When you decide to sell your aircraft, it will be competing for a potential buyer’s attention with many other aircraft of the same model. You need to have an idea of what the other serial numbers offer and how they are priced. Your aircraft will compete with these other serial numbers on a variety of levels.
When making a decision to purchase an aircraft, the price, total time, interior colours and condition, maintenance history, and installed avionics are just a few of the metrics that buyers measure between different serial numbers.
However, there is another level of competition to keep in mind that has grown more common as the recession in aircraft prices has continued: Competition between different aircraft models. As prices have reduced, there is a greater number of aircraft types available for relatively similar prices. A budget of up to $10 million USD now offers tremendous options to a buyer, a stark contrast to the more limited possibilities that existed in the 2006-2008 boom market. With so many aircraft at similar pricing levels, buyers are focusing more attention on multiple different types of aircraft, as opposed to just one.
Your aircraft will now be judged against broader differences such as larger cabins, longer range, more passenger capacity and lower operating costs that a similarly priced but completely different aircraft model may offer.
For instance, the Challenger 300 and Challenger 605 markets now offer similarly priced aircraft for roughly the same year model. The 605 experienced recent price declines, and similarly aged aircraft with equivalent hours are now trading at comparable prices to the Challenger 300. The 605 has a larger cabin, longer range and operating costs only about 10% higher than the Challenger 300. Many clients will be attracted by the extra features of the 605 and will want to explore the possibility of buying what is often considered an ‘upgrade’ to the Challenger 300 at a similar price point. As a seller of a Challenger 300, you must pay attention to the Challenger 605 market in addition to the Challenger 300. New entrants to the market, price reductions and recent sales in a completely different marketplace will now have an impact upon your own resale.
A similar situation exists between the Falcon 900LX and Falcon 7X markets. The Falcon 7X has over 1,000 miles more range, a larger cabin and operating costs within 10% of the 900LX. The 900LX is currently priced at levels that are identical to Falcon 7Xs with the same year model. For a similar price range, buyers will often opt for the longer range, bigger cabin aircraft. As an example of how this affects the market, in the last 12 months there have been zero 900LX transactions compared with 17 Falcon 7X transactions in the same period. As a 900LX seller, you should focus your price offering not just by other 900LXs, but also by the Falcon 7X. Buyers will certainly be aware of these prices and will be looking keenly at both.
Buyers are also looking across different aircraft models within the same category size. They look at the pricing of each model and which offers them the best value. For example, the Citation XLS has long competed with the Lear 60. Both are excellent mid-size aircraft with long operating histories and hundreds of each in service. However, in today’s market the XLS has a market price of about one million dollars more than a Lear 60 of the same year with similar equipment. While these are different aircraft types with their own strengths and weaknesses, many buyers approach the purchase process in terms of cabin size. And with the Lear 60 and the XLS being both mid-sized aircraft, they are grouped into the same purchaser’s search.
We often see potential buyers looking for a ‘mid-size’ cabin aircraft ask us to review the market for each aircraft in this category. After comparing each to what mission the client wants to achieve, typically we find that a couple of models will work for them, and the value proposition of each model becomes a key part of the decision making process. As a seller of an XLS keep in mind that large price declines in the Lear 60 market can lead some buyers away from your XLS, so your time to resell will increase. The Excel/XLS market is a vibrant market, but what happens in competing aircraft types can and will have an impact upon the days on market, and/or price, of a transaction.
What does this mean to you and how can you apply this? As a seller, you should pay attention to not just competing aircraft within your model, but of all types that would complete a similar or improved mission for a buyer. This means you will likely have to watch several types of different markets, see what is selling and try to understand why. Ask your broker to send you periodic market summaries or analysis of your market and competing aircraft markets. Are competing types presenting a more attractive value proposition to potential buyers? If so, work with your broker to find a unique proposition for your aircraft that can entice buyers back to it. It is easy to focus solely on other serial numbers in your model, but remember that buyers will be looking at several different types. When you purchased your aircraft, what other models did you consider? These will likely be the same models potential buyers for your aircraft are considering. Try to place yourself in the position of a buyer entering the market. The more you can adapt to what a potential buyer would consider, the more likely you can tailor your offering to attract their interest.
As a buyer, consider if multiple types of aircraft will accomplish your desired flight profiles. Quite often, there are several types of aircraft that will accomplish 90% of your needs. Each will have their own unique performance characteristic that gives it an edge in one particular facet (i.e.: whether that be more range, better short runway performance, larger cabin, higher payload capabilities, etc.) Understand your own flight profiles and what you actually need the aircraft to do. This will help you understand what types will suit your needs and where you should search. Keep looking for opportunities and market movements in different markets. Just because one market is active does not mean other markets are.
The main fact is that people are looking at where they can get the most value for their money. Buyers are often willing to purchase one of several types and are less focused on one particular brand. There are more options than ever in lower price ranges that allow them to consider aircraft they may have previously thought unattainable. More options mean more competition, and to achieve a sale you have to make your aircraft stand out.
For more information on how we can develop a custom aircraft search for you based on your specific desires and needs, contact our professionals at enquiries@colibriaircraft.com or +44 (0) 203 551 8007.
Articles are written from real world experience by Colibri Aircraft’s individuals. If you have any questions or comments about the topic of this blog, please feel free to contact us at enquiries@colibriaircraft.com
