Why Maintenance Does Not Increase the Value of Your Jet

Why Maintenance Does Not Increase the Value of Your Jet

All aircraft must go through different hourly and calendar inspections, and many of these maintenance events can be very expensive. The majority of the cost will most likely come from repairing defects found during these inspections. It can be tempting to think this will result in a reimbursement of those costs through a higher resale price. However, required maintenance merely keeps an aircraft airworthy and is not a voluntary use of capital. If you did not do the required maintenance or inspections, your aircraft would be unable to fly. Aircraft are valued as airworthy assets which is inclusive of all required maintenance being completed and defects rectified. Most buyers will not view fixing defects as increasing value, but simply bringing the aircraft back up to standard.
Without completing the required maintenance, your aircraft will definitely be less valuable. A buyer will have to account for the risk premium of completing the work themselves after the sale including down time and costs of unknown findings while the maintenance takes place.
In some circumstances, particularly around infrequent or major events like a 10 or 12 year inspection, a small minority portion of the cost may be recovered in resale due to a convenience factor. However, the convenience factor quickly fades as time passes.
The overwhelming majority of required maintenance will not increase the value of your aircraft, but its completion will make it more desirable.
If your aircraft has a market value at 5 million dollars, for example, and 500,000 dollars is spent on maintenance, then it is tempting to think your aircraft will be worth 5.5 million dollars. Your aircraft will without a doubt be more sellable, but the expense will not be recouped during resale.
A jet for sale that has recently completed a major inspection will be favoured over one that has the inspection coming due in the near-term future. Performing required maintenance allows your aircraft to continue being airworthy while potentially decreasing your days on market. Each extra day of ownership has a real cost (ongoing costs, crew salaries, hangar fees, programs, cost of tied up capital, etc.) that must be considered, and a faster resale time has a real, if hard to measure, value.