We have been paying very close attention to the changing market conditions here at Leading Edge. As we shared with you previously, we noticed the market shifting in March 2022 and began to track the available inventory. When we started on March 8th, it was at an all time low. Inventory has begun to slowly but steadily increase as the weeks have gone by. Now, a little over a year later, we feel it’s a good time to send you this latest information as it is beginning to tell us something.
What is noteworthy here is the steady increase of supply over the course of the last year at a consistent clip, but more interestingly, the sharp increase in supply over the course of the first quarter of 2023 versus the aircraft that have been sold. It is approximately 2.5 to 1. If this continues at this pace, below is what we think will occur as a result. Lest we not forget – historical “average” supply is in the area of 8-9% of the fleet for sale at any given time. We are still somewhere around half that amount. So supply has a ways to go to return us to a “normal” market.
Click here to view the full report.
Unless the current bank failures cause more disruption to the confidence of the aircraft buying public, we expect to see the current trend of supply increasing incrementally and pricing softening in a similar incremental manner. Our gut feeling here at Leading Edge the lines will cross – meaning the buyers will come back into the market in greater numbers if prices keep declining sometime in the second or third quarter of 2023. We feel there will be a fair amount of year end buying as because for those that can take advantage of bonus depreciation, the benefit goes from 80% in 2023 to 60% in 2024. Therefore we think there is a fair chance the last quarter may be the most active quarter of the year.
We can only use history and our own experience and intuition as a guide. Let’s see how right our crystal ball is when our next blog on this topic comes out.
