Latest / VREF | The Truth About the Aviation Market / The Aircraft Market Lost Its Nerve: Why Falling Prices Still Won't Make Buyers Move | EP 36
Transcript
- Addison: So I'm reading this headline this morning. Pre owned aircraft market flourishing. Deals are closing faster. Pricing is stabilizing. You know, and I stopped for a second because either I'm looking at the wrong data, or the market and the narrative are completely disconnected. Because what I'm seeing right now is something very different. Welcome back to The Truth About the Market. I'm glad you're here. This is the show where we cut through the noise focus on what's actually happening in aviation, not the hype, not the headlines, just the truth. And I'm your host, Jason Zilberbrand, and I'm president of VREF. I've appraised nearly every type of aircraft out there. My clients range from the FAA to private owners, and I've owned, operated, bought, and sold my own aircraft. And when I talk about this stuff, it's not theory. It's experience. And it's important to understand something else. This podcast, unlike everybody else's, has no sponsors. We have no advertisers. We have no commercial interests. And that means there's no incentive to soften the truth. So what you hear today is unfiltered because aviation demands the truth and the market punishes misinformation every time. So let's get right into it. What I'm about to walk you through is not what you're hearing in the market. Inventory is flat. It's averaging roughly forty three hundred and forty aircraft, almost identical to last year. At the exact same time, asking prices have dropped materially. From roughly $2.95 million on average down to $2.17 million in just a few months. That's a 20 to 25% decline, folks. And transaction volume is just as bad. It's down from 5,117 deals. The 3,428 year to date from the same time frame last year. That's a 33% collapse. April alone, down 46%. Now stop and think about that. Prices are falling, sellers are adjusting, and yet transactions are collapsing. That combination matters because when pricing moves and deals still don't clear, you're no longer looking at a normal market cycle. You're looking at a market that's losing its ability to transact, its ability to close. Guys, this is an excess supply. It's not just stubborn pricing either. Sellers are already cutting their pricing aggressively. What's breaking down is something deeper, and we call that confidence because buyers are stepping back, not just because they can't buy, but because they don't trust the timing. And let's look at that. You know, sellers are reacting, but not fast enough to close the gap. And as a result, the transactions stall quietly at first, and then all at once. And here's the part nobody's talking about. Markets like this often are more dangerous than sharp corrections. Because corrections force decisions. They create price discovery. They reset expectations. You know what this environment does? The opposite. And you're seeing it. It delays decisions, it stretches timelines, it widens the gap between perception and reality. So, today I'm going to break down what's actually happening beneath the surface. Not going to talk about the narrative, but I'm going to talk about the mechanics. Because if you're operating in this market in any sort of capacity whatsoever, this isn't background noise, people. This is a signal. Take note of it. So The illusion of a buyer's market, you're going to hear this everywhere right now, right? It's a buyer's market. It's a buyer's market. Blah, blah, blah, blah, blah. It sounds right. Prices are down, sellers start to negotiate. Inventory is readily available. But you know what that label assumes? It's something critical. That buyers are actually transacting, which they're not. So let's separate perception from structure. Inventory today is essentially unchanged year to year. As I said, right around 4300 aircraft. And so this isn't a situation where supply has overwhelmed the demand. There is no excess inventory, nothing forcing liquidation. Now look at pricing. Average asking prices have compressed materially. And we kind of saw this coming with the heated fourth quarter and the crazy run on aircraft in December, and us obviously having to react to that. But let's be honest. We are seeing a 20 to 25% collapse in pricing just in the last couple months. That's not incremental softening. That's sellers actively repositioning. They're moving, they're adjusting expectations, they're signaling willingness to transact. And yet, transaction volume has dropped by one third over the same period from last year. So you have stable supply, falling prices, and declining activity. Now that combination doesn't describe a functioning buyer's market, because in a true buyer's market, lower prices, guess what they do? They typically unlock demand. They accelerate closings. They create movement in the market. But that's not happening here. Instead, what you're seeing is a breakdown in participation. Buyers aren't responding to price alone. They're questioning timing. They're evaluating risk differently. And most importantly, they're choosing not to act. This isn't buyers gaining control of the market. It's buyers stepping out of it. And