USED AIRCRAFT MARKET: LIKE A GAME OF DARTS
A recent discussion with the principal of a car dealership got me thinking about the used aircraft market. In the automotive sales world, prices may be stabilizing (though dealers still add to the sticker price) yet there seems to be a fair level of uncertainty from month to month. So much so, I was told, that dealers are being really cautious with stocking inventory in fear of getting stuck with lots of overpriced vehicles should the market go for bust. That doesn’t seem to be the case with aircraft because brokers and salespeople tell me it’s still a brisk market, perhaps cooling a bit from where it was last year at this time, and it’s very much a seller’s market when it comes to piston singles. Plus, airplanes (the ones people want) don’t seem to be sitting around on sales ramps for long. To get a feel for buying patterns and selling prices, I caught up with Chris Reynolds at Aircraft Bluebook, who said predicting what might happen in the used aircraft market in 2024 is a proverbial game of darts.
Reynolds said the flight training market has driven a lot of the basic single-engine aircraft values, while the twin-engine piston market remains difficult to figure out because buying trends are all over the place and people use them for a variety of reasons. Many sellers tell me that Aircraft Bluebook values tend to be on the low side compared to the actual market and indeed that’s often the case. But understand that Bluebook is really a starting point in the valuation process and the publication gets data from a variety of sources, including large flight schools, aircraft brokers, financing companies and also end users who submit sales data on aircraft they’ve recently bought or sold. The biggest problem Aircraft Bluebook runs into when it comes to value analysis—particularly in a hot market—is that owner- operators tend to ask for selling prices that they think the aircraft is worth and buyers who want the assets badly enough simply pay it, even if that selling price seems outlandish. Reynolds said that what should drive value is time and condition.
But it gets real tricky putting a realistic marketable value on aircraft that have lots of upgrades and mods, including high-end avionics and even paint and interior work. While there is a diminishing value for upgrades done to a 60-year-old airplane, the Bluebook is close to unveiling an updated website that will make it easier to put more accurate numbers on these upgraded models. But I think as long as there is a feeding frenzy, sellers will price their aircraft a lot higher than any book’s value and sellers will simply pay the premium. One of many examples is the Cessna Skyhawk market. The current Bluebook puts the average retail price of a 1977 172N at $99,000, considering it’s within 1000 hours of the engine’s major overhaul. I’ve seen the same aircraft loaded with new avionics, including Garmin autopilot, GPS navigators and integrated flight displays—you’ve seen these modern gee-whiz packages, too—sell for north of $200,000, especially if it has a new engine and fresh paint work. The publication does have a section for adding some current avionics components, but it’s revamping this in an upcoming revision. The Bluebook also reports on average engine overhaul prices, and I think the published pricing tends to be low in a current engine market where prices have skyrocketed. For the 160-HP Lycoming O-320-H2AD, the average overhaul price is listed at $25,000, and that includes labor. I asked Reynolds where these prices come from and it’s an average obtained, in part, from the more popular overhaul shops. I think engine prices in general will continue to rise sharply in 2024.
Of interest to me when a new book arrives are the pricing trends. For that Cessna Skyhawk, the trend in the Fall 2023 issue shows no change. But there are some aircraft models where trends are declining. Such is the case, according to Aircraft Bluebook, with many Beech Bonanzas. For example, a 1985 model A36 is listed at $260,000 as the average retail price, but trending down $10,000. I pulled out my Fall 2021 Bluebook where that same A36 was listed at $225,000, with a $20,000 upward trend. The average overhaul cost for the 300-HP Continental IO-550-B engine was $33,000 and for 2023 it’s up to $42,000—which I think is still a touch too low compared to real-world numbers.
Last, it’s been suggested that a new generation of aircraft buyers really isn’t interested in project airplanes, but instead a turnkey package with upgrades and improvements already in place. This, potentially, could be pushing prices for older aircraft to a higher level. We’ll look at all this in a detailed market report in an upcoming issue of Aviation Consumer and in the interim, if you have a sales experience to share or care to weigh in on the used market, drop us a line—we want to hear about it. —Larry Anglisano
