Is this Peak Price for General Aviation?

May 17, 2022

As anyone in general aviation is aware, prices for aircraft have been painful for the last few quarters. More than any other time in recent memory, it's been a seller's market. Wedged between increasing oil prices, looming concerns about a potential recession, and rising interest rates, the fundamentals of the economy all lean towards an argument that soon, the tide will turn towards buyers. Adding to this, we present another datapoint today that also leans in that direction - more aircraft are being put on the market right now than any other time since the beginning of the pandemic.

The fundamentals aren't looking great as they are for any would-be seller. Assuming you're purchasing via an aircraft loan, just with rising interest rates, an increase of a few percentage points from the bottom of the market means buyers are paying way more for their aircraft. An aircraft today costs a buyer somewhere around 15% more on their monthly payments than if they had purchased only a few months ago. Further, 100LL has spiked from a pandemic low national average of $4.51 to $6.40 as of this week, a 41% increase in one of the main cost centers for aviation. Finally, with a shrinking economy, decisions around how to allocate excess wealth become tighter, and budgets available for the hobbyist class of aviator is likely to decrease should a recession fully mount.

Number of single engine and multi engine piston aircraft listed per month on Trade-a-Plane
Number of single engine and multi engine piston aircraft listed per month on Trade-a-Plane.

Adding to this, TAP Deals has observed an all time high for both the price of aircraft as well as the number of aircraft actively being listed on the market. May 2022 alone will likely be the most active month in several years in terms of new aircraft being listed - the runner up for that distinction is April 2022. In general, these two months represent an increase of 55% (for single engines) and 35% (for multi engines) more active listings than the average from the previous two years, a clear departure from previous data.

Median price of single engine and multi engine piston aircraft on Trade-a-Plane
Median price of single engine and multi engine piston aircraft on Trade-a-Plane.

Additionally, we're seeing record listing prices. As should be no surprise, the median price for an aircraft is up 28% for both single and multi-engine aircraft in April and May of 2022 as compared to the previous two years of data. This is probably correlated with the observed glut of inventory coming online now - as would-be holders of aircraft are noticing, the pricing is perhaps a rare event, and fence-sitters have joined in the sales cycle.

At what point is enough aircraft listings enough to tamp down prices, though? We likely don't have a clear answer from this data alone. Further, confounding factors like the moving targets of 100LL prices, interest rates, and the broader economic environment will muddle any relationship. What is clear, though, is that evey indicator that could flag in favor of buys is now doing so - only time will tell if the madness of aircraft prices will finally come to a slow, though.

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