2015 Light Jet Market Report for Aircraft Owners, Pilots, Prospects & Enthusiasts

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2015 Light Jet Market Report for Aircraft Owners, Pilots, Prospects & Enthusiasts A Data Driven Market Review of the Eclipse 500/550, Citation Mustang, Embraer Phenom & TBM 850/900 2015 Light Jet Market Report For Aircraft Owners, Pilots, Prospects & Enthusiasts Featuring 2013-2015 New and Pre-Owned Sales Data Annual Factory Delivery numbers from the Light Jet and Turboprop Market Avionics Functionality & Features Updates Secondary Market Sales & Trends 2015 Market Outlook Honda Jet and Cirrus SF50 Jet Certification and Delivery status Prepared by the Light Jet Specialists at JetStream Aircraft www.JetStreamAircraft.net 1 (800) 942-7199 2015 LIGHT JET MARKET REPORT Greetings Aircraft Owners, Pilots, Prospects & Enthusiasts! Join us for an insider look at several key markets in the Business and General Aviation Industry, with a specialized review of the Very Light and Light Jet marketplace. 2015 eagerly awaits the latest FAA Light Jet certification in nearly ten years, plus announcements for avionics and cabin upgrade programs from several manufacturers. We begin with a broad industry recap and zoom in for a detailed look at select overachieving piston and turbine markets. Improved economic growth, an ultra-supportive U.S. Reserve policy, and double-digit S&P gains closed out a banner 2014 financial year. In response to diminished global oil demand and a U.S. Shale boom, benchmark West Texas Intermediate (WTI) crude oil prices dipped to 2009 levels by year end. The effect on both Avgas and Jet-A pricing was substantial and immediate with prices dipping below $3 per gallon. Rejuvenated aircraft lending policies combined with bonus deprecation incentives also drove strong year-end sales. 2014 General Aviation new piston deliveries rose nearly 10%, with a 6.5% rise in overall Business Jet deliveries. The resurgent U.S. economy boosted large cabin jet manufacturers Gulfstream and Bombardier with 20-40% increases for new deliveries in their G450/550/650 and Global 5000 long range jets. Factory new Light Jet deliveries waned amidst an active secondary market with nearly 1,100 Cessna Mustang, Embraer Phenom, and Eclipse 500/550s already delivered in the world marketplace. The U.S. Dollar charged out of the gate in early 2015 and has not looked back since, trading at an 11-year high versus the Euro. Sustained greenback strength will increasingly incentivize overseas owners to offer their aircraft for sale in the burgeoning U.S. market. A robust U.S. economy traditionally drives General and Business Aviation sales volume and growth rates. Given the positive indicators thus far, piston and select jet turbine segments should openly welcome sustained growth not seen since the early 2000’s for the coming 12- 18 months. About JetStream Aircraft Founder Nate Metzler served in sales and marketing operations at the original Eclipse Aviation factory during FAA certification and customer deliveries. Following the production line shutdown in 2008, a consistent market demand remained for the pre-owned Light Jets. JetStream Aircraft was created as an independent resource for Buyers and Owners and in the pre-owned marketplace, specializing in the Citation Mustang, Embraer Phenom, and Eclipse 500/550 models. Please enjoy our latest market review. Warm Regards, Nate Metzler Founder JetStream Aircraft 2015 Market Report [email protected] 1 800 942-7199 © JetStream Aircraft 2015 ECLIPSE 500 & 550 JET 2015 Fleet Size: 278 550 PRODUCTION LINE OPENS Eclipse Aerospace achieved a major milestone in 2014 with the return of the Eclipse Jet production line and first 550 model customer deliveries. The refined sibling of the original 500 model received substantial avionics enhancements, plus Anti-Skid Brakes and Auto-Throttle hardware upgrades. Future options for Synthetic Vision, Enhanced (IR) Vision, Radar Altimeter, and ADS-B are on the certification track. The achievement required nearly six years of dedicated work from the Eclipse staff and suppliers since the last 500 model was delivered in 2008. Production rate is metered to market demand, with 12 Eclipse 550 units delivered in 2014. Eclipse 500 Fleet Upgrade Programs Eclipse 500 owners in all configurations received options for upgrading avionics and hardware through three separate factory programs. IFMS, the Safety Enhancement Package (SEP), and the PLUS Package were offered in various promotions over the prior 36 months. The PLUS 2.7 package retailing at $499,950 remains open for 2015, featuring faster processor PFDs/MFD, the latest IFMS software enhancements, Auto-Throttles, and Anti-Skid Brakes. The fleet remains segmented in various avionics versions creating multiple pricing niches ranging between $700,000 and $2.2M USD. For this reason, buyers and owners alike have difficulty in accurately pricing residual and resale values of several configurations. For a full description of capability and features, we provide an Eclipse Avionics Guide for download on our website, or by email request. The graphic below represents the avionics fleet status as of 2015. The Eclipse 500 pre-owned