How Best to Dispose of an Aging Business Aircraft

For every owner of an older business airplane, there comes a time to consider how best to obtain the highest sale price possible. The calculations and process involved aren’t always straightforward, as Chris Kjelgaard discovers…

Chris Kjelgaard  |  29th October 2021
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Chris Kjelgaard
Chris Kjelgaard

Chris Kjelgaard has been an aviation journalist for more than 40 years and has written on multiple topics...

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Older Cessna Citation jet flying overhead


Today — right now — is perhaps the best time in the history of Business Aviation for owners of aging aircraft to consider putting their aircraft up for sale, assuming it has some operating and maintenance life remaining before the next major scheduled maintenance event comes due.

The market for used bizjets and turboprops has never been hotter in the US (which in itself constitutes well over half of the entire world market). The overall North American market, which includes the sizable Business Aviation markets of Canada and Mexico, may constitute 75% of the total global market for pre-owned business aircraft.

First-time private and corporate buyers persuaded by the Covid-19 pandemic to avoid the vagaries and irritations of domestic and international commercial air travel have been flocking to the business aircraft market, seeing it as a worthwhile and affordable way to travel by air with minimal fuss.

“In the current market, people are more open to being the last owner [of an older business aircraft]," says Jeremy Cox, a Senior Aircraft Appraiser (certified by the American Society of Appraisers), and founder of aircraft appraisals firm, JetValues-Jeremy (https://jetvaluesjeremy.com). Before focusing on appraisals, Cox spent several successful years as a pre-owned aircraft broker.

“The market has turned up considerably and the availability of late-manufacture models has dried up,” he adds. 

“People are more open to buying aircraft with a few hundred hours [of engine or component life remaining] or a few months to their next major inspections — those aircraft which aren’t listed value-wise.”

However, while today’s hot market provides every incentive for owners of older aircraft to put them up for sale, they must accept that they will have to be realistic about the prices at which they will have to offer their aircraft in order for the aircraft actually to be sold.

Over-Optimism in Owners

For owners, “The question that comes up most often is, ‘what is it really worth?’” says Tony Kioussis, President and CEO of Asset Insight (www.assetinsight.com). “Savvy aircraft owners know what their aircraft are worth,” but for a variety of reasons many owners can harbor delusions about what their older business aircraft will realize when sold – even in a hot market.

One reason is emotional attachment to a particular aircraft – especially one which an owner has owned for several years and which may have been customized to suit the owner’s individual taste.

Where an owner has invested considerably in having the aircraft’s engines overhauled, having regular maintenance performed on the airframe, making sure its life-limited components are replaced when required, and installing Wi-Fi in the cabin, they may plan to get much of that investment back upon selling the aircraft, building those expenses into the sale price. The reality is that they are likely to be disappointed.

“You can put Wi-Fi in an older aircraft worth $300,000-$400,000, if appropriate antennas are available for it, but spending $400,000 on Wi-Fi will not add to its value,” says David Wyndham, Vice President, Asset Insight Consulting Services. 

“Only if operating the aircraft for several years” after installing the Wi-Fi capability will an owner realize any great degree of cost-effective benefit from that investment, he notes.

Factors Affecting Aircraft Value

The value of an older aircraft might improve if the owner can negotiate with its manufacturer an extension to the aircraft’s scheduled time between overhauls (TBO), with the OEM providing a letter of agreement confirming that extension.

However, such agreements on individual aircraft often are not transferable to new owners, and a higher resale value will only be practically guaranteed if the manufacturer has provided a general TBO extension program for all examples of the aircraft type or model, says Cox.

Having engine and component life remaining until its next major scheduled maintenance event definitely will make an older aircraft more saleable, but the aircraft’s owner may well remain disappointed in the price at which the aircraft will sell. The actual sale value of an older aircraft doesn’t depend merely on its maintenance status and the degree of customization the aircraft has been given, according to Wyndham.

For any given aircraft, while its maintenance status — hours accumulated, and hours and cycles remaining until major scheduled maintenance — is important in determining its real resale value, so too are its overall operating and maintenance pedigree (particularly the presence or absence of required documentation).

Just as important are how much it costs to operate; how much fuel it burns compared to modern business aircraft; how easy and cheap it is to obtain replacement parts; and to what degree modern aircraft noise and airworthiness regulations have made the aircraft operationally and economically obsolescent.

A Healthy Dose of Realism

Any owner of an older business aircraft who thinks that selling it to a charter company will provide the best way to get the optimal price for the aircraft may well be disappointed.

