Private aircraft are in short supply due to the current frenzied market being driven by travel demand that has been seen at these levels in years.
This is excellent news for sellers and manufacturers as customers place themselves on endless waitlists to get charter, hourly cards, new aircraft, as well as facilities to complete pre-buy inspections for pre-owned aircraft transactions. But with labor and parts shortages, continued demand for training aircraft, and limited quality aircraft supply available, buyers are becoming frustrated. This brings up another issue of those buying aircraft without a valuation or appraisal, or guidance.
Why set yourself up for unnecessary risk when you don’t have to?
Pre-owned aircraft listings are unaligned in their asking price by as much as 28% more than when compared to actual market value. I have seen aircraft purchased at auction, listed the next ay for three times the price.
Having a valuation helps you determine an aircraft’s market and historical value, the current status of the market, and learn which equipment adds or takes away from its value.
Pandemic Lifts Private Aviation Industry To New Heights
The pandemic’s start resulted in canceled commercial flights across the world, affecting everyone from families, individuals, businesses, and more. Those who couldn’t do anything about it waited until they could get back on a plane and travel again. But for those who could take action, they most certainly did.
The AOPA said about VREF’s 2021 Q1 report, “Demand for aircraft outstripped supply in numerous market segments in 2021’s first quarter as the coronavirus pandemic, aircraft exports, up-trading owners, and new market entrants made their mark.”
In fact, about 65.5% of valuation activity was from single-engine piston markets. And activity is fierce both locally and globally.
Top 5 domestic locations:
- Houston, Texas
- Pensacola, Florida
- Minneapolis, Minnesota
- Boca Raton, Florida
- Denver, Colorado
Top 5 international locations:
- Johannesburg, South Africa
- Toronto, Canada
- Calgary, Canada
- Tokyo, Japan
- Paris, France
The race is on to find the right aircraft and the best deal. But with a limited supply of airworthy aircraft, competition is aggressive.
Fractional Or Full Ownership
Because of a significant increase in aircraft demand, many potential buyers are forced to look into alternative lift scenarios, like hourly cards, fractional, and our ad-hoc charter. Because, unlike other shortages, increasing production to make enough aircraft to keep up with immediate demand simply isn’t possible. There isn’t an easy solution and everyone is experiencing more demand than supply, as it is much easier to slow down production than ramp it up, so we expect shortages and backlogs for many years to come.
Demand Is Only Going Up
Almost one in 11 Americans is a millionaire today, twice as many as 2002. With so many millionaires and so much disposable income the completion is fierce. My advice, no matter how wealthy you are, plan ahead and don’t expect miracles. Whether you are looking for an hourly card or business jet, you will be getting in line with a number of other potential buyers.
Furthermore, owning rather than relying on chartered or commercial airlines often eliminates the need to:
- Stick to a flight time
- Go through TSA and other levels of security
- Experience delays, changes, or cancellations
- Make extra stops along the way
The benefits of owning combined with pent-up spending and stacked-up vacation days mean big-money individuals are ready and want in on the private aviation market. It makes sense! Please get rid of the hassle and simply fly your aircraft or have someone else do it for you.
However, even highly wealthy people have their pool of competition to get ahead of big fleet operators. Often used for flight training and flight schools, aviation education buyers have even deeper pockets to swallow the market’s inventory.
What This Means For Aircraft Valuation
An increase in valuations may not suddenly spike again as seen in early 2021, but you can expect a continued uptick in those demanding them.
No aircraft investment is guaranteed. But it helps to have an expert in your corner, along with a fiduciary looking out for your best interests. Both aspects are crucial to finding an aircraft that fits your lifestyle and budget.
Again, a valuation isn’t meant to replace an appraisal. But it will give you a snapshot of an aircraft’s value to assist your decision-making process.
Explore Aircraft Valuation From Trusted Professionals At VREF Online
You can buy an aircraft without a valuation or appraisal. But you should be very aware of the possibility that buying blind can be detrimental to your bank account. A new paint job can hide aircraft-killing corrosion, and new avionics can leave you distracted from other forms of damage or neglect.
At the peak of the 1st quarter in April 2021, VREF completed 1,400 more valuations than it usually sees. VREF knows people want reliable, real-time valuations and data, and this is why people have depended on VREF’s success in aircraft and engine valuation services for over 27 years.
Contact us today to get started if you need valuations for a single-engine, turbine-engine, helicopter, or another airworthy vehicle.