Asian Sky Quarterly 2020Q4
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G550: SOLD FLEET AGING TREND<br />
Average Aircraft Age<br />
(Delivery Year - Sold Year)<br />
12.0<br />
11.0<br />
10.0<br />
9.0<br />
8.0<br />
7.0<br />
6.0<br />
5.0<br />
4.0<br />
3.0<br />
2015 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2016 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2017 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2018 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2019 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2020 Q1<br />
Q2<br />
Q3<br />
Q4<br />
Residual Value and Pricing Strategy<br />
Data Source: ASG<br />
Residual Value (M USD)<br />
AIRCRAFT RESIDUAL VALUE ANALYSIS: A 2010 G550<br />
60.0<br />
55.0<br />
50.0<br />
45.0<br />
40.0<br />
35.0<br />
30.0<br />
25.0<br />
20.0<br />
15.0<br />
10.0<br />
2010 Q2<br />
Q3<br />
Q4<br />
2011 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2012 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2013 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2014 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2015 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2016 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2017 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2018 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2019 Q1<br />
Q2<br />
Q3<br />
Q4<br />
2020 Q1<br />
Q2<br />
Q3<br />
Forecasting 2021<br />
Data Source: Vref<br />
According to Vref, for a 2010 delivered G550 with a residual value between<br />
$15 - $20 million, the annual depreciation rate will be 7%.<br />
There have been a few cases when the market supply bottleneck has<br />
stimulated asking prices to increase, but often both buyers and sellers<br />
struggle to agree on pricing. It is always hard to persuade sellers that<br />
their G550s are probably going to sell at a lower price, since they are<br />
always hopeful that their aircraft’s value is going to remain steady, or<br />
increase, once the economy recovers or demand returns. However, now<br />
that Gulfstream has stopped building the G550 and the age of the fleet<br />
increases, it is likely that the depreciation rate will increase.<br />
Despite the current economic situation, the demand for pre-owned business<br />
jets has gained momentum as COVID-19 has put business aviation<br />
back in demand. After a surge in G550 deal activity in Q4 2020, we see<br />
the potential for a revival of market demand, with higher asking prices<br />
in the short-term. But in the long run, the G550 is less likely to see an<br />
increase in its market value, due to its aging fleet, as well as the prevailing<br />
economic conditions.<br />
Special Thanks to: James Hagerty, Hagerty Jet Group<br />
FOURTH QUARTER 2020 — ASIAN SKY QUARTERLY | 39
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