Used Aircraft Maintenance & Marketability Analysis – November 2021

November’s pre-owned aircraft sales amounted to the second highest number of monthly aircraft trades for the models tracked by Asset Insight, along with an average Ask Price increase. Which models were affected the most? Tony Kioussis explores…

Tony Kioussis  |  15th December 2021
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    Tony Kioussis
    Tony Kioussis

    As President, Asset Insight, LLC, Tony provides valuations, audits, analytics and consulting services,...

    Bombardier Global 5000 parked at Zurich Airport

    The inventory of pre-owned business jet and turboprops tracked by Asset Insight decreased 5.6% (107 units) during November. That contributed to a 47% reduction Year-to-Date (YTD), equating to 902 fewer units.

    Overall, the 1,010 assets listed for sale across the 134 model fleet tracked by Asset Insight at the end of November, 2021 represent a 52.2% inventory decrease Year-over-Year (YoY).

    The market analysis, conducted by Asset Insight on November 30, exposed an additional 5.6% decrease to inventory over October (73 units). A lack of young, low-time aircraft certainly does not appear to have dampened buyer enthusiasm. Sellers of aging aircraft will be hoping to benefit from the market’s activity – however unlikely that might be.

    The listed fleet for sale’s Quality Rating deteriorated 0.2% from October’s 5.200, to 5.187. This represents a second consecutive 12-month low, and produces a YoY decrease of 3.4%. The Rating remained within ‘Very Good’ territory, but buyers should take note that most listed aircraft are approaching more near-term maintenance events.

    November’s Pre-Owned Aircraft Value Trends

    Average Ask Price for the tracked fleet rose 0.6% during the month, but was still 0.3% lower YTD, and 4.9% below last year’s figure. The minimal increase might appear to be counterintuitive, until you consider the average age of the limited pre-owned aircraft that are listed for sale.

    What are often termed “off-market aircraft” (pre-owned jets and turboprops not listed for sale, but whose owners are willing to part with their asset at the right price) are actively selling, and many are generating prices above their Ask Price, as buyers compete for the few opportunities to purchase a higher-quality aircraft before year-end.

    Bonus depreciation is also fueling US-based buyers’ interest, although that is mostly a secondary motivator. By individual group, the price changes were as follows…

    • Large Jets: The average Ask Price reflected the group’s highly limited availability – increasing 17.2% (a 12-month high figure) – and were up 19.2% YTD, and 20.2% YoY.
    • Mid-Size Jets: The average Ask Price decreased a substantive 16.1%, lowering the group’s prices 12.9% YTD, and 20.3% YoY.
    • Light Jets: The average Ask Price rose 7.3% as November closed, leaving pricing 12.4% down, YTD, 13.8% down, YoY, and still below the average Price for a Turboprop.
    • Turboprops: The average Ask Price decreased 1.9%, leaving it up 0.3% YTD, and 0.3% lower YoY.

    November’s Fleet for Sale Trends

    At 4.6%, availability for Asset Insight’s tracked fleet has never been lower, and inventory units decreased for all four aircraft groups during November. By way of comparison, inventory rested at 10.1% of the active fleet in November 2020.

    With new aircraft delivery slots unavailable for up to 24 months on certain models, many prospective buyers will continue to utilize charter services while they await delivery of their new asset, which will help maintain the strong demand for charter some time to come.

    While this represents revenue for aircraft owners it also increases their aircraft’s utilization, and is likely to negatively reflect on their asset’s value at the time of sale.

    • Large Jets: With listings dropping 11.8% during November (another 30 units), availability for Asset Insight’s 43 tracked models has now decreased 48%, YTD (207 units), and 54.7% YoY. The group’s availability now equates to just 4% of the active fleet. The Quality Rating improved (rose) 2% to 5.553, as buyers opted for lower-rated assets (presumably in exchange for lower pricing), raising the group’s Rating into ‘Outstanding’ territory. Note, that Rating was 3.9% lower (worse) than in November 2020.
    • Mid-Size Jets: A decrease of 41 units to the 45 tracked Mid-Size jet models lowered availability to 5.6% of the active fleet, and equated to a 7.9% inventory decrease for the month (50.5%, YTD and 55.8%, YoY). With buyers focusing on higher quality assets, the group’s Quality Rating tumbled 3.5% to a 12-month low 5.108 (4.4% lower YoY), but still managed to remain within the ‘Very Good’ range.
    • Light Jets: Ample transactions during November reduced inventory of the 29 tracked models to 4.3% of the active fleet. Availability decreased by an additional 14 jets (a monthly reduction of 3.8%), and have now reduced by 48.6% YTD, and 52% YoY. Buyer preference for higher priced units, carrying less upcoming maintenance events, helped worsen the Quality Rating by 0.3% for the month, and 2% YoY.
    • Turboprops: Sporting the second-best rating in terms of asset quality, the 17-model tracked fleet’s inventory was 5.4% lower (22 units), and is now down 40% YTD, and 44.5% YoY. The last time Turboprops posted such a high Quality Rating was back in July, and although November’s figure was lower than the group’s 12-month average, 5.112 was an improvement of 2.7% over October’s 12-month low figure (albeit also 1.9% lower than at this time last year). It was also sufficient to elevate the group back into ‘Very Good’ territory. With availability at only 4.3% of the active fleet, sellers have ample opportunity to negotiate value-based transactions.

