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2005
Volume 3
MARKET LEADER™
 Synopsis
It’s no secret, the upper end of the jet market
is red hot, crazy – possibly as strong as it has ever
been. The only time in memory that might rival today was 1998
– a very different set of conditions. In 1998, we were
nearing the end (who knew?) of the most robust U. S. Economy
and stock market in history. Today, we appear to be in the
early stages of a moderate recovery. Plus, the world is a
very different place.
Many of us have wondered whether the market has recovered
its losses and returned to normal. In this edition of Market
Leader we compare the turnaround point at the end of 2003
to today. Most airplanes are recovering nicely, especially
the turbines. However, while activity is approaching normal,
in every case, prices remain well below the peak.
So, what is going on with the remainder of the market
– airplanes that burn avgas? While the average piston
single or twin is holding its own in value – the avionics
revolution is quickly establishing two separate classes of
airplanes – glass cockpits and other. Airplanes with
no updating – no gps/comm with a moving map - are getting
lost in the crowd. Not only are buyers not adding value for
a KX155 and an old DME or ADF, they view those items as something
that will eventually have to be yanked out and replaced. On
the other hand, low time, high performance singles with new
paint and new wall-to-wall radios are selling quickly at a
$50,000 premium. Cabin class twins with new glass cockpits
(and new P&I) can bring $100,000+ more than their non-updated
counterparts.
Piston
Singles
Activity
has been good for the ready-to-go airplanes. However, buyers
have been very unforgiving of any perceived flaw. Most are
not looking for a project. Cessna 172s, 182s (the newer the
better) are moving if priced right. The emphasis continues
to be on the simple aircraft – simple to insure and
simple to operate. In complex aircraft like Beech Bonanzas,
Cessna 210s and Piper Saratogas, avionics is becoming THE
most important selling point. While most still have KX170s
or Cessna 400 series radios, buyers want the latest moving
map with weather uplink – and are willing to pay for
it. The table below shows that light singles have done the
best since the recovery began in 2003. However, even the Cessna
172P remains nearly $10,000 below where it was in 2001.
Change in Value Since Fourth Quarter 2003
Beech A36 Bonanza 0%
Cessna 172P +10
Cessna 177B +7
Cessna 182 +2
Cessna 210N -1%
Mooney M20M -9
Piper Archer +2
Saratoga SP -1
Piston Twins
This segment continues to suffer the most due to rising
costs of operation. The only positives that we see are the
incredible bargains to be had. From Beechcraft Barons and
Dukes to Twin Commanders, there are good airplanes at great
prices. Older B55 Barons or Cessna 310s can be bought for
well below $100,000. Or, some buyers are opting for totally
refurbished Cessna 421Cs and Piper Chieftains for $600,000+.
These almost remanufactured airplanes have new everything,
including a radio package that is worthy of any jet.
Change in Value Since Fourth Quarter 2003
Beech B55 Baron -1%
Beech 58 Baron -1
Cessna 310R +2
Cessna 340A +2%
Cessna 421C +1
Piper Seneca III +1
Turboprops
Turboprops - - How much further can King Air B200 prices
go? The average B200 has gained 30% in value since the third
quarter of 2003. That is still about 8%, or $135,000, below
their high of 2000. No RVSM and reasonable operating costs
for shorter legs are keeping demand strong for just about
all airplanes in this segment. Buyers should be aware that
there is a huge range of condition out there. Values on a
$1,000,000 airplane can easily swing +/-$400,000 between rough
and runout to something with 0SOH and new P&I.
Change in Value Since Third Quarter 2003
Beech King Air C90A +9%
Beech King Air B200 +30
Cessna Conquest II +12
Jets
For the first time since 1998, there are more buyers than
late model jets. In some cases, it’s come down to who
can put up a real deposit first. Companies who have to ‘go
through channels’ or endure a lengthy check requisition
process risk losing the best airplanes. Despite recent very
healthy gains in the Challenger, Falcon and Gulfstream markets,
most jets are trading well below their record highs of 2000.
Astra SPs recouped 35% of their value since the bottom in
2003, but remain $1,850,000 below the peak. Challenger 601-3As
and Falcon 900Bs are both $4,200,000 short. And, even though
Gulfstream Vs gained more than $2,000,000 in the recent quarter,
they remain $5,000,000 below year 2000 prices. It’s
easy to see why many people feel that there is still a considerable
upside to this market.
While there is a severe shortage of large, late model jets,
the same is not true of older, out of production airplanes.
Lear 20 series are plentiful with way over 10% of the fleet
for sale. More than 20% of the Viper powered Hawkers (including
retrofits) are available. Surprisingly, 25% of the Citation
500/501s are looking for buyers. We expect the action to eventually
find its way to each fanjet, but most old turbojets have had
their day.
Change in Value Since Fourth Quarter 2003
Challenger 601-3A +12%
Cessna CJ +13
Cessna Citation II +7
Cessna Citation III 0
Learjet 31A +15
Learjet 60 +7
Falcon 50 +11%
Falcon 900B +23
Gulfstream Astra SP +35
Gulfstream IV +17
Gulfstream V +22
Hawker 800A 0
Thank You For Choosing Vref - The Smart Choice Since 1994!
© 2005 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
• Vref
2005 Volume 1
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