Vol. 20, No. 1 | March 1, 2008 | Go to Charts

Business Aircraft Sales Unable to Substantiate Report

by Carl Janssens, ASA | Aircraft Bluebook – Price Digest

As the story goes, one day Chicken Little was walking through the woods when an acorn fell on his head. Accordingly, he assumed the sky was falling. Thus, Chicken Little initiated a media blitz to warn the government (in this case the king) of the impending doom. There are some good endings and not-so-good endings to this fairy tale, but the messenger, Chicken Little, and the message of impending doom have remained consistent.

What do Chicken Little and our current economic news have in common? Both are reporting bad news based on kerplunks. Both appear to be promoting a worst-case scenario without examining all of the facts that impact each environment. Hysteria is the catalyst of chaos.

To date, with the global economy in bloom, back orders for new large-cabin long-range aircraft continue to extend out 60 months or more. Try to find a good deal on an existing G-V, Global Express or 900EX. Expect to pay a premium price. And don’t expect any breaks if you are trying to find the same on the commercial side either. Late-model 737s and A320s are selling with high values as well.

The world is indeed changing, and the U.S. economy is leading the charge. But the U.S. economy is no longer in a stand-alone environment. Change is necessary for growth. The opportunity for growth far exceeds the potential for failure. Business aviation is a key link in this process. Contrary to the report from Chicken Little, the sky is not falling. For aircraft sales, business is good, and the sky is blue.

Jet

Bluebook-at-a-glance
Increased — 56
Decreased — 394
Stable — 338

You can’t hit a home run every time at bat. Sooner or later, the ball will drop in the outfield for a single. So it is with the Bluebook-at-a-glance numbers for jets for this reporting period. In the winning column, late-model light jets such as the Cessna Citation Jet 525 series increased in value when compared to the previous quarter. The same held true for select large-cabin jets as in the case of the G-IV showing $500,000 gains. Change of ownership reported by the FAA for U.S. jet aircraft reported in Aircraft Bluebook increased substantially when compared to the previous quarter.

The majority of the jet market reported in Bluebook remained either stable or demonstrated some decline. Keep in mind values have been reported at their highest levels since 9/11, and sooner or later, interpretation of value based on condition, sales and available inventory will be on the soft side. Don’t think there is a recession. Like the stock market, the jet market is just as fluid. Consider a 10-year-old aircraft such as the Citation VII. A well-equipped and well- maintained nine- to 10-year-old VII with excellent P&I and at least average airframe time is selling in the $7 million range. In a market thought to be a bit soft, the VIIs have remained consistent with available aircraft for sale over the past year with competitive interest for this aircraft. However, the VIIs are down $100,000 from last quarter to more accurately represent time and condition using Bluebook methodology.

Turboprop

Bluebook-at-a-glance
Increased — 77
Decreased — 121
Stable — 415

Turboprops tracked by Aircraft Bluebook remained stable for yet another quarter.  Few experienced increases in reported values over the previous reporting period.  Declines in value were noted with late-model King Air 350s, the Piaggio P-180 and the Socata TBM series. Overall, the turboprop market remained stable with the majority of aircraft values remaining unchanged for the current reporting cycle. For U.S. activity over the previous quarter, the FAA reported a 10 percent increase in change of ownership, which indicates a healthy market. Bluebook subscribers had nothing negative to report. Business was good, and interest in acquisitions remains high in this market.

Multi

Bluebook-at-a-glance
Increased — 25
Decreased — 298
Stable — 344

There were no surprises in the multi-engine market tracked by the Aircraft Bluebook. The few gains in values included Diamond Twin Stars, Cessna 414As and Beech P58 Barons. On the negative side, overall values diminished generally in the $5,000 range. Time and condition play a significant role in earlier model years. Overall, this market segment was not as active. The FAA reported change of ownership down approximately 15 percent from the previous reporting period. Still, the majority of aircraft in this category remained stable for yet another quarter.

Single

Bluebook-at-a-glance
Increased — 136
Decreased — 717
Stable — 1548

More than half of the single-engine pistons tracked by Aircraft Bluebook remained stable. There were a few gains noted: Piston Ag planes were in the positive value range. Select early-model Mooneys and Pipers also demonstrated slight increases. In the negative column, decreases in value were generally limited to $5,000 or less. With available inventories of aircraft making this a buyer’s market, values are generally expected to decline.

Helicopter

Bluebook-at-a-glance
Increased — 555
Decreased — 13
Stable — 354

Global need for helicopters has kept this market segment robust. Across the board, just about every turbine helicopter reported in the Aircraft Bluebook has demonstrated increases in value or has remained stable when compared to the previous quarter. There is an all-time high need for well-equipped late-model helicopters that cannot be fulfilled. Time, equipment and condition play significant roles in determining value. If dealing with an in-demand model, do not think too long. Someone else on the planet will buy it without blinking an eye.

Aircraft Bluebook – Price Digest at EBACE

Please stop by and visit us if you are attending EBACE 2008. We will be located with AC-U-KWIK in booth No. 405. We look forward to visiting with you.