The new smaller business aircraft manufactured from the 1980s up to 2007 have experienced very predictable depreciation. Historically, it has been in the neighborhood of 5 to 10% a year, down to where an aircraft reached a certain value, perhaps 60-70% of its original purchase price.
And then in three to five years the aircraft would start appreciating again – due to replacement costs being higher on the same airplanes. A buyer could get a five-year-or-older airplane with relative certainty that it would maintain its value. Consequently, the real cost of flying the aircraft would be fuel, insurance and maintaining it properly. Buyers could rest assured that they were going to recoup 75% worst case, or as much as 125% of their investment when selling.
Read the full post at NARA’s website.
JETNET, being the world leader providing aviation market data to the aircraft sales and finance professional for over 20 years, we are best positioned to objectively observe the resale markets on business aircraft.
What a ride it has been for the dealers, brokers and financiers of these planes. Going back to November 2007 there began a steady, at times meteoric, increase in the number of biz-planes coming to market. The inventory of for sale airframes was growing well in excess of 100 units a month for a time. But the summer of 2009 brought stabilization which continues to date. At the close of September 2009 there were 4511 business turboprops & jets offered for sale, 15.1% of the in-service fleet. That’s off 119 airframes from the July peak of 4630.
But of course stabilization of inventory does not alone make for a recovery. Buyers must return. Prices must firm. Certain models that sold in the low $20M range just a year ago now struggle to command $10M in the market of the moment. And bear in mind this sobering point; although the resale inventory is finally trending down it is still nearly 2000 airframes above the November 2007 inflection point of 2585 aircraft listed for sale.