In this video, Don Dwyer of Guardian Jet, LLC, the aircraft brokerage and consulting company, shares his 2018 reflections and what we can look forward to in 2019.
Here are some key learnings:
- Aircraft activity has been high all year and is still up, despite stock market volatility
- We’re seeing some bifurcation of the market where some newer aircraft models are increasing in value as much as 15%
- First-time buyers are entering the market (from the fractional market) at unprecedented levels
- Corporations are exercising their aircraft fleet planes, which have been on hold
- Pre-owned sales activity is higher than OEM sales, but still a good time to buy new aircraft
Hi, I’m Don Dwyer from Guardian Jet. I want to talk today about 2018 and what we’ve seen in the marketplace. And then I’ll look toward the future a little bit into 2019.
So, 2018 — banner year for aviation sales. The resale transaction numbers were way up. It really started at the end of 2017, and rolled right through the beginning of the year with absolutely no slowdown in the first quarter. Actually, the markets picked up steam and continued all year.
We are, right now, experiencing some stock market volatility. And I will say that it’s slowed some decision making, but it hasn’t slowed the level of activity down. We’re still getting a lot of calls for airplanes. We still have a lot of activity across all the markets.
A couple of things we’ve noticed. On the valuation side of the business…there’s been a split in these markets, or a bifurcation in these markets, where the best airplanes are actually increasing in value. So, lowest time, newest vintage, great pedigree airplanes have actually increased in value–some as much as 15% this year. So that’s something we haven’t seen in some time. But it hasn’t been across the board.
I will say that almost every model has slowed in its residual value degradation—back to more historical levels (or what we’re used to in the past, that I can remember). But, the haven’t seen them all increasing. So older, the third or fourth iteration of an air frame, of a model, hasn’t been performing as well as what’s been built in the last 10 years. So we saw that happening on the valuation side.
Another trend we saw this year was first-time buyers. A lot of first-time buyers. What I’m calling the first real wave—and a wave that I’ve been waiting for—the first real wave coming out of the fractional business, buying their own airplanes (buying whole airplanes).
The fractional business is over 40 years old now. And we’ve just never seen the kind of numbers of first-time buyers. And where they’re buying in the marketplace
You know, a fractional owner was introduced to aviation a lot different than what used to happen in the past. Better airplanes, better service.
So when they’re coming out and buying whole airplanes it’s not the smallest, cheapest thing they can buy. We’ve bought many, or at least a few, three-cabin zone airplanes for first-time buyers this year. So that’s something that we haven’t seen in the past. A real trend of first time buyers and buying good equipment.
Corporate Fleet Planning
Another thing we saw, and this happened later in the year, was that corporations are really thinking hard about replenishing the fleet. Multiple aircraft fleet owners are now exercising fleet plans that have been sort of on the shelf. This is a very positive change.
OEM Aircraft Sales
I will say that the activity in the used marketplace hasn’t completely translated over to the OEMs, to the new aircraft sales.
Aircraft pricing, I think, on new aircraft sales is still pretty good. It’s still a good time. Great value in the new marketplace. We’re feeling very good about our new purchases.
Let’s talk about 2019. I mentioned the volatility in the stock market, and what’s that mean. I’ve been asked a little bit about “should I wait until January or March to buy an airplane as the markets reprice?”
My feeling is that, historically, markets don’t reprice in the beginning of the year. Some airplanes in those markets do—probably the ones that were holding on for a high price that didn’t sell in the real strong activity of the fourth quarter. Now some of those owners might get a little more religion and reprice. But we don’t see market pricing dip down in January, February and March. We sometimes see less purchases because the fourth quarter is very strong. But, I’m not predicting that the markets are going to fall apart come January.
So we’re still very bullish. We’re still very active in both the sales side and acquisition side of the business. And we think there’s more good to come. We’re watching it very closely. Of course, this is so driven by the economy. That’s a bigger question for somebody that lives in that world. On the airplane side, we’re still busy and we’re still going.
A Final Note: Thank You
One final thing. It was just a great year here at Guardian Jet. We added quite a bit to our business. We added researchers. We added another maintenance person—a Director of Maintenance. We added sales people in the field. Our internal sales team grew. So, we’re up to about 30 people now. We’re really excited. It’s been a great year.
Thank you to all of our customers (and anybody thinking about working with us). We’re looking forward to a great 2019, and have a great holiday!