FXSolutions Quarterly Update – Q1 Recap/Q2 Outlook
The past quarter has been a time of significant change, bringing an intriguing blend of new and persistent challenges, optimism and emerging opportunities. Looking back over the past several months and also to the year ahead, I’m seeing a few notable themes that are defining the current market:
- Strong Momentum – Record level of transactions in Q1 2025 resulting in pre-owned inventory dropping for a second consecutive quarter.
- Market Rebalancing – Gradual but notable change is beginning to occur.
- Optimistic Adaptation – Various segments of the industry, from OEMs to buyers, are looking further out and positioning themselves for the future.
- Parts Shortages – Persisting and continuing to affect new deliveries, pre-purchase inspections and ongoing maintenance.
MOMENTUM
The momentum observed in late 2024 carried through into the first quarter of 2025, reflecting continued strength in the pre-owned aircraft market. Both buyers and sellers remained active, driven by stable demand and healthy transaction volume.
This quarter has continued with the heightened focus on late-model aircraft, as buyers prioritize newer inventory offering advanced avionics, extended warranties and more efficient performance profiles. This demand has contributed to sustained pricing stability in that segment, even as older model inventory has seen increased days on market and more price sensitivity.
Overall, Q1 activity indicates continued confidence in the market, with many stakeholders seeking to capitalize on near-term opportunities before potential macroeconomic or policy shifts impact the landscape later in the year.
REBALANCING
While a year of rebalancing did take place, it was not quite as significant as many expected. After eleven consecutive quarters of inventory growth in the pre-owned market, we saw a 10% reduction in aircraft supply at the end of 2024, with 6.2% of the pre-owned fleet available on the market. This compares to the 10-12% figures that represent a balanced market favoring neither buyers nor sellers.
Buyers and sellers have both remained actively engaged in 2025. Recent Q1 reports indicate a further decrease in used aircraft inventory, driven primarily by activity in the light jet category. Other categories saw a decrease as well, albeit a far smaller one. Q1 also saw relatively flat asking prices as compared to previous quarters.
PARTS SHORTAGES
Parts shortages, both for OEMs and the MRO industry, continue to create downstream issues. Pete Bunce, outgoing president and CEO of the General Aviation Manufacturers Association (GAMA), observed in a recent NBAA webinar that the supply chain still hasn’t caught up with demand. On the pre-owned side, we’re seeing many pre-purchase inspections delayed due to out-of-stock and difficult-to-source parts.
Yet to be seen is whether and how the introduction of new tariffs will further impact this challenge. It’s difficult to see how they could be anything but detrimental, as they and the resulting volatility make it difficult for manufacturers of parts and aircraft alike to forecast demand and schedule production. Indeed, JP Morgan recently reported that both Gulfstream and Cessna have observed some hesitation from buyers among the uncertainty. Ideally, the administration will give consideration to industries like ours that are uniquely calibrated to long lead times and production backlogs.
MARKET OUTLOOK – FOUR TAKEAWAYS
- Despite some returning concerns over possible recession, optimism continues in the aircraft market. It is expected that bonus depreciation will return to 100% in year one from the current 40%. This is a major driver in aircraft sales, particularly for corporate flight departments.
- With OEM deliveries projected to increase by 10% year over year, we expect to see inventory continue to grow through 2025, particularly in the late model and high-pedigree aircraft categories. One factor driving this is the continued trend of COVID-era buyers shifting from full ownership to fractional, jet card, and charter products. This shift is driven by increased maintenance costs, lower charter revenue and high pilot turnover.
- When assessing the market’s health, we focus on several key metrics, including the manufacturer backlog. The current backlog is still hovering in the two-to-three-year range. This tells us that the market is very healthy, and it’s driving some buyers to purchase late-model aircraft on the pre-owned market while they await the delivery of their factory-new aircraft.
- The limited availability of pre-purchase inspection slots, coupled with the previously mentioned parts shortages, is causing a bottleneck in many transactions. Consequently, we now plan for a pre-purchase inspection timeframe of 90 days, an increase from the prior range of 45-60 days.
Markets evolve, and so must strategies. The coming year will bring new challenges and opportunities, and expertise will be key to making the most of them. FXSolutions stands ready to assist you in navigating what’s next.
-Matthew Doyle
Managing Partner, FXSolutions
