Forecasting Aircraft Values in a Low-Inventory Market
The past several years have reshaped the global aviation market in ways few predicted. Historically, aircraft values have risen and fallen in response to predictable cycles—OEM production swings, economic conditions, business confidence, and fuel prices. But today’s market presents a unique challenge: sustained low inventory across nearly all major aircraft categories, from business jets to turboprops to high-performance pistons. For appraisers, brokers, and ownership stakeholders, forecasting values in this environment requires new tools, closer market observation, and a willingness to adapt long-standing valuation models.
A Market Defined by Scarcity
New aircraft delivery delays, persistent supply chain bottlenecks, and a surge in post-pandemic demand created an environment where normal inventory levels never returned. Listings for many models remain between 25%–60% of historical averages, creating a supply imbalance that distorts traditional depreciation curves.
In a typical market, depreciation follows a predictable trajectory influenced by age, condition, upgrades, and market comparables. But in a low-inventory environment:
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Comparable sales are fewer and less representative
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Median marketing time compresses, reducing negotiating leverage
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Bidding competition inflates prices, sometimes temporarily
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Outlier transactions can skew value expectations
The result is volatility that traditional appraisal models were not designed to accommodate.
Why Forecasting Becomes Challenging
Low inventory introduces three major forecasting barriers:
Distorted Market Comps
Aircraft that do come to market often have unusual histories—higher hours, deferred maintenance, unique configs—which means the data pool is less reliable. Appraisers must adjust more aggressively for condition and provenance, and cannot rely solely on recent sale prices.
Artificial Price Elevation
Scarcity often pushes buyers to pay premiums simply to acquire something. These premiums reflect urgency, not long-term value. Once supply normalizes, these temporary surges typically fade, leaving buyers “upside down” on value.
Unreliable Historical Curves
Traditional depreciation curves assume stable supply. With OEM delays (sometimes years long), those curves flatten or even invert for certain aircraft—leading to appreciation phases that defy standard modeling.
Key Indicators for Predicting Future Values
To forecast in a constrained market, appraisers must shift from purely historical analysis to forward-looking indicators. The following factors now carry more predictive value than ever:
OEM Production Rates
Backlogs for popular platforms (e.g., mid-size and super-mid business jets) remain at multiyear highs. Forecasting must incorporate:
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Anticipated delivery ramp-ups
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OEM supplier constraints
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New program launch timelines
An increase in deliveries is often the first sign that pre-owned values may soften.
Inventory Velocity
Monitoring days-on-market trends is essential. A sudden uptick in marketing time—especially if listing volume begins rising—is a strong indicator of downward pricing pressure.
Usage Patterns
Post-COVID, many corporate users expanded their internal flight departments, pushing utilization higher. Higher-than-normal fleet usage accelerates time-based or cycle-based value drops, even when market conditions mask them.
Economic and Interest Rate Signals
Aircraft financed at high interest rates place pressure on operational budgets. If financing becomes more affordable, demand may rise—prolonging a low-inventory environment.
Modeling Approaches that Work in a Low-Inventory Market
Scenario-Based Forecasting
Instead of a single predicted value, provide upper, middle, and lower value scenarios influenced by supply recovery timelines. This improves accuracy and avoids giving artificially precise numbers.
Blending Cost and Market Approaches
When market comps are thin, incorporating the cost approach adds stability:
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Replacement cost new
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Adjusted depreciation
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Equipment and modification value
This safeguards against overreliance on inflated comp data.
Tracking Leading Instead of Lagging Indicators
Lagging indicators (like published transaction prices) are now less useful. Leading indicators, such as OEM backlog shifts or sudden listing surges, provide better future value prediction.
Time-Series Valuation
Instead of comparing only the last few comps, appraisers should analyze:
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Multi-quarter price changes
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Rate of change acceleration or deceleration
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External macroeconomic signals
This approach helps identify when a market is approaching an inflection point.
When Will Values Normalize?
Normalization depends on three factors:
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OEM production recovery
— Key suppliers must eliminate bottlenecks, especially for engine and avionics components. -
Inventory returning to historical levels
— For many jet categories, this means a doubling or tripling of current listing volumes. -
Demand cooling to pre-2020 patterns
— Corporate travel habits and charter fleet utilization remain elevated compared to historical baselines.
A full reversion to traditional depreciation behavior may take several years—and some segments may never fully revert due to permanent structural shifts in the industry.
Conclusion
Forecasting aircraft values has always blended data with judgment, but low inventory has made that balance more challenging than ever. In today’s market, appraisers must:
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Rely on broader data sources
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Monitor forward-looking indicators
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Use flexible modeling techniques
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Avoid over-weighting short-term price spikes
Scarcity may be driving elevated values today, but forecasting requires looking beyond the present. Understanding how supply, demand, production capability, and economic pressures interact is the key to predicting where aircraft values are headed when the market finally normalizes.
