What to Know When Assessing Aircraft Value
Nearly every aircraft has its place in the used market. While upgrades make an aircraft seem desirable, if buying decisions aren’t taken in the wider context of the aircraft, Jet Tolbert shows major financial pitfalls could happen...
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Jet Tolbert
Jet Tolbert is president of Florida-based American Aircraft Sales where he oversees all aspects of aircraft...
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Nearly every aircraft has its place within the used market, and while the appeal of upgrades can make an aircraft seem more desirable, if buying decisions aren’t taken in the wider context of the aircraft, major financial pitfalls could happen. Jet Tolbert discusses…
While an airplane’s cosmetics can be changed, its pedigree and airframe hours cannot. Taken together, these factors will drive the level of interest among savvy buyers, ultimately determining the eventual sale price.
Qualified buyers can see beyond the appeal of new paint and an interior offering Wi-Fi. Unfortunately, there are some who get caught up with the ‘window-dressing’ of an airplane and risk exposure to nasty surprises later in the ownership process.
Often, those surprises lead to major expense that far surpasses the original ownership budget and may lead to a longer-than-anticipated period on the market when the time comes to divest of the asset.
If you’re shopping today’s used jet or turboprop market, don’t be discouraged – you are part of a generally astute, and aware group of people who are informed of market conditions and values.
You just need to follow some basic guidelines that will help you avoid buyer’s regret after the purchase of your used jet…
Work From the Core
There is a temptation for buyers to gravitate towards the airplane that catches their eye visually and then seek to justify it as the best option, using pre-conceived notions about certain attributes like engine and airframe hours, colors, equipment and aircraft location.
If you see a low-time jet with nice cosmetics, are you willing to become that uninformed buyer who pays 20% or more than you would for a comparable airplane?
If you’re willing to look deeper into an aircraft’s pedigree and history, you may find that there are other feasible airplanes with attributes you ignored earlier in your search that are in even better condition, and for a much lower price.
Keep Your Information in Context
Working with a well-established acquisition agent that has deep connections within both the brokerage community and the operational/maintenance side of the industry will help ascertain how each aircraft fits into the marketplace.
Viewing recent sales activity and the aircraft currently ‘For Sale’ (knowing the nuances of each aircraft’s history, including the costs and downtime needed for upgrades that will bring it in line with your requirements) is what every educated buyer is doing on some level.
However, those with the best information will be able to ascertain the best value and quality available on the market. Simply put there are things about an airplane that even the most intelligent buyer won’t fully understand without the support of appropriate expertise.
That’s because a well-connected acquisition agent will know all of the right questions to ask about history and distinguish whether a seller could be misrepresenting something.
There are many ways, for example, that an aircraft can comply with ADS-B/FANS. Consequently, the required cost (or value added to an aircraft already upgraded) can vary with different upgrade options. Moreover, understanding the nuances of a ‘damage history’ gray area is important.
Obtaining such information is just a first step, however, and experience of the aircraft resale industry is needed to understand how the information will affect resale when you wish to sell the asset in the future.
It’s not Apples-to-Apples…
Buyers often feel they are comparing apples-to-apples when they are looking at ostensibly similar aircraft with a similar year, airframe/engine hours and cosmetics. The true differences can be buried much deeper, requiring someone with an eye for quality and a deep understanding of market dynamics for that make/model aircraft to help ascertain a current market value.
Identifying personal preference for pedigree and maintenance history; cosmetic condition; required downtime; acquisition and annual operating budget may seem like the starting point, but without market knowledge a lack of context can cause a serious error in a purchasing decision.
What makes this discussion especially relevant is that within today’s market, the nicest airplanes have been cherry-picked and buyers are having to consider a wider selection of aircraft.
Using a buyer’s agent with a client focus who does not have other conflicts of interest will enable you to make the most of today’s available aircraft, whether they’re publicly ‘For Sale’ or ‘off-market’.
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