    November’s Maintenance Exposure Trends

    On the heels of October’s 1.5% improvement, the listed fleet’s Maintenance Exposure (an aircraft’s accumulated/embedded maintenance expense) decreased (improved) a further 2.6%, signifying maintenance events for the current inventory mix will cost less to complete.

    Additionally, that expense will be 1.6% lower than one year ago. By individual group, the Maintenance Exposure figures were as follows…

    • Large Jets: Maintenance Exposure identified a 9.3% increase in the cost to complete upcoming maintenance events for Large Jets. That’s the highest cost posted over the past year; a figure that is also 18.2% higher YoY.
    • Mid-Size Jets: Maintenance Exposure worsened (increased) 2.1%, equating to 0.5% higher YoY, and was worse (higher) than the group’s 12-month average.
    • Light Jets: Maintenance Exposure decreased 0.4% for November (a second consecutive 12-month low figure), and 7.4% YoY.
    • Turboprops: Maintenance Exposure improved 5.5% for November, but that was still 5.3% worse (higher) YoY.

    November’s ETP Ratio Trend

    November’s ETP Ratio recorded a second consecutive monthly improvement (decrease) at 75.8%, following September’s record high (worst) 78%. While this development likely pleased some sellers, the Ratio was worse (higher) than average. Asset Insight’s market analysis also revealed that nearly 55% of November’s tracked models, and nearly 60% of the tracked fleet, posted an ETP Ratio greater than 40%.

    The ETP Ratio calculates an aircraft's Maintenance Exposure as it relates to the Ask Price. This is achieved by dividing an aircraft's Maintenance Exposure – the financial liability accrued with respect to future scheduled maintenance events – by the aircraft's Ask Price.

    As the ETP Ratio decreases, the asset's value increases in relation to its price. ‘Days on Market’ analysis has shown that when the ETP Ratio is greater than 40%, a listed aircraft’s Days on the Market increases, in many cases by more than 30%. In fact, during Q3 2021, aircraft whose ETP Ratio was 40% or greater were listed for sale nearly 84% longer than assets with an ETP Ratio below 40% (296 versus 545 days). In November, each group fared as follows:

    • Turboprops: The group’s ETP Ratio has floated above and below the 40% ‘excessive exposure’ demarcation point during the past twelve months, improving to 42.1% in November – not that October’s 44.1% Ratio was concerning for most sellers.
    • Large Jets: The group’s large Ask Price increase positively impacted the ETP Ratio, reducing it to a 12-month low of 58.9%.
    • Mid-Size Jets: With Ask Prices decreasing, and Maintenance Exposure increasing the ETP Ratio increased to 79.3% - a 12-month worst figure.
    • Light Jets: The group’s ETP Ratio decreased (improved) to 112.7% that, while justifiably concerning for sellers, represented an improvement from October’s record-high 121.7%.

    Excluding models whose ETP Ratio was over 200% during one of the previous two months (considered outliers), following is a breakdown of the pre-owned business jet and turboprop models that fared the best and worst during November 2021.

    Most Improved Models

    All six ‘Most Improved’ models experienced a Maintenance Exposure decrease (improvement). The Bombardier Learjet 55 posted a $14,867 Ask Price decrease, while the Gulfstream GIV-SP (operated under MSG3 maintenance rules) registered no change in Ask Price. The remaining four models posted the following increases:

    • Bombardier Challenger 601-3A: +$525,681
    • Beechcraft King Air 300: +$177,600
    • Cessna Citation III: +$65,550
    • Bombardier Challenger 604: +$1,100,000

    Bombardier Challenger 601-3A

    Leading off November’s ‘winners’, the Bombardier Challenger 601-3A appeared for only the fourth time on either list – and this is the model’s first mention this year.

    The aircraft posting the lowest Ask Price transacted in November, while another joined the inventory, leaving eight jets listed for sale, or 7% of the active fleet.

