There has been conversation and many questions over the last few years relating to residual values, value retention, value as a percentage of cost new, values coming back, et al. For years, our industry used a 3 to 4 percent annualized depreciation schedule to gauge future values for business jets. Due to the fact our business was in its infancy, we did not possess formidable history to determine the validity of the schedule. When we buy-in to the fundamental assumption that aircraft are depreciating assets with a 30-year life cycle, most business jets will reflect an average midlife (15 years) value retention of 50 percent, when compared to the original cost new.
Bluebook Perspectives: Facing the Nation
Into the Blue: Aircraft Bluebook At-a-Glance, Cessna 152 Series
Ask Aircraft Bluebook: In the aircraft base average lines in the Bluebook we always see the “No Damage History” as a standard requirement, but if there is damage how does the Bluebook reflect this in terms of value?
[Download the full Winter 2012 Marketline Newsletter and All Charts.]
Vol. 26, No. 2 | June 6, 2012 | Go to Charts
by Carl Janssens, ASA | Aircraft Bluebook — Price Digest
Optimists see the silver lining behind the cloud while the pessimist only sees the cloud. Optimism continues to be the silver lining in the pre-owned aircraft market. However, reality of the dark cloud dictates an awareness and calculated approach.
Such are the conditions in the current ever-evolving pre-owned market. For the most part, the glory days of aircraft values being treated as premium investment opportunities are now nothing more than a faded memory. Knowledgeable buyers and sellers are keenly aware of this. Change of ownership continues at a slow to steady pace while values for the most part show continued depreciation. The exceptions are late model long range executive business jets.
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With a background in the creative arts, project management and entrepreneurship, Eric Wing has stepped into the marketing manager role for the Penton Media business aviation group, which includes AC-U-KWIK, Air Charter Guide and Aircraft Bluebook–Price Digest.
Wing is active in the American Marketing Association. He grew up in Southern Maine and has lived in Massachusetts for the past 10 years. Wing has two children, ages 10 and 6. He loves to mountain hike, run and travel. Wing considers himself to be a lifelong learner. He will obtain a master's degree in art administration from Drexel University in 2012.
Finally, the pre-owned aircraft market moved in a positive direction in the first quarter of 2010. Late-model, large-cabin, long-range aircraft were selling at or better than values published in the Aircraft Bluebook.
External factors such as increased sales, a slight decline of available inventory and world market competition could all be considered causes for the improvement. Although this early indication of a slow recovery is in progress, it is too early to celebrate. Any positive sign going forward is far better than where the used aircraft market has been.
With the exception of the late-model, large-cabin class, most of the other business aircraft are not yet recovering in value. The good news is that values are showing more stability. Market activity is on the rise leaving a more optimistic perception that values are not exposed to the risks experienced in the last twenty months.
This week, members of the AC-U-KWIK, Aircraft Bluebook–Price Digest and Air Charter Guide staffs will be in Geneva for EBACE. Stop by booth 729 to say hello and learn how we can help your business!
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