2004 Volume 3

MARKET LEADER™

Synopsis

After a spike in activity and prices during the first half of this year, the used aircraft market has entered a plateau phase. This leveling out is not too surprising when we consider it is an election year. The 24/7 news media seems to crave the sensational, which means convincing the audience of impending doom. Plus, many airplanes in summertime tend to have the demand of a snowmobile in Alabama. 

All of the above matters relatively little. Buying activity and price strength (and the election) is based on - The Economy. And, for the past few weeks economic news has been mixed. It is very difficult to determine if we have really 'turned the corner.' We did additional research to find out which airplanes have had two or more quarters of price gains. Some might call that a trend.

Piston Singles

Activity in the smaller singles continues to keep inventory levels under control. Dealers report that there is good demand for airplanes with fixed gear and safely under $100k. That partially explains why there is only one airplane with retractable gear on the list below. There are buyers for Bonanzas, Saratogas and other complex singles. However, high availability is keeping the buyers picky. Closing times are unusually high, sometimes 5 to 8 weeks. Gee Whiz radios such as glass panels and weather data link keeps the interest very high. Has the single engine market turned the corner? The bottom half has, at least.

• Tiger AG5B
• Beech Sundowner
• Early Cessna 172
• Cessna Fixed Gear Cardinal
• Cessna 180
• Cessna 185
• Piper Super Cub
• Piper Comanche 250
• Piper Cherokee 180

Piston Twins
The list of twins with two or more quarters of price increases is very short - Piper Twin Comanches and early model Senecas. There is slight upward pressure on later model 58 Barons, Cessna 310s and a select few Cessna 421s, but they have to be perfect. Operating costs and economic jitters keep prices flat. There is no turning the corner here, just happy to not be dropping . Dukes, 55 Barons and Navajos appear to be holding.

Turboprops
The Beech King Air market remains hot. Only F90s, B200s, 300s and 350s posted increases two quarters in a row. In a down market, sellers have to learn to just let it go - they are not going to get what they paid. In the King Air markets right now, buyers are being told, 'you can't buy one for that.' Prices for the good airplanes have steadily ramped up during the past 6 months. Piper Cheyennes and Cessna Conquests are expected to follow the King Airs. Shoppers in the Conquest and Cheyenne markets are beginning to see some of the deals slip away. Has the turboprop market turned the corner? It has, and that is expected to become more apparent if the economy doesn't falter too much.

Jets
The tire kickers have left the building. Late generation jets have turned the corner and moved up sharply. Though activity is not quite as brisk as the first few months of the year, prices for most jets remain strong. On the larger airplanes, availability, or lack thereof, can cause huge price swings. Some continue to move up in value, but the increases are small compared to last quarter. Traditionally, there is an adjustment period when prices make a big move: Sellers have to adjust on the way down - now buyers are adjusting on the way up. The bar is very high in the turbine marketplace. RVSM, TCAS II and TAWS is now the standard on all but the oldest jets. Those without are being penalized. The fact that there is a market for older Falcon 20s, Hawker 1As & 3As, Lear 20 series, or Sabre 40s is incredible, and a tribute to those airplanes. Like new Bravos, Lear 45s, and Hawker 800XPs that meet 2005 requirements today, make anything less a tough sell.

• Challenger 604
• Global Express
• Cessna CitationJet
• Early Citation Bravos
• Falcon 2000
• Falcon 50
• AstraJet
• Gulfstream G200
• Gulfstream GIVSP
• Learjet 45

An Open Letter To All Manufacturers:

For your own protection, a serial number/model year policy is needed. Unlike the automobile industry, aviation has no standard for determining model year. When each airplane leaves the factory, that first buyer thinks he or she is buying a certain year model. However, several years down the road when that airplane is sold or traded in, year model is often not so easy to define. Is year model based on original airworthiness date, completion date, delivery date, or something else entirely? An industry standard would be easy to establish. The General Aviation Manufacturers Association or other organization such as NBAA could help. At the very least, each manufacturer should have a company policy that is used for determining the year model of each serial number. Anything that heads off potential litigation is probably worth the effort.

©2004 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