Addison: Welcome back to the Truth About the Market. I'm your host Jason Zilberbrand. I'm president of VREF. And I've appraised nearly every type of aircraft out there. My clients range from private owners to lenders to insurance companies and operators. Fortune 500 companies, law firms, government agencies, including the FAA. And I've owned aircraft, operated aircraft. I've bought them, sold them, and financed them, and I have spent decades watching how this market behaves. And I can recognize when conditions change. So when I talk about the aircraft market, this is not theory. It's not social media commentary. And it's definitely not scraped internet data wrapped in a chart. It is, however, real-world transactional experience. And it's important to note that this podcast also has no sponsors, no advertisers, or outside influence, because nobody pays for our opinions here. And nobody dictates our conclusions. And that's because aviation is a capital-intensive market and the market punishes misinformation every single time. And today's a big one. Today we're talking about the Q2 market numbers. And you can look at this episode as a supplement to our newsletter and our recent value update that went live June 1. So the big question everybody's asking me, so where are we today? And more importantly, how does 2026 compare to where we have been? And what signals matter right now? So let's start with the headline. April 2026 business aviation transaction volume came in at an abysmal 831 total transactions. April 2025, you ask? Good question. We saw 1121 transactions this time last year. What about 2024? Well, that was 1165. You see the trend here, right? If we go back all the way to April of 2022, during the extraordinary post-COVID acceleration, the market produced 1,385 closings for April alone. Read that carefully, people. 831 compared to 1385. And you know what's crazy? The only weaker April we have seen over the last decade was that of April 2020, right when COVID disruption started. And that matters because transaction volume tells truth. The listings, as I've always told you, they tell stories. Transactions, on the other hand, they tell reality. And the reality today, guys, is something really important. The extraordinary post-COVID market is completely unwound, it's over. Yes, you can call it normalized, but I think there's a difference. Because markets rarely reset on price first, they reset through participation. And participation has slowed. The decision cycle has taken longer and longer. You've seen it take so much longer for a buyer to come to the table today. And capital, it's become so much more selective. The lenders are not lending on everything. And when they are, they are scrutinizing the asset. And you know what I find even more interesting is how disciplined the buyers have become. And this is exactly what we are seeing entering into Q2. So let's talk about it. Light Jets. They moved from 182 transactions in April of last year to 128 this year. And the super mid-size aircraft cabin, that activity declined a lot. It went from 204 of April last year all the way down to 164 of April this year. And even though the large cabin aircraft class doesn't produce a lot of transactions, I do think it's important to note, because there is a trickle-down effect. And in April of last year, we saw 37 large cabin aircraft sell compared to only 27 this past April. And piston aircraft also went way down. They're down from 70 plus to about 30. And you know what else went way, way down? The light helicopter market. Activity dropped substantially. We saw 221 closings in April of 25. We only saw 141 in April of 26. And you know what's really, really interesting? Is that the weakness this time around, it's not isolated to one category. No, in fact, this is broad market behavior. The urgency that defined 2021 and 2022 is continuing to fade every day. Buyers are no longer chasing airplanes simply because inventory exists. And trust me, we're going to talk about inventory because boy, is that a misnomer. But the capital, you know, the capital markets, they always kind of move at their own pace. And right now, what you are seeing is a recalibration. The capital markets are absolutely underwriting risk again. And they are taking that into account as to what deals they underwrite. And you know what? Because it's so slow, you can expect just a lot more disciplined underwriting. So let's break down where we sit segment by segment, because I think that it's important for people to realize that the issues we see are pretty much across the board. So let's start at the bottom. The very light jet market. You know, transaction volume pulled way back versus prior years. But the pricing, well, it remains resilient. And I think that it's important to note that in this class, there are a lot of published asking prices, right? So we still see elevated asking prices. However, that does not tell the whole story. And really, you know, the highest levels we've ever seen, at least over the past decade, have been in this market in terms of the asking price. And inventory has recovered, and it's recovered substantially from where we were in those few post-COVID years and the abysmal low inventory. Yet