Don't Buy A
Cheap Plane Cheap, Buy A Great Plane Cheap
by Jay Mesinger
market is on the rise we often speak of glass ceilings. You
know, that invisible top price that no one could ever
imagine any pre-owned aircraft could go above. Then it does.
We as aircraft professionals watched with amazement as the
market in the late 90's and early 2000's kept moving up,
redefining the top. Is there any more predictability in the
bottom of the preowned market? I thought I would look at
several indicators of the overall pre-owned fleet and try to
identify those components that effect or create the best
In an up
market it is easy to set the glass ceiling. It is the price
of the new aircraft from the factory. Believe it or not, in
a rich demand, low supply market, just sheer availability of
like-new aircraft created upward pressure against the glass
ceiling. In some cases people paid more for a like-new
aircraft than they did for the brand new one. So the low
time newest planes had a value that was either defined by
the new aircraft from the factory, or worse, created the
starting point for the value of the like-new plane. In fact
Bluebook, Price Digest has a special pricing consideration
for what they call a "Prime Condition Adjustment".
This adjustment gives between a 5% and 25% advantage to
those aircraft against the rest of the aircraft in that
segment. The advantage is somewhat subjective, however, it
is clear that a greater value is given to what is considered
to be the aircraft just driven on Sunday to church. Low time
against the fleet, great avionics and great aesthetics. So
there is even a danger of buying a cheap plane for too much!
But those are not the kinds of problems buyers are facing in
the current market environment.
So much for
an up market. Now letís talk about the current market.
When I look at aircraft to buy for my clients I use several
criteria. First I look at the total percent of the fleet
that is for sale. This helps me determine the vulnerability
of any given segment. For instance, as of this writing, I
looked at the King Air 200 market. Currently there is 17% of
the fleet for sale. In the Citation II market there is 16%
of the fleet for sale. That is huge. In fact in all segments
of the market, supply is at an all time high. Pretty
how do you find a great plane in all this supply? It can
almost seem as though you are a kid in a candy store. Ever
come out of a candy store as a kid and all you had was a
stomachache? Now back to the aircraft market. Read the ads,
"My owner says we will be the next one to sell",
"Must sell by year end", "Best offer this
week". Of course this is the part in my article were I
suggest the help of a skilled aircraft professional! One
must know that success should be inevitable for the buyer.
But do not measure success on price alone. Buy the best
plane cheap. Here are the ways we separate the aircraft that
are for sale to make sure we are getting the best.
at least a minute, don't look at price; look only at
benefits. Lowest time, best avionics, best pedigree, best
records and as long as we are setting the bench marks, no
damage. As I mentioned earlier in this article, in a
favorable market these benefits would cause the aircraft to
have a greater value based on the "Prime Condition
Adjustment" from Bluebook. In this market it is the
true separator between buying a "Cheap" plane
cheap or a "Great" plane cheap. There should be no
reason to pay an adjusted up value for these benefits.
those aircraft that make that cut and begin to build your
matrix down. Maybe the lowest time is out of your budget.
That is OK, so one should work down through the fleet as
follows. Determine the average time on the fleet segment you
are reviewing. If you cannot afford the lowest time, highest
serial number, then shoot for average time. Most aircraft
have an average use per year of about 350 hrs. This of
course can vary and does tend to be higher as you move into
the jets and then higher again into the larger jets.
Now look at
the age range of the aircraft you are reviewing. If it is a
10- year old plane, the average time should be between 3,500
hrs. to 5,000 hrs. depending on the previous criteria. So
try to buy around average. One might decide to go a little
above average if that number is in close proximity to
overhaul expense. Better to try not to pay retail dollars
for an aircraft that just had full overhauls that you may
never take advantage of during your ownership. So maybe you
will find an aircraft with 500 to 1,000 hrs. since overhaul.
Albeit a little above average time, it is a better value I
applies for buying under the average. Unless the buy
opportunity considers the full cost of impending overhauls,
don't make that expense yours. Therefore, plan to buy a
plane with at least two years of your average use before
addressing the hot section or overhaul expense. Looking
ahead at noise or regulatory considerations can also help
you decide about even buying into that fleet segment at all.
So now to
wrap up. Go at this with: eyes open, a skilled aircraft
professional at your side, while trying to spend as few
retail dollars as you can by taking advantage of a plane the
past owner has made all or most of the improvements that you
would want done. Don't be distracted by price (at least at
first) and be ready to say NO to a seller that does not
fully understand the market forces. Remember a saying I use
all the time. If it were the last plane to sell I would be
out of business when it sells. There is always another
opportunity to buy a great plane cheap!
Jay Mesinger is the CEO of J. Mesinger Corporate
Jet Sales, Inc. He is on the NBAA Board of Directors
and is Vice Chairman of the AMAC. Additionally, he
served on the Duncan Aviation Customer Advisory
Board for two terms, is a member of MEBAA, EBAA
and is associated with IBAC.