that distinction matters because a buyer's market still closes. This one doesn't. What you're looking at is not opportunity being seized. It's opportunity being deferred, folks. So the question is, if this isn't a buyer's market, then what the hell is it? It's a market caught between two timelines? And the numbers prove it. Like, start with the sellers. They are adjusting, but they're adjusting to what already happened. They're not looking forward. They're looking in the past. And look at the step down in asking prices. January, February, March, we're seeing a complete collapse in pricing. It's not static. It's aggressive movement, people. And of course it's not across the board. I know people are going to say, well, some aircraft are still moving. Sure they are. There's always going to be a couple popular aircraft that always sell for top dollar no matter what's going on the market. But that's not what's happening in the vast majority of the aircraft trading market. We're seeing reactiveness. Sellers chasing the market lower every month. And if you look at buyers, they're not reacting to those price cuts. They're not doing anything when the mail email comes out with a price drop because they're underwriting going forward. And you can see that in the transaction data. Look, even as prices dropped over 20%, sales fell. January down 23%, February down 28%, March down thirty-four percent. So pricing is coming down. But participation, it's falling faster, and that's the disconnect. Buyers aren't responding to where prices are, they're pricing where they think the market's going to be. That creates a widening gap, not just in numbers, but in expectations. Sellers believe a 20 to 25% adjustment should just clear the market, remove all the inventory. And buyers are effectively saying, no, not yet. So deals don't fall. They don't close. But they do fail. They just don't do it loudly. And they stretch and they stall, and then eventually they disappear, and that's what we call a deadlock. And this is why volume collapses before pricing bottoms. Because until forward expectations and current pricing align, transactions don't clear no matter how much sellers adjust. This episode is powered by VREF. The standard in aircraft valuation, if you're buying, selling, financing, or just trying to understand what your aircraft is really worth in a very complex market, V ref it. VREF Online gives you the data that actually drives decisions, not opinions, not listings, not guesswork, and please God forbid, not AI slop. So go to vref.com and VREF it before you make the call. Okay, let's talk about demand. And more importantly, let's talk about the destruction. Cause this is the most important part of the entire episode, folks. If you don't listen to anything else, this is it. Because most people are focused on the wrong signals, they're watching listings, they're watching the asking prices. Neither of those tells you if the market's actually working. Guess what does? Transactions. That's where reality shows up. That's where the rubber meets the road. So let's look at the numbers. Because January through April last year. It was really healthy. And it wasn't even a great year. It was a normal year. Nothing robust, nothing out of the ordinary. We did 5,117 transactions between January 1st and the end of April of 2025. Take a guess how many we've done this year, people. You ready for this? 3,428 deals. That's 1,689 fewer. That's 33% less. Now let's break it down by month. In January, 23.9% fewer deals. February, 28.4% fewer deals. March, 34.2% fewer deals. April, 46.1%. Guys, that's not random. That's a trend. It's accelerating. By April, nearly half the market disappeared. And that's the signal. Participation is dropping out fast. Because when demand pulls back like this, everything changes. It doesn't matter what the price reductions are. It doesn't matter that the listings don't convert into deals, because the time on market continues to extend. Liquidity, the ability to sell an asset, that's what starts to disappear. And here's what matters most. And no one's going to tell you this. You're not going to see it in one of these marketing listings from one of these alphabet organizations. The market doesn't tell you the truth through completed deals alone. It tells you the truth are the ones that didn't close. This is like my mantra. If you listen to this podcast, you've heard me say this before. Every aircraft that doesn't sell at a reduced price, every listing that carries forward month to month, every deal that falls apart, that's rejection. And when rejection scales, you don't just get slower activity, you get structural resistance. And right now that resistance is not subtle, it's measurable. Because demand hasn't just weakened, it has stepped back materially. So now let's talk about time. Because time is where stress shows up before price fully adjusts. Days on market are trending higher consistently across the first quarter. That's not a spike, it's not a shock, but it is a steady increase. And aircraft are taking longer to sell and deals are taking longer to negotiate. And look, buyers are taking a lot longer to commit. And that progression matters. Because it tells you the market isn't rejecting