what I find really interesting is that the pricing continues to hold. And that tells us something important. See, demand for efficient lift remains healthy. And if you look at what markets might be failing due to the success of light jets, twin-engine turboprops, ⁓ maybe twin-engine piston aircraft. The owner flown aviation market remains remarkably resilient. People still value efficiency. They still value capability. They like lower economic operating costs. And we're going to talk about that too. Because aircraft that solve transportation problems without introducing larger cabin ownership costs. Well, the lights jets tell a different story. See, during COVID, we had almost no inventory. And the aggressive demand, it just drove values through the But that environment changed. You know, asking prices have peaked. And today we're seeing things drop a little bit from where they were. And it makes sense because the er the inventory rebuilt and the urgency faded, and buyers have become way more selective. But I don't want people to confuse the dropping and asking prices with a weakened segment. It's still not weak, right? It is benefiting from what I said earlier: the twin turboprops, your twin-engine piston aircraft. But truth be told, nobody's paying these crazy high asking prices, right? And we're gonna talk about that too. So operating economics, you know, it's a big one. And acquisition profiles as well, they remain attractive relative to larger aircraft, not smaller ones. So the biggest story today actually I think doesn't sit in the light jet market. I think it sits in the super mid-size market, because this is where you've seen prices kind of plummet. You know, we saw about a 30% price reduction over the course of the last 12 to 18 months. And I think that that makes sense. You know, the asking prices alone have dropped about 26%, the lowest average pricing environment we have seen since 2018. Let me repeat that because I think it's important to note the super midsize cabin class has dropped more than any other cabin class. And I think that that deserves attention. Because super midsized aircraft, they sit at the intersection of financing sensitivity, affordability. I mean even rich people have trouble affording larger aircraft, and capital discipline. This episode is powered by VREF, the standard and aircraft valuation. If you're buying, selling, financing, or just trying to understand what your aircraft is really worth, VREF it. VREF Online gives you data that actually drives decisions, not opinions, not listings, not guesswork. So if you go to VREF.com, you can buy VREF online and you can VREF it before you make the call. So when markets normalize, You know, the categories that we just talked about, super mid-sized, the light jets, they show pressure first. The large cabin used to, but it's changed because the fleet sizes are so different now. There's so many aircraft flying in the light jet and super mid-sized cabin classes. That's why they dictate things. You know, the large cabin aircraft do continue to slow, and we are seeing a lot of increasing selectivity because it's got a narrow buyer pool, right? And the capital commitments are enormous. Even the big banks have to scrutinize these deals because let's be honest, these assets are super expensive. So what we've seen is that the deal timelines have lengthened, right? It's taking much, much longer to close a deal. Okay, turboprops. You know, they do remain one of aviation's strongest utility categories. Operating economics remain compelling. Capability is actually one of the more attractive strong suits. But inventory continues to go up while selling cycles continue to take longer and longer. And I think it's something that we should talk about. And piston aircraft may tell one of the most interesting stories in aviation today because the pricing really does remain historically strong. I think it's near decade highs. Yet transaction activity has softened materially, right? The inventory, there's so much of it now. The supply is completely recovered. The urgency, well, that's completely disappeared. And markets increasingly behave rationally now. So let's zoom out a little bit. Total inventory for business jets and turboprops sits at about 4,200 aircraft on the market, higher than your post COVID lows, but still way below pre pandemic supply levels. So as I said, supply did recover, but not fully. But you know. That creates today's market environment, which is slower transactions, longer decision cycles, selective buyers, and disciplined capital. The extraordinary conditions of 21 and 22 are absolutely 100% behind us. But aircraft are no longer simply selling because they exist. Buyers are evaluating maintenance exposure way more than they used to. And I think that that has material impact on residual value risk. And of course, you know, the mission fits gotta be there, guys. I mean, you don't wanna buy an aircraft just to buy it. It's gotta fit the mission profile. And I think that ultimately will create a healthier market because it's not a market driven by urgency. It's a market driven by discipline. And I think that's where aviation sits halfway through twenty twenty six. It's a much different