    Those two changes to the inventory mix reduced Maintenance Exposure by nearly $526k, while increasing the average Ask Price by over $91k to earn the pre-owned Challenger 601-3A top spot in November’s ‘Most Improved’ list. Unfortunately, with an ETP Ratio of 147%, these changes are unlikely to aid sellers.

    Bombardier Learjet 55

    By way of contrast, the Bombardier Learjet 55 has appeared on this report five times during 2021, and makes its third visit to the ‘Most Improved’ list in November. If the ETP Ratio for the Challenger 601-3A seemed high, sellers for the Learjet 55 are facing an even higher hurdle with a figure of 162.3%, even though that figure represents an improvement exceeding 27 points.

    One aircraft transacted in November, one was withdrawn, and one was added, leaving 12% of the active fleet listed for sale (11 units). While the model’s Ask Price decreased by nearly $15k, Maintenance Exposure also decreased more than $207k to make the model’s improvement possible.

    Gulfstream GIV-SP (MSG3)

    Making its first appearance on the ‘Most Improved’ list in 2021, the Gulfstream GIV-SP (operated under MSG3 maintenance rules) has been on one of these two lists on fifteen occasions previously.

    A transaction that occurred in October was identified, and with no other fleet for sale changes during November, the aircraft saw no Ask Price change. The Maintenance Exposure decreased nearly $907k, easily earning the model its spot here.

    At 71.9%, the model’s ETP Ratio, combined with its strong market following, should provide decent value-based sales opportunities for sellers, especially if their aircraft’s engines are enrolled on an Hourly Cost Maintenance Program (HCM), considering that availability is down to 4.5% of the active fleet (four units).

    Beechcraft King Air 300

    The Beechcraft King Air 300 registered three transactions in November – and Asset Insight’s research also captured one sale during October, and another back in September. Along with one withdrawal from the listed fleet, availability was down to nine units, or 4.8% of the active fleet.

    With its ETP Ratio decreasing 19.1 points to 38.7%, the King Air 300 definitely belongs on this month’s ‘Most Improved’ list.

    To earn its position, the model posted a Maintenance Exposure decrease approaching $192k along with an Ask Price increase approaching $178k. For a turboprop model, both changes are surprising and impressive.

    Cessna Citation III

    Making only its second appearance on a report (both on the ‘Most Improved’ list), the Cessna Citation III booked its place in November via a Maintenance Exposure decrease exceeding $23k, and an Ask Price increase approaching $66k.

    One aircraft traded in November, one was withdrawn, and three were added. Availability stood at 11 units (6.7% of the active fleet) as November closed. The 17.7-point improvement to the model’s ETP Ratio still resulted in a figure of 164.4%. Even in the current market, most sellers are unlikely to be happy with the offers they receive.

    Bombardier Challenger 604

    Following its first appearance on the ‘Most Deteriorated’ list in July, the Bombardier Challenger 604 earned the last spot on November’s ‘Most Improved’ grouping, making its debut here.

    Three aircraft changed ownership in November and, by our count, 13 units are listed for sale (3.7% of the active fleet). Maintenance Exposure decreased over $246k, while Ask Price increased $1.3m, improving the ETP Ratio by 16.1 points to 44.3%.

    Statistically speaking, sellers hold the better hand due to the asset’s low availability, ongoing market appeal, and the high probability their aircraft’s engines are enrolled on HCMP.

    Most Deteriorated Models

    All six ‘Most Deteriorated’ models in November posted a Maintenance Exposure increase. While the Bombardier Learjet 40 and the Beechcraft Premier 1 posted Ask Price increases of $350,000 and $30,539, respectively, the remaining four models experienced the following decreases:

    • Beechcraft King Air 350i: -$978,333
    • Bombardier Global 5000: -$500,000
    • Cessna Citation CJ1: -$175,000
    • Cessna Citation Excel 560XL: -$41,181

    Bombardier Learjet 40

    The Bombardier Learjet 40 has appeared on this report only three times, but never on the ‘Most Deteriorated’ list… until now. It arrived here, even though the average Ask Price increased by $350k, thanks to a Maintenance Exposure increase approaching $271k.

    The model’s 40% ETP Ratio is on the edge of what is statistically ‘excessive’, but with only three aircraft listed for sale (7.9% of the active fleet), most sellers – especially those with aircraft enrolled on HCMP, should have little trouble structuring value-based transactions.

    Beechcraft King Air 350i

    Making its first ever appearance on one of these reports is the Beechcraft King Air 350i. Its appearance on this list truly surprised us, as the model’s ETP Ratio deteriorated to [wait for it] 15.7%, from October’s 10%.