Not only will the charter company look very closely at the aircraft’s overall operating costs, maintenance status, and overall degree of economic obsolescence; it will also require as an outright condition that the aircraft comes with high-bandwidth Wi-Fi capability in the cabin.

In fact, says Wyndham, the best time for an owner of an aging aircraft to start considering what the long-term prognosis will be for marketing the aircraft is when they first acquire it. If few examples of the type are still flying when the owner decides to sell, then few potential buyers are likely to be interested in becoming the next owner.

That goes even for parts-trading companies, to which aging aircraft owners often look as a potential avenue for selling their aircraft. If few examples of an older aircraft type remain flying, and it is regarded as economically obsolescent, parts companies have little incentive to buy any examples they are offered.

“There are so many old airplanes now that it is difficult to find a parts company willing to pay for an aircraft,” Kioussis says.

“Usually the engines as a whole are not useful, and the avionics are usually too old to matter — and there are probably several of those parts available on the market already. Engine OEMs turn down offers to buy engines all the time.”

Parts for older aircraft which are economically obsolescent and are rapidly disappearing from service have particular cost downsides for parts-trading companies, Cox points out. After the parts are extracted from the aircraft, the companies need to have warehousing space to store them; and sorting, inventorying and listing the parts requires plentiful supplies of both manpower and time.

After the parts have been stocked, “it takes companies years to get their money back out of the aircraft by selling its parts.”

Asset Insight has established a very strong statistical correlation between the amount of maintenance investment that is embedded (accrued since its last scheduled maintenance event) in any older aircraft and the time it will spend on the market when listed for sale.

If the ratio of its embedded maintenance to its asking price — which Asset Insight calls the Maintenance Exposure to Ask Price (ETP) Ratio — is greater than 40%, the aircraft will stay much longer on the market than an aircraft for which the ratio is less than 40%. Aircraft with particularly high ratios can remain on the market for three years or longer before either being sold, or their sale listings being withdrawn.

“Owners of such aircraft should really just be realistic about what it is worth,” advises Kioussis. “They shouldn’t set unrealistic asking prices.” In fact, he says, owners should ask, “Is it not worth more [to them] flying it than selling it?” 

In most cases “they should sell it for what they can get,” or otherwise, “if they like the aircraft, fly it until the engines run out of time, or the landing gear runs out of landings.”

Should Owners Sell at All?

Even when a favorite older aircraft’s engines have completely run out of time, the owner might be able to keep it flying relatively inexpensively.

One tactic owners use to keep otherwise un-airworthy and unmarketable aircraft flying is to replace the run-out engines with another set of inexpensively-purchased used, serviceable engines with a few hundred hours of life left in them, installing those on the aircraft, says Wyndham.

He cites the example of an operator of a couple of Learjet 20-series aircraft in Brazil who replaced pairs of run-out engines with others costing about $200,000 (per pair) to keep those older aircraft in service for a few hundred additional hours of flight time.

But even taking into account an older aircraft’s potentially higher fuel and operating costs, there may be a strong reason for owners to buy, or keep operating, older aircraft, rather than trying to sell them and replace them with new aircraft, says Wyndham.

Rather like a car’s value, a new aircraft’s resale value depreciates rapidly after it leaves the factory or the dealership. A new aircraft can lose 20% to 30% of its acquisition cost in the first three to four years of its operating life, Wyndham explains. So for an aircraft that costs (say) $20m new, that loss could be between $4m to $6m in the first five years of ownership.

However, if the owner buys an older aircraft instead for $3m, operating it until it can only be sold for parts and scrap — for about $200k in all — that $2.8m value loss is much less than the financial loss the owner would have taken in buying a new aircraft.

Even if the new aircraft costs less to operate than the older one, the cost difference is unlikely to be as much as the $3m net loss the owner realizes on the new aircraft’s resale price compared with the value loss incurred with the older aircraft.

In the view of one aircraft broker polled, an owner should consider disposing of his or her aircraft when it either no longer fits the desired mission profile, or when its dispatch reliability falls below the level the owner requires. This is when you should decide whether you have something to sell, or not, the broker asserts.

Once the owner makes the decision to dispose of an aging aircraft, “Don’t try to do it yourself,” Kioussis warns. “Partner with a very experienced broker,” someone who will adjust your expectations of the price the aircraft will fetch in the market if needed.