story. The extraordinary post COVID aviation market has completely reset. And for most aircraft categories, values are or have returned to traditional depreciation curves that defined aviation ownership long before the supply shock of 2021. And aircraft do depreciate. They always have. The only time that equation changes materially is Is when inventory becomes so constrained that scarcity overwhelms the economics. And in some categories, look, scarcity remains part of the story, but in most categories it no longer is. Inventory recovered substantially. Right? So today, as I said, we sit at about 4200 aircraft, still below COVID conditions where supply regularly exceeded about 6,400 aircraft. But it's an it's a different environment, right? Buyers, they got accustomed to what was going on several years ago. And I think the public inventory only tells part of the story. There are aircraft available beyond public listing channels. There always have been. But let's address something that deserves attention. Social media increasingly romanticizing off-market aircraft as though they represent some hidden vault of opportunities, the hidden fruit. It's unavailable to everybody else. Right? You want it because you can't have it. In reality, Truly off-market aircraft typically fall into two categories: extremely specialized assets, where a buyer's mission profile narrows the available universe dramatically. Or the latter, which I think is more likely, brokers attempting to manufacture exclusivity where little exists. The reality today is simpler: there are plenty of aircraft available. Buyers have tons of options on the open market, and You can see who owns the plane if it's publicly available. You can see who actually has exclusivity and control over it, right? Options change markets. Transaction activity has slowed. Aircraft sit longer. And you know, markets rarely break on price first. They break in time. So if you look at the light jets, that's where you can look, right? We're looking at a lot of higher interest rates. We're looking at higher inventory. We're looking at lenders who no longer are looking for 15 or 20% down. I'm seeing down payments 25, 30, even 40% down. And I'm seeing a lot of cash buyers gaining leverage in this market because let's be honest. I mean, I think cash to financing is about three to one in terms of transactional volume. So if the banks are Getting more difficult and is becoming more challenging, well, then it would make sense. Cash buyers are the only ones out there that can close. And that's why you're seeing a lot of cash deals. So as lender behavior has changed, we have seen something happen over the last few weeks. And unless you've been sleeping under a rock, you're well aware that the war and what's going on with the fuel shock has absolutely changed the market. The conflict has created uncertainty. That ultimately works its way into aviation operating economics as well. Although we've never seen anything quite like this before. We have seen escalated fuel pricing, but we've never seen anything like this. So it's going to impact things, right? The obvious, it's going to cost more to fly the aircraft, but it's also going to cost more to get the parts. And a lot of your assumptions that you made for operating, you can throw them out the window because everything compounds. And operators increasingly underwrite future operating realities. Not just an acquisition cost, and I think that matters. And I think because the pricing reductions we are releasing this quarter are not isolated events, they're signals. Signals that extraordinary market conditions fully reversed. They're signals that operating economics they matter again. And I think it's important to note that disciplined underwriting has returned. Signals that aviation increasingly resembles traditional aviation markets rather than the extraordinary pandemic distortions. So where are we today? Well, aircraft sit longer. Buyers are going to negotiate the hell out of deals, guys. Lenders are going to scrutinize the hell out of deals. And if you got cash, you've got leverage. Operating economics, they matter. And markets increasingly reward discipline over urgency. And I think that is where we sit mid 2026. If you're looking at an aircraft and wondering, what is this thing actually worth? Well, don't guess. VREF it. VREF Online gives you real-time data, quarterly updates, coverage for more than 900 aircraft models, built on how the market behaves, not how it's advertised. And you know, this is the same platform that every bank and finance company uses, as well as every serious operator when the number has to hold up. So go to VREF.com and VREF it. before you make a decision to buy or sell your next aircraft. So one final thought before we wrap up. Aircraft values absolutely matter. I wouldn't have a job if they didn't. And I think we can all agree residual value risk matters as well and that liquidity matters. But I think one of the biggest mistakes we continue seeing across aviation is buyers spending enormous time negotiating acquisition price while dramatically underestimating the costs at To operate it. Operating economics increasingly determine ownership