April 17, 2024
The first quarter of 2024 was a tale of two stories for business aviation sales, with a dip in transaction numbers compared to the same period last year juxtaposed with booming activity at brokerages, according to the expert panel on the recent NBAA Thought Leadership Webinar: “First Quarter Market Results and Stats.”
The data on first quarter deals, while still incomplete, shows sales down versus the first three months of 2023, with an 11-percentage-point decline in volume driven by declines in older pre-owned aircraft, explained Rolland Vincent, president of Rolland Vincent Associates.
“That’s kind of what we would expect with GDP [gross domestic product] in the U.S. this year supposed to be around 2% growth,” Vincent said, adding that sales levels are still “good, not great, [and] slower than last year.”
Jay Mesinger, president and CEO of Mesinger Jet Sales and the webinar’s moderator and sponsor, noted that while Vincent’s analysis mirrors other published first quarter transaction data, his sales team was “seeing far more activity this first quarter than we saw last first quarter.”
“It feels good, it’s not frenzied [like the pandemic years], it’s more balanced and there is more inventory,” Mesinger added.
Don Dwyer, managing partner of aircraft consulting, appraisals and brokerage firm Guardian Jet, supporting Mesinger’s assessment, also noted that “we had our biggest first quarter ever.”
High Level of Confidence
Both assessments show the resilience of business aviation just a year after a run of bank failures and volatile interest rates and are a sign that legacy owners and new entrants alike are committed to the industry, the panelists noted.
Part of the reason for this confidence comes from increased interest in financing, said Keith Hayes, senior vice president, national sales manager for PNC Aviation Finance. There are three primary reasons for this, he explained: a renewed interest among banks for asset acquisitions after they retrenched in 2023; refinancing of existing financing agreements that are due to balloon and the current stability in interest rates.
“Now that the market is settled, and the market has kind of accepted that high 5% [interest] and low- to mid-6% will be the rate for a period of time. Now, that’s not all that expensive; it’s just expensive compared to 3%, and we are seeing a lot of prospects, a lot of clients, a lot of corporations and high-net-worth individuals that pay cash now are coming back and leveraging [their] planes post-closing,” Hayes added.
Aircraft prices in the first quarter were strong, too. “That is surprising as global economies are not as strong, but when you look at individual markets and the wealth created in them, there is strong demand for business aircraft and a lot of potential in the international market. We are very bullish,” said Dwyer.
Looking Ahead
The next two quarters will likely see a slowdown in sales activity, said Vincent, as the U.S. prepares for the November general election. Geopolitical instability, especially in the Middle East, could exacerbate that slump, but all things being equal, the fourth quarter should see a lot of aircraft sales closing, he added.
For Mesinger that means “we have to prepare in the third quarter, because that’s when fourth quarter deals begin.”
