What’s Impacting The Current Aviation Market?

By Jason Zilberbrand

August 23, 2021 Educational

By now, every consumer, including the current aviation market, is still feeling the impacts of COVID. This is appearing heavily on the supply chain side in one form or another. Some economists suggest that Americans are spending all their saved money from the lockdown. And it's all being spent on the higher costs of goods. But several issues play a role in the current "traffic jam" we are all experiencing. Whether you're in the market for a new couch, oven, or automobile, you're likely feeling it too.

The White House even went about publishing a blog on the subject. The blog does an excellent job of explaining how numerous industries rely on a daisy chain of suppliers – most of which were either idled or shut down altogether during 2020.

It isn't easy to turn the spigot off quickly and then try to turn it back on. Because things never come online nearly as quickly as they were shut down.

For most industries, the same issues are becoming problematic or even a nightmare. Everyone is feeling the impacts of the labor shortage across the board. And the current aviation market is just starting to see a trend that will be burdensome for many years to come.

Unlike many other manufacturing industries, aviation relies heavily on experienced and skilled laborers. Many of these laborers took early retirement or simply won't be returning to the workplace any time soon. These shortages play a significant role in what correlates to preventing the growth of the industry. Looking to hire a pilot, purchase a plane, rent a hangar, purchase fuel, or even complete routine maintenance? You will be competing for the good or service.

3 Things Impacting The Current Aviation Market

I cannot remember a single time in the past where most consumers were pitted head-to-head in transaction combat like we see today. It’s no longer money separating the "haves from the have nots" but timing and luck. The pandemic has also impacted the number of aircraft being produced. It seems as though we are finally starting to see aircraft delivered at what seems a super-fast rate. But the truth is these new deliveries are barely putting a dent in the buyer's appetite in the current aviation market.

Today’s aircraft purchaser is:

  • Sophisticated

  • Willing to travel

  • Equipped with a substantial knowledge base available to them

  • Armed with resources at their fingertips.

This is a dynamic shift from previous decades. Former potential aircraft owners had to rely on less than readily available data. In addition, no substantial digging or sleuth work to obtain or locate an aircraft for sale was needed.

But today, a purchaser, as one client recently described, must be a full-time investigator. He is right; after all, it is not so easy to find an airplane.

Limited Availability

Finding the aircraft or the “perfect” aircraft was difficult pre-pandemic for several popular models. We had less than 1% availability for all the top ten airplanes that VREF values; some were below 0.1%. Today even as the summer is ending, the number of closings remains high.

Pent Up Demand

Many people ask me when will it end or when will the markets show signs of easing?

The frenzied behavior we witnessed in March and April 2021 has undoubtedly cooled off to some degree.

Some of this is simply due to the lack of inventory and the frustration of buyers.

This is because so many inventoried dealers would typically sell aircraft held up in refurbishment with delays.

Then some buyers skipped the pre-owned market issues and went directly to the manufacturer to buy new.

This trend should continue as sellers’ expectations start to create questions about how high a used aircraft value can go.

Revitalized Use Of Certain Aircraft

But the most significant growth segment appears to be coming from the charter market. Operators continue swooping up aircraft that can keep up with outpaced demand.

Some aircraft previously fell behind due to:

  • Age

  • Lack of modernization

  • Maintenance costs

However, these same aircraft are all of sudden back in favor. These models still have a ramp presence, can move eight or more passengers, and generate enough revenue to offset any short-term maintenance issues assuming the markets and flight demand continues.

Most potential buyers will need to be swift and diligent to be successful in purchasing an aircraft. This does not mean you should forgo the pre-buy inspection. Or even worse, skip the chain of title, and lien research. Instead, focus on a couple of models that meet your needs. Then observe the markets and pounce quickly with a letter of intent and proof of deposit.

Will We See The Current Aviation Market Recover in Q4 2021?

As we enter the 4th quarter and watch closely as our government attempts to deal with the third winter of the pandemic, we are hopeful that supply chains start to recover and that inflation remains under control. Still, one thing is for sure... The demand for many aircraft models will continue at the same pace for the previous 18 months.

With thousands of aircraft appraisals under our belt every year, our team of Accredited Senior Appraisers helps you make an intelligent and informed decision. Our data-backed appraisals are at the core of our entire business. We continue to help aviation professionals, banks, and financial institutions with accurate, unbiased data.

Of course, there are other programs and businesses out there that provide aviation appraisals. However, we’ve perfected our craft with 27 years of producing aircraft appraisals our clients can rely on. There’s no need to feel uncertain or apprehensive about an appraiser you’re trusting to complete your appraisal. We aim to serve our customers by completing appraisals with the utmost level of professionalism.

Contact us today about your current aviation market appraisal needs.