Trading of high quality aircraft remains active, as savvy buyers seek to derive value due to historically low prices. Due to ongoing high inventory levels among older, remaining inventory aircraft, and sellers' traditional Q4 desire to sell their aircraft prior to year-end, average values are expected to fall during Q4, according to Asset Insight's Market Report (AI2 Market Report) covering Q3.
The October AI2 Market Report analyzes values for every production year of every modern make / model Business Class aircraft, while the Report's maintenance analytics cover 92 fixed-wing models and 1,818 aircraft listed for sale.
Other trends detailed in the 14-page quarterly Market Report include:
- Overall demand improved slightly during Q3.
- Across the "for sale" fleet, Ask Prices fell 6% during Q3, marking a 16.7% decrease over the past 12 months.
- Ask Prices are expected to continue decreasing during Q4, although at a reduced rate for many models.
- For the first time since January 2015, the Asset Quality rating of the "for sale" fleet fell from "Excellent" to "Very Good" due to buyer focus on attractively priced, younger, higher quality assets.
- The embedded cost of future scheduled maintenance (Maintenance Exposure) across the "for sale”" fleet improved in Q3.
"High quality assets and low pricing levels continue to provide great value for buyers," said Tony Kioussis, president of Asset Insight, LLC.
"We anticipate the high number of inventory aircraft to continue pressuring Ask Prices. The three things sellers of older assets can do to improve their aircraft’s marketability is to understand how it competes against other available assets, accept the reality of what their aircraft is currently worth, and maintain their aircraft in the highest marketable condition possible so they can be opportunistic."
Exclusively available from Asset Insight, the AI2 Market Report includes eTrendTM, a 90-day forecast for aircraft value by make and model. This tool is especially helpful to sellers who are evaluating offers on their aircraft while concurrently considering if their prospects are likely to improve.
Statistically, Asset Insight's eTrendTM forecasts are based on some of the most robust data analytics in the industry and have been thoroughly back tested to confirm a significant degree of accuracy.
Asset Insight's proprietary Asset Grading System ProcessTM (AGSP) analyzed the average maintenance condition of jet and turboprop aircraft listed for sale as of June 30, 2017, (Source: AMSTAT) to generate the AI2 Market Report.
The AGSP derives the Asset Insight Index, whose components are the Maintenance Rating, Financial Rating, and Asset Exposure Value. Dividing the Asset Exposure Value (an aircraft's accrued/embedded maintenance) by the aircraft's Ask Price derives the Asset Exposure to Ask Price Ratio (ETP Ratio) - a quantitative view of the aircraft's current marketability. The AGSP is based on proprietary algorithms that examine current age, flight hours and cycles on an aircraft's systems and major sectors - airframe, engine(s), propeller(s), APU, paint, and passenger interior - as well as the typical cost to repair or replace parts with no defined life.