2023 Pre-Owned Aircraft Market: 4 Things to Watch

Over the following paragraphs, we will look at some of the things that have already begun to change or are soon expected to – specifically, four items that many believe could have an impact on sales within the pre-owned business aircraft sales marketplace this year.

What is the likelihood that such factors could drive the direction of sales this year? Let’s review.

1. Bonus Depreciation

While admittedly Bonus Depreciation is US-centric, the majority of pre-owned aircraft transact in the United States, so it potentially could have a significant impact.

Qualified buyers have been allowed a 100% bonus depreciation deduction on their taxes since 2017. A planned phasedown lowers this deduction by 20% each year, beginning in 2023. Thus, this year’s percentage is an 80% deduction, and next year it reduces further to 60% until Bonus Depreciation is completely phased out in 2028.

In reality 80% is still a pretty good deal. What’s more, not everyone can meet the requirements to take this deduction, and many of those who do have already purchased an aircraft.

Thus, the modest change in US tax law is not expected to meaningfully deter sales. Any buyer citing this as a reason not to buy was likely never serious to begin with.

2. Pre-Buy Inspections

Sellers are losing their strong upper hand, bringing a better balance of negotiating leverage between parties. The days of sellers discouraging a pre-purchase inspection (or naive first-time buyers skipping it all together) are rapidly winding down.

Along those lines, the wait at the MRO facility to conduct the inspection should start getting shorter. If one could even find a slot, pre-purchase inspections could take upwards of weeks to schedule as maintenance facilities became oversubscribed when pre-owned transactions set records, and overall business jet utilization increased.

With hangars full of work-in-process, some maintenance providers resorted to working on aircraft parked outside in the elements, with mobile tools in tow.

3. The Paperchase

The paperwork logjam witnessed over the past couple of years related to getting an aircraft bought, sold, and registered will finally get some relief in 2023.

Given the anticipated reduction in the numbers of pre-owned transactions, coupled with organizations finally increasing their staff, the traditional nail biting to close transactions promptly - particularly by year-end – should subside a bit.

While the bureaucracy will remain a constant, there will be more bandwidth to keep deals on track, and to conclude within a more reasonable timeframe.

4. Yin and Yang Market Makers

There will be two opposite but interconnected forces acting on the market this year. To find out what these are, and to read the other key market indicators leading into February,  click the button below to view AvBuyer's February digital edition…