In the News

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..

While there are many factors impacting an aircraft’s pedigree, the ultimate questions for buyers center on whether certain business jets or turboprops could create higher than usual ownership costs, downtime or difficulty to resell. Jet Tolbert discusses…
Following are some general considerations for buyers of business aircraft to help understand a little more about an aircraft’s history and why it matters. This article covers only the tip of the iceberg, and there are always exceptions to the rule. An experienced consultant will be required to evaluate all the risks and opportunities in a potential acquisition.
Moreover, the following observations are made with the assumption that the reader is considering only aircraft of a specific make/model. Each of the factors discussed will affect different aircraft models in different ways.
A Note on Aircraft Total Hours
When comparing two aircraft that are both flown and maintained regularly, generally a lower time airplane will have a lower maintenance cost and higher dispatch reliability, fewer delayed flights and less maintenance required between flights.
This could impact some aircraft types more than others due to items like life-limited airframes and differing inspection intervals. Buyers should keep in mind, however, that some older aircraft could have very low total time having been parked for extensive periods with little or no maintenance. This comes with its own risks and would need to be evaluated on a case by case basis.
Past Maintenance and Damage History?
All aircraft are exposed to multiple factors that can require higher levels of maintenance outside of their scheduled inspections. The mere fact of pulling an aircraft out of the hangar has associated risks of damage occurring (i.e. hangar rash).
The speeds at which aircraft fly and their exposure to weather are going to unavoidably wear on an aircraft over time. Younger aircraft will naturally have less requirements for major repairs compared to an aging aircraft of the same type, so the impact of this type of negative history could be considered as a ratio relative to an aircraft’s age.
Over time more airplanes in the fleet will have had higher-level repairs, so the impact on value will be less as it becomes more common within the fleet.
Newer aircraft will also tend to have had major repairs carried out by the OEM while older models may have had more major repairs across the fleet that were completed by third-party maintenance providers.
In either case the repairs could be structurally equivalent to the OEM, or they could vary and require additional inspections throughout the life of the aircraft. If the work undertaken by the third-party provider proves inferior, potential exists for a stigma to be attached to the airplane.
Stigmas associated with major repair work can reduce over time as a specific repair may prove itself, or becomes more of a market norm as other aircraft in the fleet adopt similar work. Buyers should, nevertheless, be aware of these at the time of purchase.
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’.

How Should Aircraft Buyers and Sellers Act Today?

Sifting through the industry hype, Jet Tolbert makes sense of the used jet marketplace moving into Q4 2018. Are buyers or sellers justified in their expectations? Or is reality to be found somewhere in between? There are many buzzwords being liberally banded around the Business Aviation sales arena at present. Terms like ‘100% bonus depreciation’, ‘active…
READ MORE

What is an Aircraft Broker?

Would you know how to find the right broker for your next aircraft transaction? It may seem like a simple enough question, but a lack of clarity does still exist over what distinguishes aircraft brokers from aircraft dealers. What exactly is a business aircraft broker, and how can you choose the right one for your…
READ MORE

Tips for Approaching Today’s Used Aircraft Market

Buying and Selling Business Jets What’s the best advice for buyers and sellers entering today’s used international aircraft marketplace, and why does it help to broaden the search as widely as possible? Jet Tolbert discusses… Looking back over our recent aircraft sales, it’s clear there has been a stronger international flavor lately. While this micro…
READ MORE

97 Comments.

Comments are closed.

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In the News

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..

While there are many factors impacting an aircraft’s pedigree, the ultimate questions for buyers center on whether certain business jets or turboprops could create higher than usual ownership costs, downtime or difficulty to resell. Jet Tolbert discusses…
Following are some general considerations for buyers of business aircraft to help understand a little more about an aircraft’s history and why it matters. This article covers only the tip of the iceberg, and there are always exceptions to the rule. An experienced consultant will be required to evaluate all the risks and opportunities in a potential acquisition.
Moreover, the following observations are made with the assumption that the reader is considering only aircraft of a specific make/model. Each of the factors discussed will affect different aircraft models in different ways.
A Note on Aircraft Total Hours
When comparing two aircraft that are both flown and maintained regularly, generally a lower time airplane will have a lower maintenance cost and higher dispatch reliability, fewer delayed flights and less maintenance required between flights.
This could impact some aircraft types more than others due to items like life-limited airframes and differing inspection intervals. Buyers should keep in mind, however, that some older aircraft could have very low total time having been parked for extensive periods with little or no maintenance. This comes with its own risks and would need to be evaluated on a case by case basis.
Past Maintenance and Damage History?
All aircraft are exposed to multiple factors that can require higher levels of maintenance outside of their scheduled inspections. The mere fact of pulling an aircraft out of the hangar has associated risks of damage occurring (i.e. hangar rash).
The speeds at which aircraft fly and their exposure to weather are going to unavoidably wear on an aircraft over time. Younger aircraft will naturally have less requirements for major repairs compared to an aging aircraft of the same type, so the impact of this type of negative history could be considered as a ratio relative to an aircraft’s age.
Over time more airplanes in the fleet will have had higher-level repairs, so the impact on value will be less as it becomes more common within the fleet.
Newer aircraft will also tend to have had major repairs carried out by the OEM while older models may have had more major repairs across the fleet that were completed by third-party maintenance providers.
In either case the repairs could be structurally equivalent to the OEM, or they could vary and require additional inspections throughout the life of the aircraft. If the work undertaken by the third-party provider proves inferior, potential exists for a stigma to be attached to the airplane.
Stigmas associated with major repair work can reduce over time as a specific repair may prove itself, or becomes more of a market norm as other aircraft in the fleet adopt similar work. Buyers should, nevertheless, be aware of these at the time of purchase.
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’.

How Should Aircraft Buyers and Sellers Act Today?

Sifting through the industry hype, Jet Tolbert makes sense of the used jet marketplace moving into Q4 2018. Are buyers or sellers justified in their expectations? Or is reality to be found somewhere in between? There are many buzzwords being liberally banded around the Business Aviation sales arena at present. Terms like ‘100% bonus depreciation’, ‘active…
READ MORE

What is an Aircraft Broker?

Would you know how to find the right broker for your next aircraft transaction? It may seem like a simple enough question, but a lack of clarity does still exist over what distinguishes aircraft brokers from aircraft dealers. What exactly is a business aircraft broker, and how can you choose the right one for your…
READ MORE

Tips for Approaching Today’s Used Aircraft Market

Buying and Selling Business Jets What’s the best advice for buyers and sellers entering today’s used international aircraft marketplace, and why does it help to broaden the search as widely as possible? Jet Tolbert discusses… Looking back over our recent aircraft sales, it’s clear there has been a stronger international flavor lately. While this micro…
READ MORE

97 Comments.

Comments are closed.