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Uncharted territory

What will prices do in this market?

How the Federal Reserve navigates us through this most recent banking issue, and whether it truly slows down on rate hikes and other possible solutions to cool off inflation, will have some impact on the owner-flown market.

How much? We’re in uncharted territory in terms of how this market reacts to those inputs, so it remains to be seen.

What we can speculate, based on previous history, is that prices of new aircraft will likely continue to increase or, in the best-case scenario, remain flat. We don’t anticipate seeing in the near term any decrease in pricing, but instead a contraction in units built—reduction in supply.

In the owner-flown used market, we anticipate prices will remain relatively flat, and depending on how deep and long any potential recession is, we may eventually see some softening.

Basic economics rules everything—and by “basic” I mean supply and demand. The past several years have witnessed considerably restrained supply, which added pressure to demand, resulting in price inflation. Then came COVID. Those who had the wherewithal to fly themselves, their family, and colleagues safely and comfortably in an owner-flown aircraft suddenly sought out GA aircraft to do so. Add to that, manufacturers’ and repair facilities’ inability to effectively source and supply both parts and labor, and what we had was a recipe for prices spiking during that pandemic period.

With the pandemic now waning, we at AOPA Aviation Finance see demand waning, too. However, two factors contribute to the general trend of prices not easing in line with lowered demand pressure. The first factor is the stickiness of prices on the downside. Traditionally, prices go up quickly but fall very slowly, regardless of supply.

The second factor relates directly to supply. In a given year, the owner-flown market loses more aircraft than companies manufacture, because of obsolescence, accidents, and other factors.

That said, prices have softened (or perhaps regressed a bit to the mean) in some markets, particularly in light and cabin class jets. Some of that may be attributable to those markets’ specific superheating, and skyrocketing values fueled by tax policy, COVID, and even the allure of chartering aircraft. [email protected]
800-62-PLANE (75263)

Adam Meredith
Adam Meredith
President of AOPA Aviation Finance Company
Adam Meredith, the longtime president of AOPA Aviation Finance Co., died after a long battle with cancer in December 2023. He is remembered for his passion for helping fellow pilots, leading a team devoted to putting flight training and aircraft ownership within everyone’s reach.
Aero-Space Reports

Aero Space Reports

Sponsor of Aviation Finance
Aero-Space Reports, a third-generation family-owned business, has been a leader in the aviation title industry for more than 45 years. In that time, they’ve seen tens of thousands of aircraft purchases: They’re all too familiar with what can go wrong, and they know exactly what it takes for things to go right.