Plus - how much a light jet costs you to own?

This is Bizjet Buzz. The only newsletter in the world that makes you smarter about the bizjet market and smile while you’re at it.

In this issue:

🛩️ Learn about today’s light jet market dynamics

📊 Ownership costs comp: Citation M2, CJ2+, Phenom 300E

📈 Phenom 300 market focus

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Note: The Market Stats Infographic above is updated every month and lags one month until the data has caught up.

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The heavy jet market has been on a rip the last 12 months.

The easiest way to see this is in the % of the fleet available for sale. If this is dropping, demand is outstripping supply.

Jets are being bought faster than they’re coming to market.

Heavy jets are the orange line. Since September last year, inventory numbers have been dropping.

We’re talking large cabin, long range, ultra long range jets, Falcon 7X, Bombardier Global 5000s, Gulfstream G650s.

Whereas light and medium jet inventory started to level off in January, heavy inventory kept dropping.

That’s some perspective. Expect a deep dive on the heavy jet market August 15th, including which older models are punching way above their weight in terms of pre-owned demand.

Until then, don’t fall off the edge of your seat with anticipation. If you do, remember, the excitement of reading Bizjet Buzz is known to numb all pain.

Ok, Light Jets!

Phenoms, Lears, Citations…

The market for this category is strong. Not quite as hot as heavy, but definitely strong.

See for yourself…

Transaction numbers (green bars) have been stable the last 18 months despite seasonal fluctuations.

And if you remove older jets from the analysis, you can see that inventory for anything less than 10 years old, has been dropping all year.

The market is ageist.

So what does that mean for the light jet owner, buyer or seller?

If your jet is less than 10 years old, it’s most likely not depreciating (unless it’s a HondaJet 🫣).

If you’re trying to buy something older, say 15 years+, you’ll have some negotiating power. Don’t let the seller tell you it’s a seller market. (Unless it’s an older Phenom 300 or a CJ3, these markets are hot).

If you’re trying to sell your 15-year-old light jet to buy something newer, take your time. You’re selling in a softer market and buying in a harder one. I would try identify your upgrade first, then get the old one on the market.

And finally, if you’re sick of owning a jet and want out, get it on the market asap.

The market doesn’t get much better than this.

Why would anyone be sick of owning a jet you say?

Ownership costs.

Let’s look at what its costs you to own and operate a light jet.

This section could have been titled light jet ‘operating’ costs, but there’s something every jet owner quickly learns.

Even if you’re not ‘operating’ your jet, you still accrue costs with every day that passes.

You’re getting closer to a calendar maintenance inspection, a rent payment on your hangar or the monthly salaries of your crew.

‘Ownership’ cost is therefore more appropriate and all encompassing. This factors in your fixed cost to simply own the plane, and your variable costs to operate.

Three light jets, The Cessna Citation M2, CJ2+ and Embraer’s Phenom 300E.

Here’s what it costs you to own and fly them for 250 hrs a year…

Which one would you buy?

Considering the Phenom 300 is the best-selling light jet of all time, it should be no surprise to read that it’s also earned the title of the hottest model in the pre-owned market.

The Phenom 300 was first delivered in 2009. Embraer made 499 before they upgraded to the enhanced ‘300E’ model.

They started producing the 300E in 2018. There are 434 of these in service now.

72 300Es were delivered last year. My guess is Embraer will break 80 units this year.

Call your favourite Embraer sales rep to order a 300E today and you’ll be told to get in line.

When you get to the top of the line to board your jet, you’ll be three years wiser and approx. $14.5mil poorer.

So, what does a three-year wait do to the pre-owned market?

Well, if you’re impatient, you end up here.

Every broker I know has been looking for a Phenom 300 recently.

With available inventory dropping so much over the last 12 months, there’s been upward pressure on values.

The average ask price for a 300 and 300E right now is $8.4mil and $13mil, up 5% and 8% respectively.

Slower depreciation is one thing…values rising is another. An appreciating depreciating asset.

To get another perspective on availability, let’s look at the % of the fleet available for sale.

The number of available 300Es in the first chart (light green) is misleading as it looks like inventory is rising. Considering the E is still in production, this is expected. More jets in the world means more should be for sale.

% availability for the 300 has plummeted to 1% last 12 months, and the 300E can barely get above 3% the last three years.

Unless the economy takes a turn, I can’t see availability increasing this year. Expect slow to no depreciation on the Phenom 300s for now.

Interested in a specific jet market? Email [email protected] so it’s in the next one.

Are we in a Buyer market or a Seller market?

Which side do current jet market conditions favour?