2003 Volume 3

MARKET LEADER™

Synopsis
Good activity spoiled the summer doldrums for general aviation. What has traditionally been a time to check the phones - because they weren't ringing - saw many buyers making deals. Virtually 100% of the dealers we spoke with reported that activity continues to improve. It is all about price. For more than two years, airplane values have steadily, sometimes sharply, declined. During that period there was little good news. The World situation appeared precarious. If you weren't a duct tape or plastic sheeting salesman, the outlook was grim.

Now, in the late summer and fall of 2003, most Americans have come to realize that not only does life go on, but it can be business as usual at Threat Level Yellow, or beyond. And, that brings us back to GA. Even 1st time buyers come up to speed quickly in this information rich industry. A few clicks on the Internet reveals a lot of inventory and a few phone calls indicate some awfully good deals. No matter what the mission - the $100 hamburger run or a New York to Paris flight - buyers are saving anywhere from tens of thousands of dollars on a piston single to many millions on a jet. The toughest general aviation market in history has yielded some fantastic buys. All this, plus accelerated depreciation on new equipment, could very well move GA into a recovery mode.

At present, this market is in a transition phase. Prices may have hit bottom for many, if not most, airplanes. Spot markets involving low time or loaded airplanes may give the impression that prices are moving up. However, we are seeing just as many high timers with a negative influence on the market. Therefore, reality is somewhere in between - a stabilizing market.

Piston Singles
Very few airplanes are really going up in value at the moment. However, the $100,000 and under market is experiencing good demand. That, most likely, is where the recovery will start. For less than the price of a new Beemer, new pilots (or old) can get a set of wings. Beech Musketeers, Cessna Skyhawks and Piper Archers are missing what most other airplanes have - high operating costs. The complex single market, however, including the Cessna Turbo 210, remains soft. The exception is the low time, dual Garmin updated airplane. If it's no excuses and priced right, the demand is there. The table below is based on 1982 models (or closest) and compares the current used price to the original new price. In this market, the fixed gear, utility type airplanes have done the best over time. The Cessna 206 at 163% of new and the Cherokee Six trading at 165%, have gone way up in value since they were originally purchased in 1982. (Don't show that to your tax assessor.)

Piston Twins
Operating costs in the form of insurance requirements, fuel and maintenance, have nearly killed the piston twin market. In a robust economy, all of the above would be ignored, but the economy is a long way from robust. That may be something to keep in mind during a recovery - some of the best buys of today could be piston twins. The activity is centered around the totally updated, like new airplanes, or the really cheap ones in need of a makeover. In this market, unpressurized airplanes such as the Beech Baron, Cessna 310 and Seneca have lost relatively little of their original value, while the former charter dogs (Navajo), or the complex personal-airliners (Dukes & 340s) have retained considerably less.

Turboprops
This market has come alive. Activity is good. In the case of freshly overhauled and ready-to-go, activity is very good. Lots of turboprops are finding new homes. We actually received a call from a company that travels very little, but had heard prices were down. They wondered if they should buy a King Air, purely as an investment. Is investment grade too strong a term? Probably, but we've never seen a better time to put together a flight department.

Jets
A positive spin on the Economy, and an improved Stock Market are largely responsible for the action in the jet market. Low prices couldn't hurt either. Shoppers in this market are actually beginning to hear the phrase, "You should have been here yesterday." The real steals - the best airplanes at the cheapest prices - may be gone. The modern, fuel-efficient jets (mid-'80s or newer) are getting picked over. As Chuck Collins of Chuck Collins and Associates said, "Mainstream airplanes, those with good economics of operation, are coming back. Buyers are now willing to pay more for the top airplanes." Most airplanes remain plentiful. However, for the first time in almost three years, the number of good airplanes that are really for sale, is declining.

Thank You for choosing Vref, The Accurate One - The Only One You Need!

*% of New is based on current used Retail value compared to original New Equipped price. In this study, 1982 models (or closest) were used. Every year model can be seen in the % New column in Vref.

©2003 by Vref Publishing, Inc. All Rights Reserved.

Past Articles:

• Vref 2003 Volume 3
• Vref 2003 Volume 4
• Vref 2004 Volume 2
• Vref 2004 Volume 3
• Vref 2004 Volume 4

For more information about how we can satisfy your aircraft needs, please contact: sales@aircraftinvestmentgroup.com