It’s no secret that it is absolutely a buyer’s market right now,” says Steve Feldman, aircraft broker for AirplanesUSA, one of the largest aircraft dealers in the nation. “We had one of our biggest years last year, and we are definitely selling airplanes.” Feldman, who’s based in Chicago and handles the Midwest region as well as international sales, is one of the founders of AirplanesUSA, and has been in the business for more than 25 years. Though he says the market hasn’t shown much change in the past few years, the nature of it’s different now.
“We’re not seeing as many distressed buyers anymore,” explains Feldman. “When the economy first took a hit, those people that had to dump their airplanes did. Today, we’re seeing a more stable market.” That market still seems to be favoring single-engine pistons as core movers. “Where we’re taking the hardest hit is in the higher end,” he adds. Venerable airplanes, like Cessna 172s, 182s and Bonanzas, are still the airplanes that are moving.
The LAMA anticipates deliveries upward of 400 LSA in 2011, which is more than double last year’s numbers.
To give an illustration of the state of the sales market, Feldman explains that sellers today have dropped their asking price to historic lows. The problem is buyers don’t realize that, and they still consider that because it’s a “buyer’s” market, any offer is valid. Feldman sees that as hurting both buyers and sellers. “Buyers will take the asking price, and then offer $35,000 less. The seller gets emotional about and just says, ‘Forget it.’ Buyers don’t realize that asking prices are a lot less than even a few years ago. They’re as low as they’re going to get.”
Murry Malsbury is an aircraft broker in the Northwest, based out of Seattle, Wash. His segment of the market is slightly different, since he sees a lot of seaplane sales for the region, as well as more tailwheel and work airplanes for Alaska. Still, his view of the market is similar. “I’m seeing prices that were maybe half of what they were last year,” says Malsbury. “The airplanes that are moving are 172s, 182s and those that have modern avionics.” Malsbury agrees that prices are as low as they will ever get. “They are rock bottom. There really aren’t any more desperate sellers.”
While aircraft brokers today are seeing sellers drop their asking prices to historic lows, they caution that buyers need to realize there may not be much room for negotiation. If a buyer offers much less, they may lose the deal and a good opportunity.
All brokers are seeing a huge sales slump in the light-twin market. “You can’t give them away,” laughs Malsbury. “You can buy a good used King Air for less than the price of a new Baron.” The drop in light-twin sales is being buoyed by corporate buyers. Even with the economy in the tank, corporate buyers are willing to spend the money to get what they need. Lending has dried up for certain segments of the market, like older corporate jets. But for newer TAA and higher-performance corporate aircraft, sales are building and continue to look good.
But while it may seem like there’s a glut of airplanes for sale, the truth is that the buyer’s market has created a shortage of sellable airplanes. “Believe it or not, there’s actually a shortage of airplanes for sale out there,” says Malsbury. Buyers are ferreting out good, clean airplanes with fresh avionics, and grabbing them at excellent prices. For those kinds of airplanes, the market is going like gangbusters.
“I had a gorgeous, clean, 1970s Cessna 182 that I listed for $99,999,” explains Feldman. “I got flooded with inquiries, and it started a bidding war. We ended up getting more than the asking price.” Feldman and Malsbury, like other brokers, agree that the fundamentals haven’t changed, and that there are definitely buyers out there. One example is the used A-26 Bonanza market.
Feldman estimates there are some 250 of those airplanes for sale right now, and that asking prices today are $35,000 to $40,000 less than even a few years ago. “What that means,” Feldman explains, “is that $150,000 will get you a really nice Bonanza.”
An extremely hot market right now is international. The dollar’s weakness against European and South American currencies is creating a frenzy of buy-ers outside the United States. That’s generating sales for brokers like AirplanesUSA that know how to deal with the complexities of international sales. Just the registration issue in an international transaction is tricky. Those brokers experienced with these issues are enjoying a booming market. Feldman says, “The bottom line is I can have an airplane anywhere in the world from sale to delivery in three weeks.”
The aircraft sales market—whether new or used—has been transformed by the Internet. Traditionally, aircraft sales were regional and seasonal. That’s the way it remained from the 1940s until about a decade ago. Today, the Internet has erased those limitations, and is putting buyers in Australia together with sellers in Kansas, or Texas, or anywhere in the world. It also has increased the incentives that many manufacturers are giving on new airplanes.