    By way of proof that sellers don’t even have a low speed-bump impeding their road to value-based transactions currently, the model posted four sales in November, and availability stood at 1.7% of the active fleet (eight units). Statistically, the model’s Maintenance Exposure increased over $115k, while Ask Price fell over $978k, earning it a place on this list.

    Bombardier Global 5000

    While the Bombardier Global 5000’s statistics also consigned it to a place on this month’s ‘Most Deteriorated’ list, its appearance here will create few, if any, challenges for sellers. Two assets sold in November, leaving only five units listed for sale (2.1% of the active fleet).

    For those who are wondering, the model earned its place through a Maintenance Exposure decrease approaching $595k, along with an Ask Price decrease of $500k. The resulting 42.4% ETP Ratio placed it above the 40% demarcation point. However, we simply do not believe that sellers will wait longer to sell this model.

    Beechcraft Premier 1

    The Beechcraft Premier 1 stood three slots higher on October’s ‘Most Deteriorated’ list, but a Maintenance Exposure increase exceeding $175k worsened its position for November – even though Ask Price increased nearly $31k.

    Two transactions took place in November, while one Beechcraft Premier 1 joined the listed fleet, creating a nine-jet pool (equating to 7.7% of the active fleet). Most units of this model are enrolled on HCMP, so that is not a differentiator – and at 95.9% the ETP Ratio has reached a point where few aircraft will be able to generate an HCMP-adjusted ETP Ratio lower (better) than the 40% ‘excessive’ demarcation point.

    Cessna Citation CJ1

    The first of two Citations occupying the bottom slots of November’s ‘Most Deteriorated’ list, the Cessna Citation CJ1 arrived here after capturing sixth position on October’s ‘Most Improved’ list.

    Five Citation CJ1s were listed for sale as we closed November, with one transaction posting in the month, plus one other that posted too late for us to capture in the October report. These changes increased Maintenance Exposure by over $54k, and decreased Ask Price by $175k, pushing the ETP Ratio up 11.3%.

    The resulting 57.5% Ratio is unlikely to reduce opportunities for owners whose aircraft are enrolled on HCMP. However, with availability down to five units (only 2.6% of the active fleet), even sellers of un-enrolled assets should have respectable selling opportunities, assuming they understand their aircraft’s relationship to other competing assets on the pre-owned market.

    Cessna Citation Excel 560XL

    Although it occupies the worst position on the month’s ‘Most Deteriorated’ list, the news is anything but grim for many Cessna Citation Excel sellers. Just 4.8% of the active fleet (17 aircraft) are available for sale, and transaction opportunities are available for both buyers and sellers.

    Five aircraft transacted in November, helping to deteriorate both the Maintenance Exposure (which increased over $403k) and Ask Price (decreased over $41k). The net result was a decrease in the model’s ETP Ratio to 56.3%. Again, though, aircraft enrolled on an engine HCMP will post a lower HCMP-adjust Ratio, probably improving both the seller’s opportunity and the buyer’s Maintenance Exposure viewpoint.

    The Seller’s Challenge

    It is important to understand that an aircraft’s ETP Ratio has more to do with buyer and seller dynamics than it does with either the asset’s accrued maintenance or its price. For any aircraft, maintenance can accrue only so far before work must be completed.

    But as an aircraft’s value decreases, there will come a point when the accrued maintenance figure equates to more than 40% of the aircraft’s ask price. When a prospective buyer adjusts their offer to address this accrued maintenance, the figure is all-too-often considered unacceptable to the seller, and a deal is not reached.

    It is not until an aircraft undergoes some major maintenance that a seller is sufficiently motivated to accept a lower figure, or a buyer is willing to pay a higher price, and the aircraft transacts, ultimately.

    A wise seller needs to consider the potential marketability impact early maintenance might have on their aircraft, as well as its enrollment on an HCMP (where more than half of their model’s in-service fleet is enrolled on one).

    Sellers also need to carefully weigh any offer from a prospective buyer against the loss in value of their aircraft for sale as the asset spends more days on the market awaiting a better offer, while simultaneously accruing a higher maintenance figure.

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    Tony Kioussis

    Tony Kioussis

    Editor, Aircraft Value & Maintenance Analysis

    As President, Asset Insight, Tony provides valuations, audits, analytics and consulting services, and a uniform methodology for grading an aircraft’s maintenance condition.

    Asset Insight is owned by JETNET LLC, and has devised a uniform methodology for grading an aircraft’s maintenance condition allowing it to provide timely current and residual aircraft values, projected maintenance costs, and future marketability information.

    Previously Tony worked with GE Capital’s Corporate Aircraft Finance group; Jet Aviation; and JSSI, developing the ‘Tip-to-Tail’ airframe maintenance program.



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