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Recent news and events

JetNet recently released their analysis of the market through June of this year.  I have a tremendous amount of respect for the folks at JetNet and generally trust their information however I also think that they cast a very wide net in their analysis which can skew the results one way or another if one segment is doing exceptionally well.  As I review their market data related to specific segments (that most banking clients are dealing with day in and day out), a different picture emerges. 

The typical business jet market segment showed very little change for June and July.  Changes in the ASKING prices were in the single digit percentage range although there was a large (4.22%) increase in June over May.  The average number of days these aircraft are on the market has continued to grow as has the number of new aircraft on the market.  Five aircraft were also foreclosed on in June and two in July.  Interestingly enough there was one aircraft seized in June but this was not a U.S. registered bizjet.  JetNet indicates that sales were fairly low which probably coincides with the level of activity seen by most banking clients.  When looking at the NAAA data for both large and small bizjets, the values appear to be declining (still) for both segments.  Larger bizjets like the Lear 60 and G III show sharper declines in market value while the smaller bizjets such as the Citations show a more steady curve or slight decline in values.

Turboprops have a better story to tell because this segment appears to be more stable.  Data for June and July is limited from JetNet as this newsletter is written but there do not appear to be any large increases in asking prices or aircraft coming on or off the market.  Data from the NAAA continues to suggest that values are remaining fairly steady although some minor variations may be seen between models.

The piston twin market continues to have some positive trends.  JetNet data (albeit limited for this segment) shows a slight decline in inventories and market data from the NAAA shows a positive value trend for aircraft such as the 421C and Chieftain.  Smaller piston twins (non cabin class) appear to be somewhat steady in values but the more popular models appear to be showing a slight increase in market value - as would be expected.

Piston singles continue to show steady performance according to NAAA market data.  Of course the more popular and more recent models are commanding the higher prices.

You should note that each make and model is different and unique.  Any attempt to attach a broad overview to a specific make or model would be incorrect as some of these aircraft are doing better in the market than others.  If you have a specific question about the trend for a specific make, model or year, you will need to call 800-895-1382 for additional information.

GA Groups File Protest over Lightsquared

(From AVweb - with minor editing):  AOPA, GAMA, and Garmin added their comments to a roster of more than 2,700 recently to protest FCC plans that would allow LightSquared to broadcast over frequencies that would interfere with GPS signals. Garmin said the "laws of physics prevent the results LightSquared desires," adding that "no workable filters currently exist" that would eliminate the problems with LightSquared interference. AOPA and the General Aviation Manufacturers Association issued a joint commentary, strongly urging the FCC to rescind the conditional waiver it granted to LightSquared. "The evidence is clear: LightSquared's proposal puts the entire GPS system at risk," said AOPA President Craig Fuller in a news release. A recent FAA report also showed that the LightSquared plan would cost the aviation sector $70 billion over the next 10 years, and would "severely impact" NextGen.

The FAA assessment, according to The Wall Street Journal, also said LightSquared's plan could hurt U.S. leadership in international aviation by eroding confidence in commitments made to ICAO to maintain the GPS system's safety and availability. "Study after study has shown that LightSquared's plan is simply 'incompatible' with GPS," said AOPA's Fuller. "At the same time, the company's proposed solutions rely heavily on technology that doesn't exist. That's why we are joining with GAMA to ask the FCC to revoke LightSquared's waiver immediately, and to begin a rulemaking process that will protect the integrity of the GPS system into the future." The full text of all comments to the FCC regarding LightSquared can be found online at the FCC web site; insert Proceeding Number 11-109 to reach the list.

A Question for the Appraiser

Q:  Do you use the results from any publications in your appraisal reports?

A:  Any legitimate aircraft appraisal report should provide sufficient information to justify its value conclusions and this normally includes multiple sources of reference information.  Publications are used in many cases but not the way in which you might expect. 

The primary data and resource used by Plane Data, Inc. in the analysis is based on actual sales data which is what is reflected in the NAAA database.  NAAA data has proven to be accurate and reliable in many situations over the years and as a result, it continues to be the benchmark in my reporting and analysis.  Other sources of information include those aircraft that are currently "for sale" along with information from publications.

Over the years, I have found that no matter what level of analysis has been performed in the report itself, someone typically states - "well book X says this aircraft is worth $Y" without any real though or analysis of this information.  To that individual, the number printed in the book or obtained on line represents the value for all serial numbers impacted regardless of maintenance history, damage history, equipment or current condition of the airframe (it should be noted that the condition of the airframe is not addressed in ANY publication but is a critical value point) - or what may be found in any log book entries - or not found.  To properly address this concern and defend the opinion of value stated in the appraisal report, an analysis using book X is completed (typically over the phone) identifying the limitations of the evaluator's methods and the errors in the numbers from the publication.  

With this scenario in mind, many of my reports now include an analysis using book X.  The objective is not to lend creditably to any publication but to simply provide another data point in the overall analysis of the subject aircraft since many individuals do this type of analysis anyway and most complete the analysis incorrectly. 

Technically, no publication can legitimately be used to appraise a specific aircraft due to the publication's stated disclaimer.  If we set the disclaimer aside, there is still the issue of the airframe condition not being addressed.  If the publication's data is used as a general guide, as it was intended to be, the airframe may not be a critical factor but the objective is to focus on and evaluate a specific aircraft with very specific attributes.  Setting those situations (airframe rating and publication disclaimer) aside, many situations I run across in the analysis (about 30% or so), involved additional situations or attributes wherein publications cannot be used because they simply do not properly address damage history or missing log books or the impact of repairs on the condition of the airframe.  In those situations, "rules of thumb" or other methods are typically employed by the evaluator to arrive at a final opinion of value.  In other cases (single digit percentages), the data published is simply incorrect when compared with other independent, creditable information obtained from another source (such as the owner of a particular mod for example).  There are also errors introduced in the calculation of avionics and other equipment. 

As indicated earlier, a final result that is creditable can be challenging using the resources of the publication alone.  Without additional resources, the act of simply plugging numbers into a spreadsheet without understanding what is behind those number or key attributes about the subject aircraft can lead to erroneous results due to the many degrees of error introduced - typically overvaluing the subject aircraft.  Using a "rule of thumb" can also have unintended consequences and impact the aircraft's value unfairly - both now and in the future.

There are different approaches taken when appraising aircraft.  The most common is to force a specific aircraft to fit a model or average as depicted in a publication or on line.  Another approach starts with a "clean sheet of paper" and bases the final opinion on research and analysis - from multiple sources including the aircraft and its records. 

Which approach would you count on to best manage your risk when financing aircraft and which approach do you believe is more creditable and reliable?

Key Items to Note

 

Have Questions or need immediate assistance?

 

virtual office phone

 

other information

Call 800-895-1382 for more information or to see how Plane Data, Inc. can help you.