balanced market. Don’t get me wrong — as I said, it’s not a buyer’s market, but sellers who ignore the correct value of the aircraft being sold, or ignore the correct rights of the buyer, will not be in a favorable position.

It will be the best time for both parties. I believe that a more traditional annual residual loss rate of 5 to 10 percent will prevail. We are already seeing year-to-date price corrections of 6 to 10 percent in oversupplied markets.

So good for all of you who have been waiting to buy – this year is going to be your year of rewards. See you again on the playing field.

Jay Messinger is it General director and founder of Mesinger Jet Sales, an international aviation brokerage firm. With 49 years of successfully buying and selling aircraft, Mesinger Jet Sales has a global reputation for personalized, transparent service.

The opinions expressed in this column are those of the author and are not necessarily endorsed by him AIN Media group.