Supply Constraints Remain in Pre-Owned Aircraft Market as Inventory Levels Continue to Decline

Sandhills reports aircraft inventory remains tight, with global used jet inventory down 19.21% YoY (down 0.15% MoM) in June and used jet asking prices falling 4.48% YoY (down 2.28% MoM). Used turboprop inventory declined for seven straight months, down 13.67% YoY and 5.15% MoM, though turboprop asking prices rose 3.12% MoM and 3.32% YoY. U.S./Canada single-engine piston inventory rose 2.48% MoM but fell 14.08% YoY, with asking values down 0.61% MoM and 0.74% YoY.

Analysis

This reads more like a residual-value and utilization signal than a clean demand boom. The important nuance is that tight inventory is not translating into universally firmer pricing, which usually means financing frictions and seller discipline are still suppressing transaction velocity. That is constructive for owners with low leverage, but it is a headwind for forced sellers, remarketers, and any platform whose monetization depends on turnover rather than just quotes.

The clearest second-order winner is the aftermarket chain: when aircraft stay in service longer because replacement supply is tight, parts, maintenance, avionics upgrades, and refurbishment spend rise. That favors high-margin aerospace service names like TDG more than pure OEMs, while also supporting niche exposure such as TXT’s turboprop/helicopter franchise. The loser is the high-end pre-owned market where bid-ask spreads can stay wide until financing costs ease; that can pressure residual assumptions for lessors and suppress new-unit pricing power in some business-aviation segments.

Contrarian take: the market may be over-reading "tight inventory" as bullish for the whole complex. In jets, falling asking values alongside lower inventory is a classic sign of a stale market clearing slowly, not healthy acceleration. A 1-3 month catalyst would be lower rates or a restart in corporate flight hours; a 6-18 month downside case is recessionary credit widening that forces liquidation and overwhelms scarcity. If used jet pricing keeps falling on the next two monthly prints, the bullish residual-value thesis is wrong.

Key Decisions for Investors

• Long TXT on weakness, 3-6 month horizon: best public proxy for tight turboprop/heli supply and stable replacement demand; risk/reward is attractive if used-aircraft scarcity sustains aftermarket and support margins.
• Add TDG selectively on pullbacks, 6-12 month horizon: older fleets staying in service should support parts volume and pricing; thesis breaks if flight activity rolls over or OEM deliveries normalize faster than expected.
• Do not force a broad aviation-basket long via JETS; this data is more supportive of niche OEM/aftermarket names than airline exposure, and the signal is too mixed for a generic beta trade.
• Keep AER and AL on watch rather than buying immediately: wait for used-jet asking values to stabilize for two monthly prints before taking residual-value exposure; downside trigger is another month of price declines with no inventory improvement.