Surely we can’t be the only ones who find the pre-owned Falcon 7X market a bit of an enigma. It’s a fine and capable aircraft that enjoyed massive success when first introduced; yet for a variety of reasons still seems to be searching for its groove in the pre-owned world.
Inventory levels increased during 2015 from 15 units a year ago to 23 units today. A grand total of 6 aircraft changed hands last year, and that means there are currently 46 months of available inventory. Average market time of 276 days is a bit misleading, as a few old listings have been pulled from the market while 8 new listings have hit in the past 100 days.
Less than 20% of the market is N registered. We think this factor alone weakens demand. Rightly or wrongly, there is some element of stigmatism regarding foreign registered aircraft amongst U.S. buyers- who happen to comprise the majority of the current market.
Of course, this statistic is a partial reflection of the Falcon 7X fleet demographic. After all, this was an aircraft that began commercial deliveries in 2007, benefitting from the booming demand in emerging business jet markets at the time. The flip side of this is that the 7X did not quite develop the same nexus and familiarity amongst U.S. operators that it might have under different conditions.
IAG’s modeling also shows a distinctly steeper year-over-year relationship in value than normal (i.e. the difference in average value for a 2009 vs. 2010 model). This is a phenomenon that will want to correct itself over the short to medium term. As a result, we are especially concerned with pricing pressure in the newer half of the market.
Asking prices currently range from $21.995M to $46M. Interestingly, there have been relatively few recent price cuts considering the slow sales pace. This partially may be explained because 60% of the listings are currently “Make Offer.” That’s a really high percentage and suggests, along with the rest of the fact patterns, that the market is still searching for better pricing equilibrium.
Macro conditions impact all aircraft, but the specifics of the Falcon 7X market will make it an interesting case study for 2016.
If you have questions about pre-owned Falcon 7X’s please give Cass or Jeff a call at +1 212 888 7979 or send us an email here.