Private jet market heats up: bonus depreciation restored, Bombardier gets a mysterious $1.7B order, and upgrade cycle unlocked

Summary

The restoration of 100% bonus depreciation under the newly signed tax bill is injecting fresh momentum into the private aviation market, with implications for buyers, sellers, manufacturers, and the secondary market. Preston Holland, founder of Prestige Aircraft Finance, lays out the mechanics and market dynamics.

The Depreciation Mechanics

Under the restored provision, buyers can expense the full purchase price of an aircraft in year one, provided the aircraft is used at least 51% for business purposes. The rule applies retroactively to January 19, 2025, a date Holland describes as oddly arbitrary. Fractional ownership shares through operators like NetJets and Flexjet also qualify, since buyers hold a stake in an actual registered tail.

Unlike real estate, aircraft transactions carry no 1031 like-kind exchange protection, meaning sellers face depreciation recapture taxed as ordinary income when they sell. The restoration to 100% largely neutralizes this because two sequential 100% depreciation events offset each other, unlocking an upgrade cycle that had been stalled when the rate sat at 40%.

The Bombardier Surge

Bombardier's stock has roughly doubled over approximately three months, but the most recent leg of that move traces to a single anonymous $1.7 billion order for Challenger and Global aircraft placed last week. The buyer's identity remains unconfirmed, though the leading rumor points to a Saudi conglomerate or sovereign wealth fund, partly because Bombardier recently opened a significant maintenance network in the Middle East. Holland notes the secrecy itself is telling: US-based operators like Flexjet and NetJets routinely publicize large orders as marketing events. The fact this deal was placed quietly narrows the field. Bombardier carries a market capitalization of approximately $15 billion Canadian dollars, making a $1.7 billion order material.

Market Timing: A Lagging Indicator

Historical data Holland tracks shows bonus depreciation is a lagging indicator for transaction volume. Looking back to 2016, the prior 100% depreciation period, the bump in aircraft transactions did not appear until the following year. The same lag applies to new aircraft orders at manufacturers including Gulfstream, Textron, and Embraer. Significant transaction volume pickup is more likely in 2026 than in the back half of 2025.

The current environment also differs materially from the 2020 to 2022 frenzy. The risk-free rate now sits at roughly 4.5%, compared to effectively zero during the COVID era. That gap compresses the return case for buying aircraft purely to charter out, where the spread between an 8% and 12% IRR now matters in a way it did not when capital was yield-starved.

Supply Conditions Are Different This Time

Total used aircraft supply on the market today exceeds pre-COVID 2019 levels, according to data from Greg Sidor at Guardian Jet, described as the top-volume brokerage serving Fortune 50 buyers. During 2022, supply collapsed so severely that buyers were wiring money on aircraft they had never inspected, closing in as few as seven days. That dynamic is unlikely to repeat.

The upper end of the market is already active. Gulfstream G650s, G700s, and G550s are all moving as an upgrade cascade pushes owners from the 550 into the 650 and from the 650 into the 700, with Gulfstream preparing to offload its G700 demo fleet. The segment that went most irrational in the prior cycle, aircraft older than 20 years priced below $5 million, has not yet moved and Holland does not expect it to replicate that behavior.

The Recapture Loop

Buyers who sell a depreciated aircraft and do not immediately roll into a larger purchase face recapture of the full depreciation benefit, taxed as ordinary income rather than long-term capital gains. The structure does allow sequential buyers each to claim depreciation on their own purchase price, but the selling party absorbs the recapture liability in the interim. The cleanest path is a direct step-up into a higher-value aircraft, where the new depreciation claim offsets the recapture exposure.