Both brokers’ advice to buyers is the same: Take advantage of the rock-bottom prices today, but don’t expect to get much below current asking prices. “There might be a little wiggle room in there,” explains Feldman, “but don’t whack the buyer’s knees to get a lower price. Predatory buying is not beneficial to anyone.” For those seeking a great bargain on a new or used airplane, now’s definitely the time to act.
|Time To Buy An LSA?
By James Lawrence
|Tongues wag, rumors fly, the commentariat comments, and in the end, it’s the numbers that carry water. The lifeblood of any industry, LSA included, is sales. Fortunately, the buckets are filling up: Numbers for the first four months of 2011 show we’re in an upturn.
This seven-year-old kid called Light Sport Aviation remains a phenomenon in progress. Behind the 83 manufacturers and 115 ASTM-approved S-LSA designs to date, brilliant designers and razor-sharp business minds work hard to ride the tsunami outflow of the Great Recession, hoping for LSA to see its teenage years.
Dan Johnson, President of the Light Aircraft Manufacturing Association (LAMA) and Delphic oracle of all things LSA, throws the bones. “We may see 400 deliveries this year…double 2010…with Cessna accounting for half of that with the Skycatcher. The non-U.S. market for LSA has already experienced some revitalization, especially helping the big players.”
Johnson also points out AOPA’s recent acquisition of David Kruger’s Aircraft Partnership Association (APA) which, along with Let’s Fly, offers shared aircraft ownership. With the price of many imported LSA topping $125,000, thanks in part to the euro-dollar exchange rate, the classic American one vehicle/one owner scenario needs a shift in the old thought paradigm.
Used LSA also are becoming more numerous. “They often come out of leasebacks…buyers could find better deals there.” And LAMA Europe has just opened its hangar doors. Its primary goal: bring the ASTM self-certification concept to Europe. That could boost U.S. makers hoping to sell overseas.
Around The LSA Horn
Tecnam North America’s CEO Phil Solomon sees it this way: “We are very positive about the next six months…more people seem to be making their mind up to do something. The biggest obstacle to any significant growth is the lack of support from the traditional sources of finance for any type of commercially linked loan…I expect the top five to 10 players will take more and more market share compared with the others. Costs are going up, so buying now will yield better deals than six months from now.” Tecnam offers leasebacks for qualified flight schools and $80/hour discounts off demo aircraft. Senior pilots can also benefit from Tecnam’s program to reduce cost brokerage and offer a guaranteed buyback.
Remos President Earle Boyter also is optimistic. “We’ve seen a definite increase in LSA market activity over the past few months, and believe sales numbers will continue to climb. Used prices of conventional aircraft have solidified to the point owners can sell and get a reasonable price for GA aircraft, and can then enter the LSA market. With fuel over $7 a gallon, it is nice to only be using about 3.5 gallons per hour.” Remos sells demonstrators. Lead time from order to delivery is currently 90 days.
Robert Stangarone of Cessna Aircraft, who predicts the company will deliver 150 or more Skycatchers this year, chimes in on the GA side: “Our accelerated depreciation plan is leading to many retail sales. Leaseback activity is improving as the economy is showing signs of life. Our retail sales for all piston-engine aircraft were up 40% in the first quarter, compared to the same period in 2010. I expect this trend will continue for the rest of the year with more demand than supply of aircraft.”
American Legend Aircraft’s Dave Graham works closely with current owners. “It’s better than a year ago, but we’re looking for more ways to move sales. Our typical buyer writes us a check rather than finances. We broker for owners wishing to sell their current Legend aircraft. We do a full annual inspection and provide a 90-day warranty with the plane in exchange for a 7% commission. We have a very long list of used Legends. When we receive an aircraft to broker, we circulate the information to this list. Usually, we’ll get back an offer within a month, and very close to the asking price.”
Randy Lervold, head of CubCrafters, says, “We are having an excellent year so far, and see tangible evidence of consumer confidence rebounding, and the GA market strengthening. We are optimistic about the remainder of the year as well.”
Arion Lightning’s Nick Otterback also sees improvement. “We delivered nine S-LSAs and a few E-LSAs last year. This year, we have delivered three S-LSAs and two E-LSAs. We offer some avionics deals or option specials at the air shows. And we try to keep our price as low as possible, at a $98,000 base.”
He also notes the euro-dollar imbalance hurts imports and helps U.S. producers. But he believes it’s a good time to buy. “The economy has proven the American dream is still available, if you are lucky enough to be employed and will stay that way into the future. With low-cost credit and 15-20 year loans, the dream of owning your airplane is still attainable.”