Jeremy Cox is president, JetValues-Jeremy LLC and enjoys direct interface between aircraft... Read More
Bombardier Global Jet
Senior Certified Aircraft Appraiser Jeremy Cox discusses how business jet modifications impact the value of a jet at the time of resale. His observations and advice are direct and insightful.
When considering the purchase of a used jet that has been modified, or when adding features to your company aircraft in preparation for resale, keep in mind the following admonitions:
Avoid owning the first aircraft to incorporate a new modification, as well as the last to be modified;
Realize that having the word “experimental” in the aircraft’s log probably will impact its value;
Assess the visual impact of the aircraft’s modification, since ramp appearance affects salability and thus value;
Beware of concepts that look good on paper but have no demonstrated benefit(s) in practice;
Be mindful that mods usually add weight, which might offset the implied advantages of the change.
Let’s take each of these points and dissect their importance regarding valuation.
Change Affects Jet Value
There are hard-earned reasons (e.g., in-service development issues often addressed by Service Bulletin) as to why many buyers will never consider owning any aircraft that’s below serial number 10. The same argument applies to Supplemental Type Certificate (STC) projects.
Even though the incentives offered by an MRO to use your aircraft as their test-bed for their proposed STC may be highly attractive (including your ability to keep the modification on your aircraft after it has been approved), be very wary that the project may not get FAA approval, or worse yet, you may sustain damage or injury as a result of the test flying that the project may require.
There is also the likelihood that you may have to hand in your Standard Airworthiness Certificate and operate on an Experimental Certificate of Airworthiness until the modification is approved or removed from your aircraft.
Jump ahead five years, and your aircraft is now up for sale: How will potential buyers perceive the value loss, thanks to the word “Experimental” being permanently recorded within your logbooks?
Another issue to consider is that prior to the late 1990s the FAA allowed owners/operators to take the sometimes easier route of obtaining FAA Field Approval at their local FSDO for the modifications made. Quite a few modifications back then would not pass close inspection today. Now, all equipment or features installed on an aircraft must have Instructions for Continued Airworthiness (e.g., servicing, operating, and inspection manuals, as well as drawings, blueprints, wiring diagrams, etc.).
For example, in 1998 the FAA issued a notice proposing that a Terrain Awareness and Warning System (TAWS) should be installed on all Turbine Aircraft with six or more passenger seats (pilot and co-pilot seats were excluded). The FAA’s proposal was accepted and was written into law on March 29, 2001. Rather than pay for the installation of a TAWS-B system as mandated by cfr. 14, FAR 91.223, several King Air 90 series owners decide that it was cheaper to remove one of the passenger seats from their aircraft under a ‘Field Approval’. Two issues surfaced from that action:
Today, it generally is required to have an STC to facilitate the removal of a passenger seat.
As you might imagine, buyers value the aircraft with one-less passenger seat as being less desirable than a standard King Air.
Modifications are sought to improve performance, ease of operation, add efficiency, assure greater safety and/or increase utility. Sometimes all of these goals are achieved by a single modification. Unfortunately, some modifiers don’t consider how the aesthetics of their modification may affect value. If the finished product looks ugly or incongruous, there is a good chance that future buyers might be turned-off by the look of the modified aircraft, and place it near the bottom of their shopping list of purchase candidates.
Appearance also applies to wild, loud and outrageous paint schemes as well as interior designs. My advice is: If it looks sleek, then some serious time has been put into its design. If it looks fast, its looks might be deceiving. If it is ‘fugly’ to me, then there is a good chance that it will be ‘fugly’ to lots of other people too.
Apart from the modifications that obviously make no economic sense, there are some modifications that ultimately hurt an aircraft’s value rather than enhance it, and thus I question their desirability.
Even though some of these modifications are obsolete in today’s market, I include them here and offer my reasons for doing so…
Thrust Reversers on a Hawker 700A/B: Offered as an option by BAe on new production aircraft this added significant weight, reduced rate of climb, cruise speed, and increased cost for increased maintenance requirements. Per Vref, the base value is decreased by up to $150,000.
Forward Lavatory on a Falcon 50: A configuration popular with Europeans and Arabs (because it kept the crew separate from the passengers), this modification creates potential odor issues because the cabin pressure outflow valves are located aft at the pressure bulkhead, and passengers don’t like to be seen entering or leaving a toilet in full-view of the cabin occupants. Per Vref, the base value is decreased by as much as $300,000.
Forward Lavatory on a Learjet 55: See the above explanation. Per Vref, the base value is decreased by as much as $150,000.
Aft Galley on a Gulfstream IV: This was standard configuration for most new GIV’s, but is the least popular configuration because it requires the crew to come into the passenger area for refreshments. There are potential odor issues with an Aft Galley, because the cabin pressure outflow valves are located forward of the main entrance door. Although there is no quoted base-value decrease, the impact is manifested in ‘sales lag/dwell time’.
Tip-Tanks on a Gulfstream II: Offered as an option for increased range, the drag and weight penalty of this mod almost made the range increase ‘a-wash’. The best option in place of the tip-tanks, in the opinion of many operators, was to install the wing of a GIII onto the GII, thus receiving re-designation as a GIIB. There is no quoted base value decrease, but the impact of this mod is manifested in ‘sales lag/dwell time’.
Raisbeck’s Sabreliner 60, and 75A/80 Wing SC Mod: These features became standard on the Sabreliner 65, but the mod is blighted with costly delamination issues. There is no quoted base value decrease, however impact is manifested in ‘sales lag/dwell time’.
Fuselage Fuel Tank in a Citation 550: Providing an extra hour of range, but eliminating two seats, there is no quoted base value decrease, however impact is manifested in ‘sales lag/dwell time’.
Bendix EFIS 10 in Anything: In the late 1980s and 1990s, there was a push to oust ‘steam gauges’ from business aircraft and replace them with Electronic Flight Instrumentation Systems (EFIS). The EFIS-10 system was quickly made obsolete by newer systems, however, shortly after their installation because the Cathode Ray Tube – Symbol Generator Displays were unreliable and extremely costly to repair or replace, thus negating the reliability advantage cited. There is no quoted base value decrease, however impact is manifested in ‘sales lag/dwell time’.
Any ‘Airline’ Avionics not normally installed in a Business Aircraft: No description needed here - just expect an increased ‘sales lag/dwell time’.
Can you think of any other issues with jet modifications? If you do, please comment in the box below.