assets outright. It's just hesitating. And you're seeing it everywhere. Well, maybe not the high-end car market, but for some reason that just keeps on trucking, at least for the moment. But I do see a lot of hesitation, and that's your early signal. But if you go deeper, the picture changes. There are entire segments where aircraft have been sitting not for months, but for years. In some cases, multiple years. That's not pricing and efficiency. Because if it were. The market would correct it. That's a breakdown in liquidity. Meaning meaning the issue isn't what's the right price. It's is there a buyer at any price? Any price at all that's going to change the risk profile and the financing and the usability. That's a different problem entirely, people. And it doesn't resolve quickly. This is why calling this a correction kind of misses the point, right? Because corrections are active, they involve repricing, they typically include transactions that close, and we see inventory that turns over. And this behavior of this environment, it's completely different because it's slowing and it's stretching and the delays are coming, and it seems like everything is frozen, everything's locked up. And when a market freezes and when it locks up, the price discovery doesn't actually accelerate. It completely stalls. And that's where I think we are right now. We're not collapsing, we're not closing, we're just sitting in a place waiting for pressure to force resolution. If you're looking at an aircraft and wondering, what is it actually worth? Well, don't guess. VREF it. VREF Online gives you real-time data with quarterly updates and coverage across more than 900 aircraft models, built on how the market actually behaves, not how it's advertised. This is a platform that is dependent upon by every lender, insurance company, and serious operator worldwide, because when the numbers have to hold up, They go to VREF So you go to VREF.com and you VREF it before you make your next decision. Okay, so let's talk about distress. Because here's where this gets misunderstood. People look at the distress data and draw the wrong conclusion. They see low foreclosure activity, no meaningful repossessions, and assume the market is stable. Well, we know it's not. And we also know it's very early on in what's been going on in this correction. And foreclosures year to date are down sharply. Repossessions essentially nonexistent, but those are lagging indicators. They tell you what has already been forced through the system, not what's building inside of it, because distress doesn't appear all at once. It moves in stages. You know, first the cash flow tightens, then payments get stretched, then defaults begin to form, and only after that do you see enforcement, and that timeline isn't weeks, it's months and years. So when you combine what we've already seen, declining transaction volume, meaningful price compression, and slower market absorption, you're not looking at stability, you're looking at a pressure cooker. Accumulating beneath the system, beneath the surface. And this is the front end of that process, right? So as it continues to percolate and as it continues to build pressure, and we're seeing this, right? Activity's dropping, liquidity is very thin, and the confidence is starting to fade. And then only later does formal distress become visible. And it's going to start with a lot of the dealers that have inventory that they have to make curtailment payments on that they can't resell for anywhere near a profit or break-even. So that's why if you rely on foreclosure data, it's going to be very misleading because that data has not caught up yet to what the market is doing and the conditions that created it. But make no mistake, all the wheels are in motion and everything's already in place. And this is not a single market moving in one direction. It is a collection of segments that are responding differently to the same pressure, and that divergence is widening. So let's start with helicopters. Liquidity is extremely thin. Extended time in the market, repeated price reductions, and limited buyer depth are creating conditions where we're seeing assets sit for years without selling. That's not cyclical softness, that's structural illiquidity. And if you look at older jets, here the issue isn't just age, it's relevance. Avionics limitations and rising maintenance exposures, and reduced financing appetite. I mean, there are very few banks that'll even touch this stuff anymore. And that's combining to create functional obsolescence, something you don't hear a lot of people talk about, but functional obsolescence is a big deal. It means you're buying an aircraft that cannot function based on the technology that it has without requiring substantial money to be reinvested into it. These aircraft aren't just worth less. They're harder to sell at any price point. Turboprops are showing a different pattern. Values are compressing pretty quickly, particularly across King Airs. Where supply is steady, but buyer sensitivity to operating costs. Remember, there's two engines with a King Air, and future maintenance has increased. And I haven't talked about fuel pricing in this episode because I have been hammering at home