Some owners are so unrealistic that their aircraft for sale remain on the market for a long period of time. “Some brokers refuse to take certain aircraft, because the advertising costs will be higher than their fees. Even if the aircraft is the best [of its type] in the marketplace, the market is only willing to pay a certain amount for any aircraft of that type.”

Sales Strategies for Older Aircraft

While some older aircraft are still sold into Mexico and Latin America from North America, Kioussis says it is important to realize that “the biggest importer of older aircraft is the US — we import more than we export.

“There are only a handful a year sold to Mexico,” he explains. “The situational realities are very different from what people like to believe.”

Africa, another traditional home for older and end-of-life business aircraft sold from North America and Europe, no longer is so, according to Cox. Its constituent nations have largely adopted the same airworthiness regulatory standards as those of the major developed world nations, and their wealthy individuals and corporations are just as capable of assessing an older aircraft’s condition and true resale value as are buyers in North America.

The story is the same for most Asia-Pacific nations, Cox adds, with many now having adopted regulations barring the importation of aircraft older than 12 or 15 years.

There are a few specific aircraft-type exceptions to this rule, says Wyndham – particularly among turboprop utility types such as the Cessna Caravan and the seemingly immortal original de Havilland Canada Twin Otter.

Twin Otter 200s and 300s built nearly 50 years ago are now commanding higher lease rates every year, because of their ruggedness, their extreme utility, their irreplaceability, and the fact that it costs up to $7m to buy a new Viking Twin Otter 400 today.

For owners of older aircraft, it can be worth researching to find particular niche markets where — because of their particular operating characteristics — specific aircraft types retain their value, no matter what their age, says Kioussis. In fact, Kioussis terms this type of focused marketing “strategic selling”; a marketing approach requiring much research.

Some aircraft types — again, mainly turboprop and piston-engine types — are particularly valued for operations in the Caribbean, where short runways and tight approaches abound.

Meanwhile, some older business jets also remain valued in some specialized markets. The aging Falcon 50EX “can handle a lot of different, difficult approach parameters,” making it particularly suitable for operations into airports with challenging approaches, Kioussis elaborates.

Charitable Donations and Scrapping

Two further potential aircraft disposal avenues remain for owners, one of which is probably more attractive than the other.

First, owners can consider non-cash charitable donations of their disposable aircraft, either to general charities for subsequent auction, or to aviation organizations such as aircraft-maintenance schools (to help students learn maintenance techniques and technologies), or airports as gate guardians or as aids for fire drills and evacuation emergencies.

“This does have value and perhaps more than the appraised value in some situations,” says Cox, who has performed aircraft-value appraisals for owners for these purposes.

However, if they decide to donate their aircraft charitably to realize tax deductions, owners must be careful that they do not furnish the tax authorities with over-optimistic appraisals of an aircraft’s resale value, Cox warns.

Should an owner obtain an appraisal that a donated aircraft is worth $1m and take that deduction, only to find that the aircraft realizes only $250,000 at the subsequent charity auction, the national tax authority will soon come calling to ask why there is such a major discrepancy, and stiff penalties may result.

The only remaining sales avenue for disposing of an aging aircraft that is economically obsolescent (or even obsolete) and is in run-out condition, is to offer it to a scrapyard. This might result in a small payment but, according to Cox, the question the owner is more likely to have to ask the scrapper is, “How much is it going to cost me for you to dispose of it?”

“It costs more to break a hulk up than what the scrap metal is worth,” says Cox. “The per-pound price of dirty mixed metal is extremely low, and there are hazmat issues associated with scrapping it.”

Expert Advice

“If you’re serious about selling, do so as quickly as possible,” advises Kioussis. “An aircraft is a depreciating asset.” Even in today’s overheated market, “If its value goes up, the incremental increase will be marginal, and more likely the value is just going to depreciate more slowly” than it would in a more stable market.

“If your aircraft has been sitting [grounded for an appreciable period of time], your only option is to sell it.” At that point, “Everything on the aircraft will need to be re-certified,” he adds.

“The longer the life you build into an airplane, the greater the value and the more the interest,” says Cox. But when seeking to sell an older aircraft, “there has to be a definite sense of realism in terms of pricing and marketing, and you have to be honest.”

A final word of advice goes to those who either decide to buy older aircraft, or keep them in service longer than originally planned. If this describes you, Wyndham suggests you must make sure the aircraft’s continuing maintenance is performed by a company, and by A&P mechanics, who know that aircraft type really well and are experienced in maintaining it.

“Even Bombardier doesn’t have people anymore who maintained the original Challengers,” he says. “You need to find those facilities that do still maintain your aircraft.”


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