success, right? Fuel, maintenance, insurance, training, all those databases you have to subscribe to, your charts, the hangar. How about engine reserves, financing? You need unscheduled maintenance reserves. You got to have a reserve for your annual inspections. Then you gotta take into account craziness like parts and labor inflation. So the purchase price gets attention. But the operating cost determines whether ownership is sustainable. And that matters today more than it did several years ago because aviation has returned to the fundamentals. Disciplined buyers increasingly underrate operating exposure before they underwrite acquisition exposure. And lenders increasingly evaluate long-term ownership economics. And the cash buyers, they're just evaluating opportunity cost. So the real transparency here, right? Operators. They increasingly want it, not estimates built around assumptions that fail to match real-world ownership. And that is why we just released our brand new operating costs calculator. Because ownership decisions should not require spending thousands annually just to understand what an aircraft costs to operate. So it's been a bugaboo for me. I can't stand the fact that. We are so relatively inexpensive compared to so many other subscriptions. And the operating costs, those databases that are out there, they are so ridiculously expensive. It's insane. I don't know how anybody can afford to subscribe to them. So that no longer has to be the case because we've included it now in VRF Online. So owners and buyers and brokers and lenders and flight departments and advisors. You can now model operating costs directly inside VREf. We're going to tell you fuel, not some guess, not some national average, but exactly what it costs at your airport because we have real data, real time. And we're going to tell you about maintenance and all your variable costs and all your fixed costs. And you can use this to supplement the aircraft comparison tool we have. Because understanding operating economics isn't optional anymore, guys. It's critical. It's critical to success. And in many situations, operators can save upwards of fifteen hundred dollars annually simply by eliminating dependence on an additional standalone solution. More importantly, you're going to gain visibility. And visibility creates better decisions. Because aircraft ownership isn't simply buying airplanes. It's managing capital. And you got to manage the risk and managing long-term economics. And unfortunately, increasingly, The operators that understand operating costs best make the strongest ownership decisions. Look, guys, I wish that the cost of aircraft ownership didn't continue to go up and up and up. And I wish you could rely on the same data every month of every year, but that's no longer the case, right? Because one of the biggest questions we continue getting is simple. What's changed? I get it at least a hundred times a week. Why did a market that ended in twenty five or twenty four? Yesterday somebody asked me about twenty twenty-one with substantial momentum begin so slow. And you know, why has twenty-six become so isolated? Well, it's because aircraft markets are capital markets, and capital responds to pressure. And week after week, through the first quarter of twenty twenty-six, we watch transactional volume soften day after day. Buyer appetite, it disappeared. First it slowed, then it got really scarce. Financing. I mean, guys, I do more appraisals than anybody, and when I tell you, I rarely hear from the lenders these days. There's very few aircraft being financed. Aircraft that 12 to 18 months ago would have traded super quick. Guess what? They're sitting. Because the buyers changed and the lenders changed and the environment changed. Interest rates, they changed too. What we thought was going to soften is actually gone back up. Capital is no longer free, guys. Lenders increasingly require larger down payments, and underwriting has become way more disciplined. So, your debt to income that matters. Your debt coverage matters. Liquidity matters. Cash buyers, they've got the upper hand, and that changes market behavior. And at the same time, operators continue dealing with increasing operating pressure. And I think fuel. Is going to go down as the biggest topic of 2026 because the geopolitical uncertainty surrounding Iran has increasingly created pressure across energy markets, and that matters. Because aviation runs on energy. We run on Jet A. We run on 100 low led, right? All your parts, all your maintenance logistics, all your training, your charter economics, everything compounds. Some parts of the country are increasingly experiencing fuel pricing environments. That fundamentally change ownership economics. What does that mean? It means they can't afford to fly. Period. There are parts of this country where fuel has gotten so high that a lot of my clients have parked aircraft. They're not going to pay double digits per gallon to fly. So, the charter market, you know, it's increasingly feeling the pressure as well. Don't be fooled by what you see on social media and all of these nonsense reports, right? Costs can only pass through operators for so long before demand begins responding. Look at what's