the last few weeks, but you know, make no mistake. Twin engine turboprops, the pressure's on, people are moving up in the market. They're taking a different approach to how they're going to operate these aircraft based on what we're seeing with the price of fuel. Let's talk a little bit about mid-size and super mid-size jets because those are beginning to soften too, especially with maintenance and program gaps and a lot of things are producing uncertainty. These deals aren't failing on price alone. They're failing on the structure. And at the top end, newer aircraft are holding because the backlogs are so long, guys. Strong positioning. It's still supporting those values. You gotta remember, people bought these aircraft years and years and years ago. And when you buy a new airplane, You pay based on a payment schedule. You don't just write a check all at once. So talk about being pregnant. Imagine buying an airplane post-COVID for $80 million and having 75 or 80% of your money invested into it and be six months out from delivery today. The financial outlook looks different. This is what fragmentation looks like, guys. It's not a broad decline, but a selective breakdown. Across segments driven by liquidity, usability, and risk. So what happens next? What happens from here? And I think the key is understanding how markets actually reset. They don't reset on pricing first. They always reset on participation. Think about it. Activity returns before stability does. Right now, participation is the missing piece. It's the missing link. Until buyers step back, until they come back in with conviction and sellers respond with clarity. This environment will persist. So what changes that? Well, certainly not headlines and certainly not incremental price cuts. But I would say it's going to be alignment. At some point, sellers will move decisively enough to change the uncertainty of buyers, not just negotiate around it. And at the same time, buyers will reach a point where they're not going to wait any longer. They don't think their position's going to improve by stretching out an inevitable decision to purchase. And financing. Whether through rate stability, which is gonna happen, it's just not gonna happen quick, or improved underwriting confidence, it'll begin to normalize deal flow. The question is how long is this stuff gonna take? I mean, it's May, this is flying season, we're in the middle of it, and it has been incredibly slow. We're seeing very few transactions come through. So when those three elements come back into alignment, that's when we're gonna see transactions restart. It's not gonna be gradual, but it is gonna be noticeable. Because liquidity, once it comes back, it's a cluster, right? It tends to happen in groupings. But until that happens, I think we're in a holding pattern, guys. And holding patterns carry a lot of risk. Because while activity is paused, pressure doesn't start building. Cash flow constraints, deferred decisions, assets, and their age and where they sit in maintenance. And if that continues, the next phase isn't just repricing, it's forced movement. And that's where you begin to see motivated sellers. Constrained operators and time-sensitive decisions entering the market. And when that happens, the pace is going to change. Not because the market improves, but because it's compelled to. So let me leave you with this. Nothing about this market is broken. Not yet. But it is clearly under pressure. Inventory isn't moving. It is stagnant. And so this isn't a supply shock. And at the same time, asking prices have dropped materially. And if you remember what I said, on average, from 2.95 million down to 2.17 in just a few months, that's a 20 to 25% correction in pricing. And yet the transactions, they have just been pummeled. They've been annihilated. They're down 33% year-to-date, people. April alone, down 46%. So you have a stable supply, prices that are going down, and activity that's going down with it. And that combination tells you exactly where the problem is. Again, it's not inventory. It's not pricing anymore. It's confidence. It's the C-word. Confidence that pricing has found a floor. Confidence that waiting doesn't improve outcomes. Confidence that risk is properly understood. And until that confidence returns, this market does not change. This market doesn't clear because markets don't reset it all at once. They compress, they stall, they freeze. And then when the pressure builds enough. That's when they move because it's a big explosion. The real question now isn't whether that happens, it's when. Because when activity does come back, it won't be gradual, it never is. If you found this episode helpful, please share it with someone who's either looking to buy or sell or finance an aircraft. This podcast exists for one reason to analyze aircraft as capital assets, without brokerage spin and without the manufacturer narrative, and remember When you need accurate, defensible, and data-driven aircraft values, there's only one name in the industry to trust, that's VREF. So go visit vref.com and get started today. I want to thank you for listening. I'm Jason Zilberbrand and this is the truth about the market. Until next time, fly safe and stay smart.