Unlike the real estate or used car markets- determining the market value of a pre-owned aircraft is a little more complex. The main reason is that purchase prices are unpublished and in many cases protected by confidentiality clauses in contracts.Back to Articles
Unlike the real estate or used car markets- determining the market value of a pre-owned aircraft is a little more complex. The main reason is that purchase prices are unpublished and in many cases protected by confidentiality clauses in contracts.
There are a few things that have traditionally made a difference on aircraft value and a few recent considerations that have tanked the value of these assets.
• Percentage of Fleet on Market - Typically a low percentage of the fleet available for sale tightens sales prices and reduces days on market. When we first started doing this- a model line with less than 10 percent of operational aircraft on the market was considered a seller’s market and sales figures rose proportionately. Today- a smaller available fleet seems to indicate performance that is meeting the needs of its users and does not translate to price appreciation. A well-equipped aircraft- however- will sell faster and for more money.
• Equipment - Low-time engines or aircraft with parts or engine maintenance programs are appealing to many buyers. On older models of aircraft- we see increased value on engine or prop upgrades- winglets and avionics upgrades. On newer models- features such as EVS- WiFi or HUD may be important. And if the aircraft is equipped for Part 135 operations or JAR-OPS- that may be appealing to certain buyers.
• Age – Older vintages definitely have a reduced buyer pool for their used aircraft. Cash buyers may be looking for aircraft with more efficient performance and avionics. Loans are being scrutinized more carefully these days and many people turning to local lenders. These local banks may not have a good understanding of the values and limitations of older assets and may limit loan terms.
• Service availability – This area is great news for some aircraft owners. Several lines of aircraft have been greatly depreciated because of the instability of the manufacturer. For others- service centers and parts abound- making AOGs less stressful. Our favorite independent resource for market data is Vref- which publishes updated approximate values quarterly. The publisher- Fletcher Aldredge- makes it his business to find out as many sold figures or estimates as possible to keep his reference book relevant. One of Fletcher’s practices is to call a handful of aircraft brokers- including Charlie Bravo Aviation- whose jobs keep them in touch with a broad range of owners and operators.
The bottom line about the value of your aircraft is that it’s worth what someone will pay for it. But by comparing it at a detailed level to other aircraft that have sold in the last ninety days- we can give you a pretty good idea of how much it would bring if you decided to sell.
Read More About: Rene Banglesdorf