Enjoying the Market, Eyes Open

What a Week at NAFA in Savannah Reinforced About Where

Business Aviation Finance Stands Right Now

The mood at the NAFA conference in Savannah this week was one of genuine optimism. Low used inventory, elevated values across many segments, and lenders who by most accounts remain hungry to put money to work. For anyone who lived through the decade-plus of compressed values that followed the financial crisis, the current environment feels like a meaningful shift.

And it is. But it also warrants a clear-eyed look at what's driving it - and what that means for the people financing these assets.

The Fog

One phrase I heard more than once this week - said in jest, but with enough context behind it to make you think - was "crazy’s back." The reference was to the willingness of some buyers to pay prices for aircraft that stretch well beyond what the underlying data would comfortably support. It wasn't said with alarm - more as a knowing observation from people who have seen this movie before.

The elevated pricing environment was broadly acknowledged across the room - by lenders, appraisers, asset managers, and others. Nobody was sounding alarms. There's a kind of collective comfort in a market where values are high and deals are getting done.

That comfort is understandable. Some in the market make a reasonable case that today's values reflect a correction of sorts - that pricing was pushed down for so long after the financial crisis that the current environment represents a recalibration rather than overheating. That may be true. It may also not be. The honest answer is that nobody knows with certainty where "normal" is, or whether today's values will eventually revert toward it.

Worth noting alongside that conversation is the role manufacturers have played in shaping the current environment. Backlogs across the major OEMs are strong, and production discipline has been a meaningful factor - manufacturers haven't ramped output the way they have in previous cycles. That restraint has kept new delivery supply measured, which supports both new and used aircraft values. It's a legitimate structural driver of where prices are, and it deserves to be part of the conversation when discussing why the market looks the way it does.

What's also worth noting is that low inventory doesn't just support pricing - it limits options. In a market where preferred aircraft simply aren't available, buyers sometimes move further down their list than they otherwise would. They acquire what's available rather than what they ideally wanted. That dynamic is part of what's sustaining activity levels, but it introduces a nuance that doesn't always get examined carefully enough.

What Lenders Should Be Thinking About

None of this is an argument that the market is broken or that lenders should be pulling back. The fundamentals are real - inventory is genuinely tight, demand has been durable, and manufacturers have been disciplined. But strong markets are precisely when underwriting discipline matters most, for a simple reason: the cushion that elevated collateral values appear to provide can compress faster than anyone expects when sentiment shifts.

Two questions worth asking on every deal in this environment:

What happens to my collateral position if values compress? Stress testing isn't pessimism - it's standard risk management. Underwriting to today's values without considering a range of outcomes is a different posture than underwriting with eyes open to where values could go.

What is actually driving the value of this specific aircraft? Elevated market conditions lift a lot of boats, but not equally. Demand, inventory levels, and sentiment each contribute differently to where a specific asset is priced - and each has a different durability. Understanding which factors are at work in a given transaction is more useful than pointing to a strong market as a blanket justification for collateral support.

One additional consideration: when a borrower has acquired an aircraft that wasn't their first choice - or even their second - because inventory constraints left them with limited options, that's worth understanding from a collateral standpoint. An asset that was a compromise at purchase may face a shorter hold period, and in a softer market, a more narrowly appealing aircraft carries more resale risk than one that was actively sought. That's not a credit judgment - it's a collateral observation worth making.

On the maintenance side, it's also worth noting that the best-maintained, best-pedigreed aircraft in any segment get absorbed quickly in a market like this. That flight to quality is its own signal - and it's worth understanding what it says about the assets that aren't moving as fast.

The Bottom Line

The NAFA conference left me with a clear sense that the business aviation finance community is in a good place. Lenders are active, appraisers are busy, and the market has real underlying strength. The optimism in that room was earned, not manufactured. Markets like this one don't last forever - but the participants who understand what's driving them are better positioned regardless of what comes next.

If you're navigating transactions in this environment and want an independent perspective on collateral value, I'd welcome the conversation.