and secondary market 2% 20% 4% (Non-ETT): 6 continues evolving as an 5% amalgam of submarkets and (Avidyne ETT): 11 pricing niches. Used market 7% 6% AVIO NG1.3: 15 transactions have steadily averaged 3 per month for the NG1.5: 19 10% prior three years (2012: 34, NG1.7: 27 2013: 35, 2014: 35), confirming consistent demand 46% IFMS: 129 in evolving economic SEP 2.5: 17 conditions. IFMS and Total Eclipse sales make up the PLUS/TE Plus/550: 54 majority of secondary market transactions. Prospective 2015 Eclipse 500 Fleet By Avionics Version owner uncertainty concerning factory parts availability for NG1.7 and below weakened demand for non-IFMS platforms, and prompted some owners of the legacy Avidyne and AVIO NG versions to upgrade through the factory programs. Notably, market demand around the $1M pricepoint fuels consistent inquires by transitioning piston-owner pilots. However, 2014-2015 entry level pricing for secondhand IFMS versions has not dipped to the $1M range, eliciting a wait- 2015 Market Report [email protected] 1 800 942-7199 © JetStream Aircraft 2015 and-see response from these prospective buyers. Within 24-36 months normal depreciation and market movement should transition used IFMS pricing into the $1M range. Eclipse secondary market values are passionately debated, thus we conducted a depreciation comparison to the Cessna Mustang and Embraer Phenom 100. In spite of a circuitous company history, upgraded versions of the Eclipse held relative resale equal to, or in some case better than the Mustang and Phenom. Average Aircraft Valuation from Factory Delivery to 2014 Eclipse 500 Phenom 100 Cessna Mustang 2007/08 Factory Delivered Price $1,600,000 $3,750,000 $3,250,000 Avionics Upgrade (IFMS) $350,000 (IFMS) - - 2014 Average Resale $1,325,000 $2,705,000 $2,125,000 % Used vs. Original Value 68% 72% 65% *resale values are averaged from all available public database sources. Individual aircraft valuations vary upon condition, hours, history, and specific avionics configuration. ECLIPSE JET RESALE MARKET VALUES In previous Market Reports we tracked resale values by a trendline for each avionics version AVIDYNE through TOTAL ECLIPSE. For the 2015 report, we incorporated Market Averaged Sales into data ranges with at least 80% of the recorded sales represented in the orange bands. Sales data recorded outside the 80% majority were recorded in the blue bands. As Eclipse airframes extend beyond 7 years since original factory delivery, resale pricing variance increases with aircraft condition. Mid-market IFMS averaged 500-750 hours Total time, with ESP Coverage and all inspections current. Higher time or non-ESP aircraft values are adjusted accordingly. ECLIPSE JET IFMS RESALE VALUES 2013 - 2015 $1,600,000 $1,550,000 $1,500,000 $1,450,000 $1,400,000 $1,350,000 $1,300,000 $1,250,000 $1,200,000 $1,150,000 $1,100,000 $1,050,000 $1,000,000 1/1/2013 7/1/2013 1/1/2014 7/1/2014 1/1/2015 MARKET AVERAGED Resale Range ORANGE BAND | All Recorded Sales BLUE BAND 2015 Market Report [email protected] 1 800 942-7199 © JetStream Aircraft 2015 The TOTAL ECLIPSE program introduced in 2011 produced refurbished and upgraded models with IFMS avionics. The TE features a customizable interior and exterior, plus fully paid ESP Engine Program. TE resale values average $50,000 - $200,000 above the base IFMS average, depending on condition, equipment installed, and S/N pedigree. The factory currently offers pre-owned TOTAL ECLIPSE jets with a warranty priced at $2.2M USD. We recognize an opportunity to target the Piper Meridian market at this price point. Piper has consistently delivered between 30-40 factory new Meridians each of the last three years for the popular $2.2M turboprop. Swaying just one of five Meridian prospects would bolster the TE demand and resale numbers considerably. AVIO NG1.5 & 1.7 RESALE TRENDS The upgraded dual Garmin 400 WAAS versions dubbed AVIO NG1.5 and 1.7 saw considerable market revaluation over the past 24-months. Over 40 1.5/1.7 aircraft remain in the fleet; however the number of resale and private transactions dropped in 2013 – 2014 despite up to 12 different serial numbers advertised for sale. Following the closing of the avionics upgrade program in 2014, the market demand softened for all AVIO NG versions. Stocked parts availability and factory support is available for all AVIO NG1.5+ versions. Sharing over 98% parts commonality with the IFMS fleet, this version provides great value and mission capability with certified FIKI and a fully coupled Auto-Pilot. Secondary market inquiries from non-pilot owners for this version at or below $1M has notably increased, validating a price point which may hold future resale values. ECLIPSE JET AVIO NG1.5-1.7 RESALE VALUES 2013 - 2015 $1,500,000 $1,450,000 $1,400,000 $1,350,000 $1,300,000 $1,250,000 $1,200,000 $1,150,000 $1,100,000 $1,050,000 $1,000,000 $950,000 $900,000 $850,000 $800,000 1/1/2013 7/1/2013 1/1/2014 7/1/2014 1/1/2015 MARKET AVERAGED Resale Range ORANGE BAND | All Recorded Sales BLUE BAND PRE-AVIO NG1.5 RESALE MARKET Avidyne 1.0 and AVIO NG1.3 used sales have emerged as a specialty sub-market aside from the upgraded fleet.
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