The sky is falling! The sky is falling! Or, maybe it’s not.
I think everyone has a little Nostradamus in them. We all like to take steps today that will help make tomorrow that much better.So, when it comes to looking at improving their future investments, some people watch the stock market, some manage oil futures, and some spend time charting the price of pork bellies.
Me? I keep track of the pre-owned business airplane market. After all, knowing current trends is the first step in helping owner/operators maximize their aircraft’s market value. And keeping up with things used to be easy. Today, not so much.
Why? Well, in our post-pandemic business aviation world, the combination of some recent, and some might say, “significant” adjustments in the total pre-owned aircraft inventory, mixed with some price fluctuations, has made the whole picture somewhat fuzzy.
Times like this are when I turn to the experts for accurate and informed information. One story I found particularly insightful was a recent piece in Aviation International News by Kevin O’Leary, CEO and founder of Jet Advisors.
According to O’Leary, current inventories of “for sale” turboprops and jets have risen nearly 25% since the beginning of this year. That alone could seem alarming, but when put into context, it makes sense.
He went on to say that in 2019, “the market had more than 3,000 jets and turboprops for sale, representing over 8 percent of the in-service fleet. Today, we have only a little more than 2,000 jets and turboprops for sale.”
So, while there may be more aircraft on the market than there were 10 months ago when compared to the “normal” pre-pandemic inventory, in his opinion, we are far from experiencing a proverbial fire sale.
You say toMAYto, I say toMAHto…
So, is it a buyer’s or a seller’s market? Well, it’s safe to say it’s a bit of both. And apparently, the International Aircraft Dealers Association (IADA) and its membership feel that putting the two together adds up to a pretty good situation all around.
In their Third Quarter 2023 Market Report, which was released during BACE, the association’s Executive Director, Wayne Starling, said, “The good news is inventories are expanding, price inflation has slowed if not slightly slipped, and supply chain quirks and bottlenecks are being ironed out industry-wide. Additionally, MROs and FBOs are expanding to meet the needs of aging fleets. Those factors coupled with massive new options from fleet buyers could signal that supply and demand are rebalancing for a larger post-pandemic marketplace.”
With regards to the “larger post-pandemic marketplace” and its impact on aircraft values in the future, the IADA report continued with, “Overall, business aircraft valuations remain relatively stable with new models and higher pedigree aircraft coming off of their peak prices by 5 to 10 percent. Older models have dropped in value by 15 to 20 percent for less preferred aircraft sold over the past couple of years.”
6 steps to maximizing your aircraft’s resale value.
If you’re still a bit confused, you’re not alone. Right after COVID, private aviation took off — literally. And that meant aircraft sales and prices jumped off the charts. But now that things are achieving equilibrium, some people are getting anxious about the future market.
“The aircraft market is sending mixed messages, with inventories rising but remaining well below the average levels of years past,” O’Leary wrote. “Prices remain higher than in 2019, but that situation is being challenged with every new deal. The time on the market for aircraft is increasing, and sellers are becoming concerned that the global economy will go into recession.”
As with the sale of any asset, timing and preparation are everything. And no matter which side of the coin lands up, I think it’s safe to say that while there are fluctuations in both pre-owned turboprop and jet inventory and pricing, there’s still an opportunity for owners to take steps to position their aircraft well. Not only to get more “value” out of it today, but also to sell faster and for more money when the time comes.
#1: Analog is out. Digital is in.
If your airplane still has ‘coffee grinder’ instruments or legacy CRT-based EFIS in the panel, make a move to digital avionics. Yes, it is the most expensive and time-consuming upgrade you can do, but it’s also historically going to net you the fastest and biggest return on that investment. Besides, the new avionics will increase your aircraft’s usability, capability, and safety — so much so you may decide to keep it.
#2: Connectivity is king.
It’s debatable that cabin Wi-Fi connectivity is more important today than a digital cockpit. But the fact is, if you don’t have some cabin-to-Internet connectivity — get it. Not having connectivity will put your aircraft at the bottom of any prospective buyer’s list.
#3: Have all of your aircraft’s logs and records digitally scanned.
It’s the easiest and least expensive “upgrade” you can give your aircraft, and will work wonders for its resale value. Think of it: if you have two identical airplanes, and one has banker’s boxes filled with paper logs to search through, and the other has all of its back-to-birth records securely stored on the cloud that you can search, share, and verify in seconds, which one will come off as being the better maintained of the two? And anyone will tell you better maintenance adds up to higher market value.
#4: Kill all unwanted passengers.
Another excellent upgrade in today’s virus-conscious world is to add an Aviation Clean Air (ACA) system to your aircraft’s A/C system. It uses Needlepoint Bi-Polar Ionization to continually destroy 99 percent of airborne pathogens, including the COVID-19 virus, in your aircraft’s cockpit and cabin. And it gives the air that “after a spring shower” freshness.
#5: Enroll your engines on a power-by-the-hour program.
Better yet, if your aircraft’s new enough and the engine or airframe OEM offers coverage, sign up for their program. If not, there are some excellent third-party providers like Engine Assurance Program (EAP) to provide coverage for your engines. No, you won’t recoup 100 percent of the buy-in costs, but just having some coverage will, at the very least, put it on par with the competition.
#6: Put a new shine on things…
You’d be surprised how much “added value” a good buff and polish can bring to any airplane. No, you don’t have to redo the interior or repaint the exterior. Chances are the next owner will want to reupholster the seats and change the stripes. Nobody wants somebody else’s colors. Just have the cabin and airframe cleaned and refreshed by qualified professionals. And don’t trust the work to a local auto detailer. Airplane surfaces and auto detailing products often don’t mix.
Ultimately, timing and preparation are key. By staying informed and proactively enhancing your aircraft’s value, you can position yourself to not only enjoy greater value today but also increase your chances of a faster and more profitable sale when the time comes. So, as we navigate the ever-changing skies of the business aviation market, remember that with the right strategy, your aircraft can remain a valuable asset in the years to come.
