Broker Gene Clow completed an analysis of the first quarter of 2017, and realized that the results for the first quarter of 2017 surpass the 4th quarter of 2016. Typically, the fourth quarter is the best quarter of the year.
A better fourth quarter than first quarter has not occurred in the business jet resale market in the past 30 years. 147 Aircraft were sold in the first quarter of 2017.
“There were a couple of surprises in the data for the first quarter of 2017. Big airplanes did so well, but there were surprises in the smaller airplanes. For example, the earlier versions (1981 through 1985) of the King Air B 200 are going up in value. These are 30 year old airplanes,” remarked Clow.
“Of course, any time we look at an airplane that’s five years old or less, the price is going down, because the warranties are expiring and the “new smell” is going away.”
He continues with the data that an eight-year-old airplane and continues through a 30-year-old airplane, and explains that it’s an inverted bell shaped curve as to how the deprecation schedule works. “So what’s happening is this – when they hit 30 years old, they’re starting to go back up in value again. And it’s not because they’re getting any better, it’s because the new ones are getting much more expensive.”
Someone looking for a King Air B 200 is going to either spend $800,000 for a 30-year-old airplane, or a $4.5 million for a new one.
The benefit of the new King Air is that it’s going to go about 20 knots faster. “Well, for $4 million I can slow down a little!” Clow chuckled.
Clow is surprised that some of the older Citations are starting to go up in value as well.
PC 12s, on the other hand, which have always been regarded as “the king of retaining value forever and ever,” are not doing so well. They’re not retaining their value like they used to. They’re not doing as badly as the new (less than 5 year old) vintages of the King Airs, but they’re not holding their value like they used to do.
The pricing differences are definitely size related. The mid-size jets are a smorgasbord. Hawkers are doing what Hawkers do, they fall fast.
About Great Circle Aircraft
Business and Corporate Aviation sales veteran Gene Clow founded Great Circle Aircraft in Renton, Washington, in 2009. Great Circle specializes in business aircraft transactions for clients on the West Coast, focusing on mission profiles and practicality of private air travel. His philosophy is driven by the reality that “The most expensive aircraft that you will ever own is the one that you can’t fly.”
SOURCE: Press Advantage [Link]
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