2003 Volume 4

MARKET LEADER™

Synopsis
If it weren't for the War on Terror, 6% unemployment, freshly unearthed scandals in mutual funds, and a sorry state of affairs as painted by presidential wannabes - life, and even the used aircraft market, would be great. Despite a mixed bag of economic news, the stock market has rallied; so much so that some pundits have called it a bull market. And, since aviation is joined at the hip to the U. S. stock market, portions of the used aircraft market continue to heat up.

The real steals may be gone. Yet, good deals remain in almost every segment. Everyone knows that prices are much less than they were only a couple of years ago, and most of us believe they are currently less than they are going to be. Very few airplanes are actually increasing in value at the moment. However, there is a stabilizing, and in some cases, a firming of prices. While today's buyer is more market savvy than a pre-internet buyer, so are most sellers. In this bountiful market, spot shortages are easily detected. If a relatively small number of a certain vintage are available, prices for those airplanes increase. We are seeing this selective phenomenon from G-Vs to Piper Warriors.

Piston Singles
The used single market continues to be active, especially in the under-$150,000 airplanes. One dealer quipped, "It's good to be working again." Several dealers reported getting top dollar, but quickly added they are selling top dollar airplanes. Beech Musketeers, Cessna 182s, Piper Cherokee Warriors and Sixes and early model Tigers have all experienced good activity, if they fall into one of two categories. They must be low time, no damage with at least a good level of upgrades. (A new GNS430 or new paint from a reputable shop will make the phone ring.) Or, if it's rough/original, it had better be priced right - cheap. Fixed gear, non-turbo and non-pressurized airplanes are where most of the action is. Add any one of the above, and the list of potential buyers shrinks. Airplanes with all three (retractable gear, turbo and pressurization), such as the Cessna P210, have endured a very tough market due to operating costs.

Piston Twins
At times it seems the only thing worse than pressurization and retractable gear in the piston market is a second engine. If there is any good news in this segment, it has to be all the great buys. Prices have slipped to the point where buyers in today's market can pay for a lot of fuel (or insurance) with the money they've saved. There is great opportunity here. A late 1970s Beech B55 Baron can be bought for less than a comparable A36. Cessna 310s are not much more than Cessna 206s. And, Piper Senecas and Aztecs are less than Piper Saratogas. At this point we must restate the obvious: Value is determined from times, condition and quality of upgrades. An older airplane (single or twin) can be worth more than a late model if that early model is low time and expertly upgraded. Just over 12% of all Beech 58 Barons remain on the market in November. 15% of the 58P Barons are for sale. 14% of the Cessna 421Bs, and more than 19% of the 421Cs can be bought. If you've always wanted a twin, now is the time.

Turboprops
Finally, some good news. Beech King Air B200s and Conquest IIs have sold down to below the magic 10% mark - the point that traditionally divides the buyers' market from the sellers' market. Less than 7% of the B200s are for sale, as are about 9% of the Conquest IIs. This is one of those spot shortages. We have not seen actual selling prices increase significantly in any market. However, at this writing, there is slight upward pressure in the mid to late 1980s B200s. Early model straight King Air 200s remain very plentiful with 17%, on the market. Prices are generally flat for most turboprops. Real buyers are not having any trouble finding an airplane. 14% of the King Air C90s are available. 14% of the Cheyenne IIs are for sale, and 12% of the Twin Commander 690Bs.

Jets
Though not a requirement until January 2005, RVSM is having an impact on all but the newest jets right now. Buyers in most cases are deducting for no RVSM. Therefore, most jets in Vref are depicted with RVSM. The deduction for no RVSM ranges from a $25k service bulletin for some very late model airplanes, to more than $300k for older ones. We have included price ranges on many jets, but certification will vary depending on type of autopilot and other factors. It may be necessary to get a quote on each serial number. For many early generation (non-fan, non-digital) airplanes, this is another step closer to the grave.

Prices appear to be 'off the bottom' as the upper end of the market continues to stabilize. Many, if not most, of the sales continue to be price driven, because of the ongoing oversupply of airplanes. Activity is improving, and a few areas are actually tightening up. Late model CJs and CJ1s are drying up, and prices are up. Late model Falcon 50s have brought some very strong prices. Less than 5% of the Gulfstream IVSPs are for sale, and asking prices for the later serial numbers reflect the scarcity. The availability numbers listed below are from early November 2003. In most of these markets, the number for sale is down about one percentage point from the previous month - a very welcome trend. This has not yet reversed the downward price trend, but it has definitely put the brakes on it.

*Percentage of fleet for sale is per Jetnet. See www.Jetnet.com

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

Have a Happy Holiday Season!

©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