2006 Volume 3

MARKET LEADER™

The Quarterly Newsletter of Vref - Used By Smart People Everywhere Since 1994!

Synopsis

Necessity is the mother of invention. If general aviation is to survive as a viable resource, it will have to be reinvented. Operating costs and government tariffs are perpetual threats. And lately, the cost of money is almost as big a topic as the price of fuel.

Indeed there are signs that aviation is evolving. Projects like Cessna's NGP (Next Generation Piston), Eclipse's VLJ, and the dozens of new LSAs (Light Sport Aircraft), might be just what the doctor ordered. The avionics revolution has already increased interest.

One of the most positive trends we've seen is the attempt at fractionalizing everything. Bulk fuel or co-oping, is being tried - almost everyone gets a discount of some kind. Also, owners are beginning to share airplanes. The fractional concept has long been successful in the jet market. Dealers are now seeing more people sharing light aircraft such as Beech Barons, Bonanzas, Twin Cessnas and Piper Navajos - on a local level, of course. This makes a lot of sense for two or three owners who only need to travel 100 hours per year.

Piston Singles

It's a buyers' market, at least in the older airplanes, but most sellers don't realize it yet. Normally, if it's a good, low time airplane with no blemishes, it's a quick sell. However, we are getting reports from dealers and owners that even the good airplanes are lost in a sea of complex singles. This may be more than just the summer doldrums - it could be a major long-term correction. Demand for pre-1980 vintage airplanes, especially if they are limping along with original radios, is shrinking. The gulf between an IFR panel consisting of a KX170 and ADF, and something with a new pair of GPS/Comms, is enormous. The KX170 or Cessna 300 equipped airplanes are perceived as having little more than a can with a string - it worked great in yesterday's tree house but not in today's used aircraft market.

Demand and price strength continue to favor the simpler, cheaper airplanes. Ownership costs are much more bearable for Citabrias, Huskys, Cessna 152s and Piper Cubs. Beech Sierras are flat; all Bonanzas down, new or old; Cessna Skyhawks too plentiful, Cardinals moved up; 182s and 182RGs slow, prices down; Cessna 210s & T210s down again; 206s unchanged, but prices firm; Commanders flat; Mooney market from older M20Bs through 201s flooded, stock/original ones a tough sell; late model M20Ks strong; big-engine Piper Comanches down; Warriors, Cherokee 180s and Archers flat; most Arrows down; Dakotas up; Cherokee Six ok unless it's runout; Lance and Saratogas, all down; Malibu prices holding; Mirage surprisingly strong.

Piston Twins

Finally, owners are getting realistic, lowering prices - the logjam might be breaking. The piston twin market remains the weakest segment. However, a few dealers report improved activity as buyers take advantage of some excellent deals. We'll say it again; if you have some traveling to do, piston twins are a best buy right now. The general trend continues down; Beech B55 Barons are reported 'dead as a hammer;' 58s moving as prices come down; P-Barons weak; older Cessna 310s soft, later model Twin Cessna prices stabilized; 421Cs up slightly; Piper Senecas & Aztecs down; Twin Comanches flat; Navajos & Chieftains unchanged. Appraise carefully! We've seen some 1967 Navajo owners who would be very happy to get $100k, while a low time, late model Chieftain, with new everything, can break $900k.

Turboprops

We are frequently asked about the new VLJ market and its impact on turboprops. Specifically, "Will my turboprop lose value when the VLJs become available?" At the moment, VLJs are not applying downward pressure on any market. Though more than 2,400 Eclipses have been ordered, it will be years before that quantity gets delivered. Some King Air or Pilatus shoppers will probably opt for a VLJ. Remember, it works the other way, too. Many people will stick with a turboprop for its size and useful load. Ultimately, we do think that the VLJ is going to be some competition for the turboprop market. In the distant future, airplanes like the single-engine Diamond D-Jet might even lure away a few piston twin buyers.

Stability best describes the turboprop market in the recent quarter. No big price changes detected. Beech King Airs continue strong. King Air C90s & 200s are stable, little price change; E90s & F90s up; 100s flat; King Air 300s are the strongest; 350s up also; Late model Cessna Caravans very hot; Conquest Is & IIs up; Merlins flat; Mitsubishis down again; Pilatus PC-12 up again; TBM700s good, but late models trending down; Cheyennes slow unless especially nice; Twin Commanders unchanged.

Jets

If you order a new Gulfstream G550 today, delivery won't happen until 2009. This, along with similar backlogs at Bombardier, Cessna and Falcon, is keeping the upper end jet market red hot. Most dealers we spoke with reported a slow start to the summer. As we go to press at summer's end, activity seems to be improving for just about everything except Stage 2 airplanes. Are prices correcting on some? Absolutely! But, overall the jet market remains the strongest segment. A good year-end is expected, but keep an eye on the terror situation and interest rates.

In the recent quarter, Beechjets and Premiers were flat; Cessna Citation Is soft, but no price change; Early CitationJets steady; CJ1s strong; CJ2+ and CJ3 positions selling at $300k+ premiums; Citation II has some activity; SII good; Early Bravos down; Citation V & Ultra no change; Encore prices down; Excel remains tight; Citation III, VI & VII slow, little activity; Sovereign very tight; Citation X up again; Bombardier Global Express is strong but no price increase; Challenger 300 up; 601-1A & 3A unchanged, 604s moving up due to backlog of new airplanes; Falcon 10s flat; Falcon 2000 peaked, trending down; Falcon 2000EX very tight, moving up; Falcon 50 stable; 50EX very strong; Falcon 900B some downward pressure; 900EX & 900C scarce, strong upward pressure; Good Astra activity, no price change; Gulfstream IV flooded, undergoing a market correction; IVSPs good activity, prices stable; GVs strong, late models up; G550 sellers' market; Westwinds sitting unless they're perfect; Lear 31A quiet, Lear 35A price driven, prices down; Lear 45s down; Lear 55s very quiet; Lear 60s down slightly; Jetstars, and other Stage 2s, dead; Mitsubishi Diamonds down; Hawker 800s a sharp correction; 800XP ok, but some downward pressure, ProLine 21 airplanes in demand; Sabre 65s unchanged.

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© 2006 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
• Vref 2005 Volume 3

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