Much has been discussed and written regarding falling aircraft prices as of late. Prices are decreasing and supply is increasing in most markets, but there are other factors at play that can affect the value of your aircraft when you bring it to the market. Before you are surprised during price negotiations, there are a few aspects to consider regarding your aircraft.
An obvious factor to consider is the hours and age of your aircraft. High time and older aircraft equal less value. In regards to aircraft hours, it is not a straight line depreciation. There is a subjective point that varies with each aircraft model where a certain amount of hours is exceeded and depreciation starts to rapidly increase. For example, if depreciation is around $300 per hour on your aircraft, but then it hits a certain amount of time that pushes it into the very high time bracket, you could now see depreciation at $600-$800 per hour. Buyers are very reluctant to look at high time aircraft, mainly because there are so many aircraft on the market with low to mid-range hours. Many buyers will simply not consider aircraft over a certain amount of hours, and buyers who will consider them will require a significant discount. You can still find buyers for high time aircraft, but be prepared for a much lower market price and longer resale time.
Regarding the age of your aircraft, older year models typically follow a more straight line depreciation model from the newer ones, making their impact on market value slightly different and more predictable than the airframe hours.
Sellers – discuss the specific times and cycles of your aircraft with your broker to be prepared for any price considerations that may be necessary.
Similarly, if you are looking to buy an aircraft, high time or an older vintage does not mean a bad aircraft. From a technical perspective they still perform to the same standards as newer aircraft, and they can present a great value opportunity providing they are priced accordingly.