As the aviation industry continues to evolve, so does the complex and ever-changing environment of private aircraft ownership. With 2023 in the rearview mirror and 2024 rapidly unfolding, now is an ideal time for private flyers, aircraft owners, and other aviation professionals to take a look at this last year and consider trends for 2024. In this blog post, we’ll look back at what happened in the market last year while also offering some insights as to what may lie ahead regarding market trends during 2024. From the rise of interest rates to resilience in the economy — dive into this recap if you want to stay current on all that is happening in private aviation.
Overview
In 2023, several factors significantly impacted the industry, including concerns about the economy, increased operating expenses, and a relaxation in the constrained supply of used jets. Notably, the availability of previously owned jets for sale surged, surpassing typical historical levels since the spring of 2022, putting downward pressure on pricing. Despite this slow down in the market, it is expected to lead to a more balanced market recovery and optimism for 2024.
Impact of Rising Interest Rates
The surge in interest rates, which historically for aviation loans are approximately two percent higher than mortgage rates, has substantially influenced the decision-making process for potential aircraft buyers. Financing an aircraft has become less appealing, leading to a noticeable decrease in transactions and a subsequent decline in aircraft values. This trend has been apparent since 2021, with 2023 recording the lowest transaction numbers recently. Much like the housing market, owners that have the funds and means to upgrade their aircraft have generally been putting those plans on hold due to the high interest rates. A lot of people are electing to wait until 2024 to see if those rates come down. Additionally, owners that have the funds and means to upgrade their aircraft have generally been putting those plans on hold due to the high interest rates, much like the housing market. As a result, many people are electing to wait until 2024 to see if those rates come down.
Resilience of the Economy
The statistical data paints a picture of a downturn in the market. The consistent decline in transactions and values over the past few years signifies a challenging period for the private aviation industry. However, contrary to the statistical narrative, the economy remains robust, evidenced by sustained consumer spending. This resilience is at odds with the downward trend observed in the aviation market, indicating economic resilience and optimism from experts. In addition, inflation has retreated significantly from its previous highs, as reflected in the government’s latest release of December figures, marking a year-over-year increase of 3.1%
Outliers in the Market
Amidst the market downturn, certain anomalies have emerged. Specific aircraft models, such as the King Air 350s, experienced unexpected success, defying the overall trend. This suggests that despite the prevailing challenges, the aviation market has pockets of opportunity and growth.
Potential Interest Rate Reversal
Rumors circulating about a potential decrease in interest rates, expected in the coming months, hold promise for the industry. Anticipation of this reversal in rates could significantly impact market sentiment and potentially stimulate aircraft sales once more.
Predictions for 2024
The current jet market exhibits strength, showcasing its resilience with promising prospects likely to extend into the upcoming year and beyond. Prospective buyers, especially those searching for pre-owned jets, will find a favorable scenario with many opportunities in a well-balanced market.
The expansion of the private jet market indicates a rising demand among individuals seeking pre-owned jets for sale. Even though the demand is rising, buyers are not at a disadvantage. According to a recent quarterly market report from the International Aircraft Dealers Association, the current interaction between buyers and sellers seems equitable. This implies that buyers can expect fair pricing without concerns about inflated values.
In conclusion, despite challenges such as rising interest rates and a decrease in transactions, the industry remains resilient with opportunities for growth. As we look towards 2024, there is optimism for a more balanced and sustainable market with potential interest rate reversals. Overall, the private aviation industry remains strong and adaptable, offering opportunities for both buyers and sellers in the upcoming year.
