Dec. 27, 2013
Companies and business aviation professionals considering the sale of an aircraft may benefit from a seminar offered at NBAA’s first 2014 Business Aviation Regional Forum next month in Boca Raton, FL. “Business Aircraft Appraisals and Evaluations – Facing the Changes” will address today’s often-challenging market conditions, including pre-owned aircraft prices.
While today’s uncertain economic climate attracts most of the attention in this discussion, it is far from the only factor influencing aircraft values. Panel moderator Gil Wolin, president of business aviation consulting firm Wolin Aviation, noted that both regulators and the marketplace have increasingly mandated that aircraft be equipped with glass panels and automatic dependent surveillance-broadcast (ADS-B) technologies, as well as equipment to meet stricter global noise restrictions.
“These are all investments you need to make on ‘teenage’ aircraft – those between 10 and 15 years old – regardless if you plan to keep it or are looking to sell,” Wolin said. Aircraft older than 20 to 30 years of age, however, may be “simply too far behind current technology or regulatory requirements,” he added, and not saleable even in what once were traditional secondhand markets in developing regions.
Seminar presenter Anthony Kioussis, president of Asset Insight Inc. noted another key factor in appraising in-service aircraft: maintenance condition.
“Maintenance represents the biggest wildcard when it comes to expense,” he said. “A large aircraft could have several million dollars in accrued maintenance costs, potentially making it a much more expensive acquisition than many buyers believe.
“In grading the maintenance condition of an aircraft, we assign a value to an hourly cost maintenance program,” Kioussis continued. “While offering sellers the opportunity to realize the value of their program’s coverage through the aircraft’s sale price, buyers acquiring an aircraft already enrolled on a program are able to address the financial exposure associated with airframe, engine, and/or APU maintenance, right from the start.”
Wolin cautioned potential sellers to carefully consider – and not overestimate – demand for their make and model aircraft.
“There’s a sense that the market is coming back since the percentage of aircraft listed for sale has dropped,” he explained. “That’s not quite right, though; in many cases, owners who had listed their aircraft simply couldn’t get what [price] they needed for them, so they took the airplane off the market.
“As inventory levels dropped, folks on the sidelines saw [what they viewed as] a little spike in activity for their niche, and decided to try selling their aircraft,” Wolin said. “So, the cycle repeats, and that keeps overall values down.”
Also scheduled to present at the session are: Mike Dwyer of Guardian Jet LLC, and Joseph Zulueta with Aeronautical Systems Inc.
The NBAA Business Aviation Regional Forum in Boca Raton, FL will take place on Jan. 30 at Signature Flight Support, located at Boca Raton Airport (BCT).