If anyone is looking for further evidence of a strong economy, here is a sign: wealthy individuals and companies are starting to snap up used private jets before they get too expensive.

Take Steven Myers. A private-equity financier and a licensed pilot, Myers had been patiently looking to buy a jet for years.

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But when he began noticing a drop in the number of planes for sale a few months ago, he moved quickly to buy a Cessna CJ2. (Myers would not say how much he paid, but the 2002 model he bought is listed at about US$2.4 million).

“On this particular aeroplane I probably would have made a worse deal if I had waited,” says, who runs Los Angeles-based Dolphin Capital Holdings.

The private-jet business collapsed after the 2008 recession as companies scaled back on travel to cut costs.

Prices had been driven to astronomical levels in the earlier boom and too many planes were built. When the crash came, pre-owned aircraft lost value at a dizzying pace.

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But now buyers are coming out of hiding, encouraged by expanding businesses and lower corporate tax rates. It has not hurt that US President Donald Trump, long synonymous with luxury private jets, is seen as someone friendly to the industry.

Former US president Barack Obama had often criticised private air travel, helping to keep the small-jet industry in a longer funk than other high-end segments of the economy, such as watches and sports cars.

There’s certainly not the number of [used jets] out there that created some of the issues for us on new aircraft sales in the past
Scott Donnelly, CEO of Textron, maker of Cessna jets

Sense of urgency

Prices remain depressed from the heady days, for sure, but no longer are planes with for-sale signs lingering for months.

Buyers of used jets are gripped with a sense of urgency not seen since before the financial meltdown.

In April, the average asking price for pre-owned jets, from small to large, rose 1.5 per cent from the previous month to US$9.7 million, according to JPMorgan Chase. They jumped another 2.4 per cent in May.

However, used-jet prices are down almost 25 per cent since the third quarter of 2015, the report said.

“What we’re left with now is [a] very light amount of inventory in the pre-owned sector of quality, late-model business jets,” Joe Carfagna Jnr, president of aircraft brokerage Leading Edge Aviation Solutions, said.

“It shifted from a buyer’s market to a seller’s market around the end of the year.”

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That can be seen in the number of used planes up for sale, which forms 9.3 per cent of the current fleet – the lowest level in about 15 years.

In 2009, it had peaked at 17 per cent, said Rolland Vincent, who provides a widely read market analysis called JetNet iQ.

Price depreciation

In turn, depreciation has slowed considerably.

During the recession, used-plane prices were dropping by as much as 6 per cent each quarter. Well-maintained aircraft are now depreciating at a more normal rate of about 1 to 2 per cent each quarter

During the recession, used-plane prices were dropping by as much as 6 per cent each quarter, Jay Mesinger, CEO of Mesinger Jet Sales, said.

Well-maintained aircraft are now depreciating at a more normal rate of about 1 to 2 per cent each quarter.

“That’s healthy, that’s sustainable,” Mesinger said. “That’s what a piece of equipment should do.”

The slight upward trend is a relief for business-jet makers, such as Bombardier, Embraer and Dassault Aviation.

They had cut production rates and offered discounts to curb a glut of aircraft.

New-jet deliveries plummeted to 874 in 2009 from a record 1,317 the year before.

While sales remain weak, at 676 jets last year, the dearth of inexpensive, nearly new aircraft is beginning to drive buyers to purchase new planes, brokers and analysts said.

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‘Less competition’

“We’re certainly seeing less competition from the used side,” Scott Donnelly, CEO of Textron, the maker of Cessna jets, told analysts in April.

“There’s certainly not the number of them out there that created some of the issues for us on new aircraft sales in the past.”

Manufacturers were not out of the woods, and were still selling planes at discounts to list prices, Vincent said.

Bombardier was protecting its turf in the mid-sized jet market from new planes such as Textron’s Cessna Longitude and Embraer’s Legacy 500, he said.

Textron increased the list price of the Longitude from US$24 million to US$26.9 million in 2017.

A new Gulfstream G650, made by General Dynamics and currently the largest private jet, costs US$69.4 million.

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But the recovery this year looked more solid, Chad Anderson, president of Jetcraft, a private-jet broker, said.

For one thing, aircraft makers had been vigilant at stopping speculators – who had bought planes to sell later at a higher price – from artificially driving up backlogs, he said.

“The last run-up was so extraordinary that it was unsustainable,” Anderson said. “I think we have legs here for the foreseeable future.”

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