An influx of first-time aircraft buyers enter the preowned market.
Molly McMillin
Bombardier’s Certified Preowned aircraft program has had a successful first year of operations at a time when record low preowned inventory levels are beginning to stabilize, a development that creates additional opportunities for the program, officials say.
Bombardier launched the Bombardier Certified Preowned (CPO) aircraft program a year ago after watching how cumbersome the process between buyers and sellers can be, officials say.
The program, which offers customers turnkey and refurbished like-new aircraft, also offers peace of mind for customers, organizers say.
“We thought that we could create a totally new experience for a buyer and especially in this day and age, whenever you’ve got a number of first-time buyers touching our product for the first time,” says Chris Milligan, Bombardier vice president of preowned aircraft and flight operations. “We really set out to create a complete premium and unique experience from the standpoint of a product as well as the service after the sale.”
The Certified Preowned program selects available aircraft on the market, conducts maintenance inspections and system and cabin upgrades and provides a one-year manufacturer’s warranty on labor and parts. It’s a like-new, turnkey experience.
Aircraft in the program sell faster than comparable aircraft with days on the market cut by about 50% officials say.“The whole focus is that whenever that buyer buys that plane, they’re ready to put it into service with new interior, new paint,” Milligan says. “We also have a strong focus on making sure it has the latest avionics [and] Wi-Fi connectivity solutions in the plane that’s unmatched anywhere. In addition to what you see is also the amount of the inspection that we do on the plane when we buy the plane—when we start the project. We do a comprehensive review with the other OEMs on the engines and the avionics and the other providers of the plane to make sure that we holistically update that plane to the best that we can do.”
Bombardier has seen an influx of first-time aircraft buyers enter the preowned market. Traditionally, first-time buyers make up 7-9%% of all buyers of Bombardier preowned aircraft. In 2021, first-time buyers totaled a record 40-43% of all buyers. In 2022, that has declined to about 21%, but it is still far ahead of pre-pandemic levels, officials say.
A record low supply of preowned inventory has led to increased pricing and residual values, “which has been definitely a tailwind,” says Thomas Fissellier, Bombardier director of preowned aircraft acquisition and sales support.
In the past month or so, available inventory has stabilized from record lows, creating “pure opportunities for us to go and acquire planes,” Fissellier says. “Every plane acquisition has really been a fight on our side trying to go and acquire a plane so we can take it and move it through our certified preowned program.”
Credit: Bombardier
Citing proprietary reasons, Bombardier officials decline to say how many customers the preowned certified program has attracted to date. Last year, overall preowned transactions of Bombardier aircraft totaled 555, the highest on record, compared to an average of about 440 per year, Fissellier says. During the first six months of this year, preowned transactions totaled 241 with sales on track to reach about 500 for the year—the second-highest number in the past seven years. At the same time, Global and Challenger sales represents the majority of the market.
“We see this market as being resilient and growing,” Fissellier says.
Industry-wide, preowned transactions reached a record 2,200 in 2021. In 2022, transactions are on track to total about 2,000.
“Basically, 2021 was a bit of an outlier,” he says. Fissellier predicts that “over the next couple of years, the market is going to stabilize back to 6% CAGR [compound annual growth rate] growth, which will give us some opportunities to grow our CPO business. We’re very well positioned to capture that growth opportunity.”
Activity remains brisk.
At the height of the pandemic, Bombardier would put a certified preowned aircraft on the market to its worldwide sales directors and within three days, they would have eight offers. Now, it may take one or two weeks to receive the same number of offers.
Activity and demand remain, but they are not at the “feeding frenzy” levels of last year.
