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« Marketline Summer 2015: Current Market Strength (CMS) | Main | Marketline Summer 2015: Aircraft Values Stay Predictable »

Aircraft Values Stay Predictable 

By Carl Janssens, ASA | Chief Appraiser | Penton Aviation

It’s hard to believe, but 2015 is already nearly halfway into the history books.  For business aircraft transactions, it has been a steady course, fair weather kind of activity.  Nothing negative, transactions are occurring.  Values, for the most part, continue to show depreciation.  The question of when are values going to stabilize appears to offer its own conclusion by what is revealed through the transparency in recent sales data.  The answer: “never.” 

There is a mix of opinions as to what are the current market drivers.  Tax issues and lease returns are the most common on the financial side with the former rule of 20 now divided by half into the rule of 10 for finance.  At the same time, legacy issues such as avionics, as in the former days of RVSM compliance, are now a factor when dealing with future FANS and CPDLC mandates. New technologies such as the Dassault Falcon 5X, Embraer Legacy 450 and 500, the Cessna Citation Latitude, Gulfstream 500 and 600, and the Bombardier Global 7000 are real platforms that are or will be in-service in the near future, as well as the newcomer, HondaJet.  With all of this new technology, is it really a surprise sustainability of values are a thing of the past?  Not to mention the number of business jets has significantly increased during the past 10 years to offer a size and niche for any mission profile.  Aircraft history, equipment and maintenance are key factors as well in pre-owned offerings. 

The BLUEBOOK–AT–A–GLANCE marquee on the right reflects a working market with a trend in depreciation for jet and turboprop aircraft listed in Aircraft Bluebook.  In the piston world, a more stable environment is reported with values generally holding steady when compared to the previous quarter.  Beechcraft for instance, only produces a handful of G36 Bonanza’s and G58 Barons annually.  Supply and demand for well-equipped late-model piston aircraft is a partial reason for a more stable environment with regard to pricing.  The helicopter market is also economically in-line with piston market, despite a draw back in activity in energy and mineral markets.

In this edition of Marketline, Dennis Rousseau, AircraftPost, offers some strategic insight of business jet depreciation.  Secondly, Anthony Kioussis, President, Asset Insight, targets how maintenance pedigree impacts value.  In addition, graphs and a snapshot of the Bombardier Challenger 605 by Chris Reynolds, ASA, of the Bluebook staff will offer you, the reader, your own analysis and perspective on the current business aircraft market.  Share your thoughts with us at info@aircraftbluebook.com.

This article originally appeared in the Summer 2015 issue of Marketline. Click here to read the full issue.