A trending question in aviation lately is…when will used aircraft prices go back down? After all, what goes up must come down, or does it?
After an astounding 2021, post-Covid aircraft values skyrocketed, and the used aircraft market is being compared to the housing market. The demand is high, inventory is low, and there doesn’t seem to be much let up from the consumer’s appetite to fly privately.
Aircraft sales and the volume of transactions are correlated to the available inventory; it’s essential to keep in mind that used aircraft prices depend on more than just one part of the economy; there are several issues at play, from interest rates to service centers having the physical room to take on pre-purchase inspections. The good news is that if you were waiting for the market peak to purchase, then you might be in luck as piston aircraft have likely reached their peak, which means potential buyers might be able to stretch their budget further than a year ago, but beware any likely savings in the asking price will probably be offset by higher interest rates, so your payment is not expected to go down. Those with cash will benefit the most.
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Why Used Airplane Prices Are So High & When You Can Expect Them To Decrease
Price escalations are reaching their peak, but what does this mean about upcoming used aircraft prices? VREF is anticipating a rather ho-hum 1st quarter of 2023, as most potential purchasers already own an aircraft. There is little reason to purchase in the coming months until there is a more precise economic direction. As we get closer to spring and flying season, piston aircraft sales will be back to pre-Covid levels and should remain pending any unknown economic issues.
Off-Market, What Does That Even Mean?
If you have been in the market for an aircraft, you probably noticed that not much inventory is making it to the classified pages these days. 2/3rds of the aircraft available for sale are done off-market. An off-market listing is one that only the brokerage community knows about, and for the most part, it’s the same as a listed aircraft in terms of the transaction, except the whole world doesn’t know about it. Why is this a big deal? If you wait for the unicorn aircraft to show up for sale, you have a better chance of buying a bridge. The only way to snatch up an in-demand newer aircraft is via a broker in the know. Think of an off-market listing as a pocket listing in real estate; these coveted listings are saved for genuine buyers with connections to those that control the buying and selling of a given market. In other words, when you want to get serious about buying a plane, find a a reputable broker, and start being in the know.
Aircraft Manufacturers All Have a Backlog
If your plan entails buying a new aircraft, do not be shocked to hear about the works backlog, as chances are you will be waiting many years for your new aircraft direct from the factory. While you may need or desire the latest and greatest technology, or factory support, pre-owned aircraft values in specific categories will continue to benefit for many years due to the new orders the factories are inundated with.
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Engine Programs or Preventive Maintenance?
You may see fewer aircraft owners enrolling in non-factory engine programs in the future. This is for a few reasons…
Manufacturers continue to create aircraft with engines that no longer require overhauls or, in many cases, push the TBO to 10,000 hours, giving them a definitive shelf life. The time between overhauls becomes the time between replacements. Like many Jet A piston engines, we are already starting to see a shift in how operators and owners manage the maintenance reserves. Furthermore, the real-time support the OEMs offer will be nearly impossible for a third party to offer much less match. If preventative maintenance is the future, a dynamic shift will occur in reserving for unknown or unscheduled events.
Safety, Efficiency & Going Green
As manufacturers focus less on speed and functionality, advanced features and fuel efficiency continue to push their way to the top of the priority list. As you browse the used aircraft market, don’t be surprised when you see older aircraft with central panels or other cockpit upgrades. A rising cost for newer aircraft means the competition is more fierce, encouraging used aircraft owners to upgrade what they have to get the most bang for their buck.
Keep in mind that any upgrades will factor into your future expected expenses when it comes to maintenance.
Trusted Partner Of The AOPA
Whether interested in a corporate, personal, or commercial aircraft, VREF is your go-to aviation appraisal destination. Ensuring your money is well-spent means investing in a reliable appraisal that gives you the facts to make an informed decision.
Don’t take the risk of buying blind. Reach out for an aircraft appraisal from VREF today.