TIME TO UPGRADE OR REPLACE YOUR AIRCRAFT?
Category: Operating Costs – Business Aviation
Author: David Wyndham
Now Is The Time To Upgrade Or Replace Your Aircraft.
As we bask in the Summer of 2010, the economic news continues to show glimmers of hope. While all the indicators are not positive, we can safely say we are in more of a recovery mode than crisis management mode. As business rebounds, now is the time to take a look at those aircraft upgrades or improvements that you have delayed or canceled until further notice.
PRICES OF USED AIRCRAFT ARE VERY COMPETITIVE IN FAVOR OF THE BUYER.
Aircraft values have bottomed-out for much of the business aircraft market. Some models, the newer and more popular ones, have firmed up and we are starting to see some increases in selling prices. There are a number of good aircraft to choose from.
If you are considering upgrading to a more capable aircraft, do it now. Yes, you will stand to lose money on the sale of your current aircraft versus two years ago. But you will save more money on the acquisition of the upgrade aircraft which will be a nice bargain for you.
It will take a year or more to clear out the excessive inventory. Some models will move faster than others. Which are the more desirable models? These are ones you should be considering for your upgrade. Associated with the price is the availability of credit. Credit markets remain tight, or maybe the better term to use is "are back to requiring excellent credit." Aircraft future values have risk once again. Thus, with the risk greater in aircraft future values, the client's financial risk needs to be low to make the total risk manageable to the lender. If you have cash or cash-equivalents, then the lenders are willing to talk.
If you’ve got a risky deal or are taking the aircraft to a Third World country - then no deal. Are you a profitable company upgrading your older/smaller aircraft for a newer/bigger model? You can get reasonable terms.
UPCOMING AIRCRAFT MODELS IN DEVELOPMENT ARE MOSTLY SET FOR THE NEXT FOUR-TO-SIX YEARS.
Look at the lead-times for brand new designs, take into account the weak order books for most of the business aircraft industry and there is not much cash left over to finance a complete new design (Hawker Beechcraft turboprop rumors aside). So rather than wait and see what new models are coming, you might as well act now. Today's designs offer some outstanding aircraft.
IF YOUR UPGRADE PATH IS WITH THE AIRCRAFT THAT YOU CURRENTLY HAVE, ONCE AGAIN, NOW IS THE TIME TO ACT.
The Maintenance, Repair and Overhaul (MRO) facilities have had some tough economic times. Their schedules are not as tightly booked as a few years ago. Depending on the upgrade, you may be able to negotiate good pricing and favorable delivery schedules.
Paint and interior upgrades, and avionics enhancements to current production model standards are some good bets right now. Performance enhancements that can save fuel are worth looking at, too. Engine upgrades may be worth the expense if you are at or near engine overhaul with your current engines.
A lot of MROs may be offering deals. See what they offer, get references and go with quality upgrades that have value for your operation.
Whether upgrading to a newer, more capable aircraft, or upgrading the capability of the one you already have, now is a good time to evaluate your available options. Do your homework and plan to take advantage of today's market conditions.
David Wyndham is an owner of Conklin & de Decker. The mission of Conklin & de Decker is to furnish the general aviation industry with objective and impartial information in the form of professionally developed and supported products and services, enabling its clients to make more informed decisions when dealing with the purchase and operation of aircraft. With over 1,800 clients in 90 countries around the world, Conklin & de Decker combines aviation experience with proven business practices.
More information from www.conklindd.com; Tel: +1 508 255 5975