Whether dealing with a new or pre-owned aircraft one of the most daunting questions is “How do I add value to my aircraft.” Better still- “How do I retain maximum equity value from my aircraft”? The average aircraft is replaced every five to seven years for many reasons that include upsizing- downsizing- and requirements for larger or smaller capacity- shorter or longer range. But the one denominator that will not change is how the aircraft value can be maximized? ...
Enhancing Aircraft Value
Whether dealing with a new or pre-owned aircraft one of the most daunting questions is “How do I add value to my aircraft.” Better still- “How do I retain maximum equity value from my aircraft”? The average aircraft is replaced every five to seven years for many reasons that include upsizing- downsizing- and requirements for larger or smaller capacity- shorter or longer range. But the one denominator that will not change is how the aircraft value can be maximized?
The value of an aircraft is based on numerous criteria including (but not limited to) the age and condition of the aircraft. But an older aircraft in pristine condition is still a highly sought-after commodity since it can be purchased for a fraction of the cost of a newer- similar replacement aircraft.
An example can be found in the re-sale price of a Challenger 601-ER aircraft. The aircraft is very similar to the newer Challenger 605- but can be acquired for $10-15 million dollars less than the Challenger 605. The 601 owner will have the same size aircraft- same cabin interior and similar range (except for maybe a 200nm difference). While the 605 cockpit is more advanced- the 601 still is a very capable airplane- and for substantially less cash outlay.
In order to maximize aircraft value one must begin by selecting an appropriate aircraft. An aircraft that is still in production or actively supported by the OEM will generally retain better value in the resale market. If the OEM is no longer in business- or is not actively supporting the aircraft- the airplane will not retain its value so well. The aircraft must be properly maintained and documented. Cutting corners and deferring maintenance items in this area will not help when it comes to the right time to sell. One of the first tasks during a pre-purchase inspection of an aircraft is to evaluate the documents and logbooks. If there are many entries of deferred maintenance then what signal is that giving to the purchaser?
If the entries and logbooks are not neat and orderly then that will also leave a negative impression with the buyer. A clean- concise- and properly written and legible logbook will speak volumes on how this particular aircraft was cared for and enable the prospective buyer to feel more comfortable about their prospective purchase.
Here’s an obvious fact: Tastes differ. Therefore- no one is expected to have the ultimate interior that will appeal to every buyer. Nevertheless- a few simple rules can be followed to keep the owner’s costs down while enhancing the value of the aircraft.
They are as follows:
The best selection for an interior is to use earth tones. By utilizing earth tone colors such as beiges- browns- greens- for example- in light hues- the interior will appeal to the majority of prospective buyers. Most buyers will want to change a few items in order to personalize the interior but with a clean earthy palate to begin with- one can change the seat colors and immediately transform the interior to reflect a personal style.
If a buyer wants the aircraft but finds the interior in a red crimson with gold accents and a blue headliner- then they will automatically factor in additional costs for additional interior changes- which will ultimately raise the price of the acquisition for the buyer. As a result- this is turn will diminish the market capitalization for the seller since the aircraft will not be appealing to many at its asking price.
Interior electronics should also be kept as up-to-date as is feasible. Keep a decent sound system with DVD and monitors connected to Airshow. Airshow allows for software updates as do most Satcom systems. There is- of course- no need to upgrade the VHS system- so be ready to dump it for a DVD system the next time you freshen up the interior at your local shop.
Even though the interior is where the buyer will have a first impression of the aircraft- the mechanical condition of the aircraft is even more important. One of the issues an aircraft owner deals with is Service Bulletins. “Should I or Shouldn’t I?” especially when one is thinking of selling the aircraft in a year or two.
Service bulletins are generally categorized into three areas of importance- AD/Mandatory- Recommended and Optional.
By FAA and TC regulations all AD/Mandatory service bulletins must be complied with. But Recommended and Optional bulletins are just that- and a surprising number of operators will simply not comply with all recommended bulletins. This will in fact affect resale value of the aircraft since most buyers will want the aircraft configured to the latest service bulletin status.
Costs can climb rapidly for service bulletins implementation due to lead times for parts and labor hours for access and installation. If a buyer is looking at many labor hours and down time for service bulletin compliance- then that could be a deciding factor in whether to move ahead with the aircraft purchase or not.
That’s not to say- however- that all operators should procure all recommended and optional service bulletins. A general rule of thumb is that if a particular service bulletin improves the maintainability- reliability and situational awareness of the aircraft and crew- then it should be considered as being worth installing- thus ensuring the next buyer will want those bulletins and be willing to pay a premium for a better aircraft. It’s easy to sell an older aircraft that needs hundreds of thousands of dollars spent for service bulletin implementation.
Many bulletins and kits are also for enhancements of an aircraft such has engine upgrades- avionics upgrades- and so on. Generally these are very high cost updates and appeal more for the current user who desires to keep the aircraft longer and enjoy the enhancement. Generally- getting these upgrades in order to sell the aircraft will not necessary increase the marketability of the aircraft since not every owner will desire the enhancement.
The same applies to new aircraft purchases. Again the majority of these aircraft will be sold after the initial five to seven years- and if the owner desires a clean- quick sale then pretty much the same rules apply.
• Choosing earth tone colors for the interi- or will allow the aircraft to easily move from one owner to another.
• Equip the aircraft for maintainability (access panels- service lights etc)- reliabil- ity (second FMS- third IRU etc)- situation awareness (HUD- EVS- auto-throttles etc).
• Maintain the service bulletin status of the aircraft and install all recommended bul- letins since they are generally covered under warranty.
• Optional bulletins should be decided on the same criteria for importance and enhancement of the aircraft and situation awareness.
• Finally- keep the records- logbooks and all documents neat- concise and orderly. It all begins and ends with the paper- work.
This article was written by Aerospace Concepts (John Brodeur) which specializes in Completion Management and Interior Design of large cabin business aircraft. In business since 1998 ACL has managed the completion of over 50 widebody aircraft including 40 Global Express aircraft.
Photos used within this article are copyright of Aerospace Concepts. Mr. Brodeur can be contacted at Tel: +1 647 448 4748 (Cell) or by email at firstname.lastname@example.org.
More information from www.aerospaceconcepts.com