Airside Aviation’s Quarter 2 In Review: A Lagging Market

As of noon, July 2^nd we’ve officially passed the mid point not only of this year, but of this half-century. From this moment on we’re officially closer to the year 2050 than we are to the year 2000. If you’re anything like me that cursed little bit of chronological trivia has been floating around your feeds on linked-in, Facebook, YouTube, or whatever other social media you personally make use of. For those of you encountering this fact for the first time here: You’re welcome… Alternatively, I’m sorry. Either way the times, they are ‘a changing.

But are the markets changing? If they are, are they changing quickly enough to keep up with the future, or are they doomed to wallow in the past?

As confusing as it may be the answer is yes to both counts, at least in the General Aviation. This industry faces some serious challenges: The fleet of aircraft available to the average joe at an entry level is -year on year- shrinking and aging. Right now, in the US the average age of the single engine piston fleet is 52.2 years. Piston twins are right up there with them at an average age of 49.2 years. This trend is unlikely to change any time soon as manufactures continue to struggle with post-covid delays and skyrocketing MSRPs that keep the number of new sales low.

This lack of new supply drives up the asking prices for used aircraft. Especially in the shadow of the virus, we’ve seen prices for entry level GA skyrocket. Of course, this can’t continue on forever and in early 2025 the market correction began. As a market researcher, the shift manifests first in our tools yielding increasingly incorrect results; quick valuation tools that update once a quarter have begun to lag behind the true value of aircraft. Even direct market reviews and historic sales data contain a certain hysteresis that diminishes the accuracy of data driven valuations. You have to start relying more on trends and your experience to make good pricing calls. This also hinders that market, as aircraft start to sit on market longer. Prices, of course, hold firm for a bit; nobody wants to take a loss on an aircraft they purchased a premium, only a few years back. However, the first nail in the coffin comes with rising supply; aircraft types that only a handful on market last year, have ballooned to a dozen more listings, competition gets stiff, and only then do we see prices begin to drop. This is where we are now; the supply is increasing but demand is about the same, and the demand for a deal is increasing, or perhaps more accurately buyer tolerance for the covid era private aviation premium is diminishing.

While this may sound discouraging for sellers, it’s not all doom and gloom—at least not yet. Although the days of achieving a 20% return on investment over five years may be on pause, aircraft still tend to retain intrinsic value. Market supply may be rising, but the overall fleet size continues to shrink year over year. This dynamic, combined with the number of aircraft listed at unrealistically high asking prices, creates a unique opportunity. While ROI margins are tightening, they haven’t disappeared. Pricing your aircraft correctly—based on its condition and features—can give you a significant competitive edge. In fact, we’re seeing aircraft sell in days, not weeks, when priced right, often with minimal negotiation and very favorable terms. In this market, getting the price right the first time is everything.

The truth is that over the next 6 to 12 months, the used GA market will cool. This is especially true for larger, heavier, more expensive to fly ‘family hauler’ types. The aircraft least affected by the cooling will be flight school and true entry level GA. Aircraft like the 172, Diamond 20, Classic and experimental cubs, will likely maintain high demand. With the specter of the pilot shortage in the rear view mirror these types will see a cooling too, but that will come some time in the future as flight training begins to slow down.

Here at Airside Aviation, we focus primarily on the capital G General Aviation market, but that doesn’t mean there isn’t room for some good-natured speculation about the future of commercial aviation as well. For now, industry leading manufacturers like Boeing and Airbus, seem set on their tradition of incremental improvement; their most ambitious projects, such as blended wing body airliners, have mostly been cast to the wayside, even comparatively less radical programs like Boeing’s truss braced wing X-66 have seen development funding slashed in favor of even less impressive sounding technologies like the much touted, but thus far largely undescribed ‘thin-wing’ tech. While incremental improvements are always welcome in the world of aviation, its unclear if these projects will yield any particularly valuable results in the near future.

On the extreme opposite end of the spectrum, we have the Silicon Valley inspired aviation Disruptors. Start-ups designed to burn cash quickly and explore highly improbable technologies with the blind religious zeal that brought us such compelling and successful products as Theranos and Juicero. Jokes aside, while the comparison there is deliberately harsh –not all aviation startups are totally out to lunch– Disruption in the aviation industry is a massively unproven, deeply fraught prospect; only time will tell if buzzwords like eVTOL or Urban Air Mobility will go down in the history books along side Orville and Wilbur Wright, or if they find their place closer to Ocean Gate and the Zeppelin. One thing is certain however: even truly great disruptors will eventually come face to face with regulators, something that will likely push widespread adoption of their technologies well into the future.