A few weeks ago, my team and I created a video discussing what we know and what we can foresee in the private aviation market as it relates to these strange times. Though much is unknown, what is clear is that there is a significant reduction in flights both commercial and private. There isn’t anywhere to go, and even if there was, would we even want to go? Only time will tell how long it will take for these markets to bounce back, but we believe that private aviation will return faster than commercial.
In this blog, I will highlight three takeaways from my discussion around aircraft values with Ryan Lutz, Charlie Bravo Aviation’s most experienced research analyst and CBA Vice President and Bob Wilke, industry risk assessment veteran and CBA’s ASA Certified Senior Aircraft Appraiser.
(1) Don’t unnecessarily devalue your asset for a buyer that’s not there.
As we look to two major disruptors in modern history – the recession of 2008-2009 and the 9/11 terrorist attacks on the US, we are given indicators about what’s going to happen to the markets in response to COVID-19. During the economic disaster of 2008, aircraft experienced a 20-30% depreciation which was influenced by the reactive dropping of asking prices unnecessarily.
Based on conversations with our clients and friends at other brokerages, it seems that as an industry, we’ve learned from this mistake. Instead of responding to the current situation in panic, aircraft owners are waiting it out, both in the decision to start the listing process and to advertise a price reduction. Given that aircraft owners are taking the time to think, see and evaluate the impact, our experts estimate that there will only be a 10-20% drop, which will vary by model and age.
(2) Take your aircraft to altitude every two or three weeks for 45-minutes.
To ensure the aircraft’s value remains constant, it’s important to get it the exercise it needs. This one shouldn’t be too hard of a sell… At this point, we are all looking for an excuse to get out of the house somehow.
Bob Wilke, industry risk assessment veteran and CBA’s ASA Certified Senior Aircraft Appraiser, recommends flying the aircraft every two or three weeks for 45-minutes at altitude. Running the systems and engines on the ground is not the same as getting the aircraft in the cold, dry air and getting your plane the care it needs will ensure its in top shape when it comes time to sell.
(3) Stay up to date with fluctuating values to get the most when the time is right.
Currently, there hasn’t been a flooding of inventory of the market, simply a natural uptick that corresponds with deals not finalizing. Light and mid-sized jets have remained steady and are following predictable trends. Though there have been one-off fire-sale dumping deals, there hasn’t been anything to indicate a sharp devaluation trend.
But the reality is, aircraft values fluctuate. To ensure aircraft owners have the information they need, we’ve put together an offering allows aircraft owners to be in the know on the specific activity on the model that concerns them. We call it our in-depth research offering.
I hope you’ve found value (no pun intended) and comfort in the trends we are seeing related to aircraft valuation. If you want to learn more, watch the complete video discussion. Fill out the form below for immediate access to the full conversation.