In 2008, the economic downturn created a perfect but devastating storm for the private jet industry. Corporate aircraft owners sold off their jets to free up cash while potential buyers abandoned new and pre-owned aircraft orders in droves. The result was a market saturated with unwanted aircraft inventory, very little demand and a gloomy outlook for the future.
However, as 2012 gets underway, the future of the private jet market shows signs of a modest but growing recovery. Here are a few indications that the bottom of the buyer’s market has either arrived or, at the very least, is rapidly approaching.
Prices still decreasing as inventory ticks up slightly
According to a recent study, pre-owned aircraft prices continue to fall, albeit at a much slower rate than in recent years. This deceleration in pricing along with the slight growth of available inventory creates an ideal environment for buyers to act with confidence. Once the market has fully recovered, demand will siphon off the excess inventory, driving jet prices higher.
Meanwhile, attractive financing options look solid. Interest rates continue to hover at record lows, and the Federal Reserve Board is signaling that rates should remain steady through 2012.
Corporate demand predicted to grow
The economies of the BRIC countries (Brazil, Russia, India and China) continue to grow at an exponential rate, creating a booming class of wealthy individuals with both the desire and the disposable income to purchase private aircraft. As this trend continues, the market may quickly recover from the inertia of the past few years and eventually struggle to keep up with new inventory demands.
In the U.S., 2011 was a good year overall for many companies, with earnings and profits rebounding to (almost) pre-recession levels, triggering renewed appeal for private aircraft ownership.
Economy and politics creating uncertainty
However, many economists warn that a complete economic recovery in the U.S. may still be several years away. In addition, 2012’s election cycle and the politically-charged climate in the U.S. lead many to worry about future regulatory changes and tax increases for corporations of all sizes, adding to the overall unease in the market.
While much about the global economy remains unsure and unsettled, one thing is certain. Low prices, attractive interest rates and a healthy inventory of aircraft combine to create a near perfect climate for companies or individuals looking to land a great deal on a private aircraft.