going on in Europe. It slowed down. It's showed meaningful economic softness. Fuel concerns continue to build. There's a fuel shortage in parts of Europe. International weakness historically finds its way back into aviation demand, and it finds its way into a pattern over time, right? Because the markets are connected, just like the capital markets are connected, just like Consumer confidence is connected. Increasingly, what we are seeing entering Q2 is a market transitioning back toward fundamentals. Not fear buying, not panic buying, not scarcity buying, but disciplined buying, measured acquisition decisions. Take your time, do more negotiation, scrutinize the hell out of it. That environment creates pressure across legacy aircraft. CJ Series aircraft continue facing pressure, hawkers remain soft. Older vintage categories continue to struggle to find buyers. Operating economics increasingly matter. Supportability matters. The technology in the cabin, the technology in the cockpit, it's starting to matter way more than people are talking about. And meanwhile, certain aircraft continue outperforming, like the Challenger 300. It remains remarkably resilient. And what about the Gulfstream G650 and ER? They've continued to hold. Current production aircraft, as well, from both Gulfstream and Bombardier, as well as Embraer, have remained comparatively healthy to those that are out of production. Piston, those aircraft, you know, it's crazy how the piston market really does hold up over time. I mean, to think that you could buy a 172, no matter what the market is like, and pretty much fly it for free if you plan on holding it three to five years, I think it's a pretty safe bet. That's why people buy them. But outside of those categories, You can see a correction. And entering the summer, the seasonality becomes another factor, right? Summer slowdowns historically occur in aviation. They do every year. People fly, they don't sit and talk about aircraft purchases. And the question is whether softer demand entering summer becomes temporary or it extends, because the market increasingly points toward a slower Q three. And I think the focus is now shifting towards Q four. Because aviation often turns quickly. The confidence is going to return, capital will return, rates will adjust, liquidity returns. But for now, discipline defines aviation entering the second half of 2026. We will keep an eye on Iran and the conflict, although my gut tells me that by July 4th and the 250 celebration, that this will be in our rearview mirror so that we can focus on celebrating how wonderful our country is. And in closing. A more disciplined market, a more selective market, and ultimately a healthier market. Not because slower markets feel better, they don't. I don't like talking about slow markets. Boom cycles, they create excitement. Scarcity, it creates urgency. Fast moving markets create headlines. Aircraft selling quickly. You know, capital flows freely in those markets. But extraordinary markets often distort decision making. They encourage emotion. They reward speed over discipline and they compress due diligence. They also do something, they create unrealistic expectations around pricing and around liquidity, and especially along long around long-term ownership economics. But sustainable markets behave differently. Sustainable markets force buyers to underwrite the risk. They force lenders to evaluate their exposure, and they force sellers to price against reality rather than some momentum, right? They reward preparation, patience, your mission profile, operating economics, long-term thinking. That ultimately builds a stronger aviation community. Aircraft ownership should not depend on extraordinary supply shortages. Aircraft values, they shouldn't depend on panic buying. And healthy markets create stability. And the stability is what creates the confidence. And the confidence creates the investment for a stronger infrastructure, better financing. Healthier residual values, better long-term ownership experiences, and perhaps most importantly, healthy markets create accessibility, right? That's what we all want. Because aviation only works long-term if the next generation gets to participate. And if buyers can enter rationally, and if the lenders remain engaged, and if more importantly, there's capital available, then today's market's not broken. It's a recalibration. And the extraordinary conditions that defined aviation several years ago have absolutely faded. And what remains is a market increasingly driven by discipline. I say it all the time: discipline, discipline, discipline. Operating economics discipline, right? You have to know what liquidity is and capital and your mission. That may not create the excitement of 2021. But I will tell you this a sustainable aviation was never built on s and on excitement. It was built on fundamentals. And fundamentals matter. Because ultimately, aircraft are not simply assets. They are indeed transportation tools. And healthy aviation markets are not defined by how fast airplanes sell, but they are defined by how well aviation endures. And I'm Jason Zilberbrand, and this is the truth about the market. Until next time, fly safe and stay smart.