AINsight: New vs Preowned Gap Narrows for Bizjet Buyers

 - May 7, 2021, 11:51 AM

At my business aircraft brokerage, we are starting to see a very positive gap narrowing between the contemplation of buying preowned or new. It has been over a decade now since the Great Recession, and many buyers have developed a very clear picture of the value of buying preowned over new in this period.

This not to say that OEMs haven't been having great sales years. They have. This is to say that now the delineation between new and preowned is shrinking, and it can be traced back to several factors. One being that the opportunity to buy really good, late-model preowned aircraft is now harder to accomplish, and the price between the two choices is narrowing.

Take the Gulfstream G550, which is a popular aircraft with high demand and low supply. In the last few years, there has been a smaller number of G550s produced, and those have been reduced even more by the special-mission builds, which have been a sizable percentage. This leaves very little choice at the top, which can drive a buyer to consider new in addition to just preowned.

This is exciting for the manufacturers. Of course, it can be intoxicating for manufacturers to consider ramping up production. Good news, though—the manufacturers are both very smart and have great memories. They understand what can happen by getting out ahead with production and then having hiccups in the market that result in an oversupply of inventory.

Now let’s talk about the industry sales professionals like myself, serving buyer clients correctly so as to be able to properly support them when buying new. We are often in the background with our clients as they consider the new product. No different than the choice of buying preowned, there is the choice of which manufacturer and model to focus on. Mission fulfillment is typically the deciding factor. But once the new aircraft is chosen, the integral pieces of the puzzle must come into play.

We must be a total advocate for the client. There is the negotiation of the purchase agreement that has its own set of nuances from a preowned contract.

Then there is the process of specifying the aircraft. Some buyers will want a specific interior configuration and options package and refuse to be swayed, but sound advice on the future residual value of these decisions should be given as some decisions can have significant economic impact in the future preowned market.

Having skilled support is critical in both the sales contract and completion processes to help ensure that all the components play well together, including the seats, paint, and avionics all being installed with the highest degree of fit, finish, and functionality.

One must choose an advocate carefully to be confident they have a clear responsibility in this project shoulder to shoulder with you. After all, this same advocate who helped you buy should be there with you when it comes time to resell in the preowned market. They should be able to answer back to you throughout the purchase experience, ownership cycle, and finally at the closing table when you sell it sometime in the future.

As I often say: choose your partners wisely. Choose one with the skillsets needed for these complex decisions.