The Importance of an Aircraft Market Analysis: G550 Review

In this 4-minute video, Doc Dwyer explains why an aircraft market analysis is important when buying or selling your airplane.

In particular, he gives you an in-depth look at the Gulfstream G550 market, and shares why you track and analyze all the details in a market to truly understand what’s going on.

Watch the video:

Doc’s Edited Transcript:

Today we’re going to talk about the Gulfstream G550 market.

I’m going to start with three statistics that just give you a sense of what’s going on in the market.

There are 30 aircraft for sale (or 5.2 percent of the market), and that 5.2 percent makes me start to think this is a little bit of a seller’s market.

Ten percent of a market is fairly standard.

There were 12 sales in the past six months (or about two sales per month), so we’re seeing some good activity two sales per month and 30 aircraft for sale leads us to 15 months to sell the current inventory.

This is a really important statistic that we like to track at Guardian Jet.

A 12- to- 18-month cycle is a very healthy market with good turnover. Less than 12 months and the market’s on fire; above 18 months, and we start to see a slowdown and prices really falling.

 

G550 Market Trends

The next thing I like to look at is some trending.

We track everything over eight quarters here at Guardian Jet. These two graphs jumped off the page to me. The first is the number of aircraft for sale.

As you see, the general trend over the past eight months is definitely down although we’ve seen an uptick in the first quarter of 2018, and another uptick in the second quarter of 2018.

For aircraft sold by model year, the second quarter of 2017, we sold 13 G550s. In the first quarter of 2018, we sold four. In the second quarter of 2018, we’ve sold three so far.

So you can see that the supply is starting to pick up; demand is definitely decreasing.

So what does that mean?

Let’s go back to our basic economics increasing supply decreasing demand will probably see some softening and pricing.

But if you look at the first two slides that we’ve showed you here today they disagree with each other so let’s go into more detail and see what’s really going on in the market.

 

What’s selling in the G550 market?

  • 9 of 12 sales are U.S.-based aircraft
  • 14 of the 30 aircraft for sale are based in the U.S.

We’re seeing a heavy favoritism toward the U.S.-based aircraft.

The number one single option to have right now in the G550 is a forward galley. Eleven out of the 12 aircraft that have sold have a forward galley while only 17 out of the 30 on the market have a forward galley.

So really those forward galley airplanes are the only one that’s moving. Aft-galley airplanes are moving solely based on price.

If you look, you’ll see that the trend on forward galley aircraft has increased over time. From 2003 to 2010, if we look at the aircraft that are currently for sale, 5 out of the 14 aircraft have a forward galley.

From 2011 to 2017, 12 of the 16 have a forward galley. As you can see, the market has really shifted in that time span to being forward galley-driven.

 

Why is all this important?

It’s really important when we bring your aircraft to the market to understand what the market wants, so that we can price your aircraft correctly.

If you have an international aft galley aircraft right now, we know we need to sell it on price. But if you have a U.S. forward galley airplane, we know we can be a little firmer on price and terms when it comes to the letter of intent (LOI) in agreement because we’ll have a desired airplane.

We track a number of other details in every market so that we really can have an understanding of what’s going on.

Thank you very much. If you have any interest in the G550 market—or any aircraft that you own currently or are looking at—please don’t hesitate to call us at 1-203-453-0800. We’d love you to walk you through those markets as well.

 

This entry was posted in Aircraft Valuation, Asset Management, Aviation Industry, Fleet Planning, Guardian Jet, Gulfstream, Ownership and tagged , , , , , , . Bookmark the permalink.

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