In our last post, we explored how AI tools have the potential to transform the aircraft appraisal industry. Today, we’ll focus specifically on how the Professional Aircraft Appraisal Organization (PAAO) incorporates these tools into its appraisal process—and why this matters.
This discussion isn’t about the fine-tuned decimal places of accuracy or orders of magnitude. After all, an appraisal is an opinion. What we’re talking about here is the effort to calculate a value estimate based on a wide array of market information, versus selectively choosing data to fit a particular narrative, which is both unethical and misleading.
The Role of Subjectivity in Aircraft Valuations
Having been involved in legal cases concerning aircraft appraisals, I’ve reviewed numerous reports. Some are well-written, others not so much. Understanding what these reports lack often highlights the value that AI brings to the table.
As mentioned, an appraisal is simply an opinion—neither inherently right nor wrong, but only as good as the support behind it. When clients hire appraisers, they typically expect a well-supported opinion of value in the form of an appraisal report.
The challenge for appraisers is to sift through the vast amount of data gathered during the field inspection and communicate it understandably, even to those with limited aircraft knowledge. Unfortunately, some appraisers never leave their office, review the aircraft’s logbooks, or inspect the airframe. Others might lack the training or seek a pre-determined result, which leads to a questionable and often an opinion of value that lacks credibility and believability.
In certain cases, it’s essential to understand the deeper impact of repairs following damage, how they affect the airframe’s value, and other factors that can be tricky to explain for those without a deep grasp of aircraft interrelationships.
How PAAO Appraisers Use AI Modeling
At the PAAO, appraisers use an engineering-based modeling approach to determine the value of an aircraft. Essentially, all appraisers rely on some form of modeling, whether they realize it or not. In our case, we start by stripping the aircraft down to its core airframe value. This requires removing key value points such as the value of the paint, interior, avionics, and the value of the engine overhaul.
The result is what we call the Computed Base Airframe Value—the value of the airframe itself. PAAO is the only organization that can accurately calculate this value because we take the time to do so, using our specialized training and methods. While other appraisers could calculate this value, many choose not to.
There’s a relationship between the airframe’s condition, its flight time, damage history, and the presence (or lack) of logbooks. All of these variables influence the value, and this relationship varies depending on the aircraft’s year, make, and model.
When an appraiser applies a simple flat percentage to the aircraft’s value, it’s often a sign they lack the knowledge or willingness to provide more detailed calculations. A flat percentage approach also impacts a number of value points that have nothing to do with the issue in question.
How AI Tools Enhance Aircraft Valuation
AI tools help refine this process by ensuring the model parameters are accurate. Historically, appraisers have relied on the aircraft’s original factory configuration for their estimates, but that’s increasingly outdated, especially as the general aviation fleet averages 50 years old. Avionics and engines—two of the biggest value drivers—are often upgraded after the aircraft leaves the factory.
But many valuation models don’t account for these upgrades, which skews the final figure. The Average Retail Value you see for a particular aircraft year/make/model is often based on assumptions about its original factory configuration. However, it’s rare to find an aircraft that still matches this factory setup after several decades of use.
For example, many older aircraft didn’t come with ADS-B (Automatic Dependent Surveillance-Broadcast) equipment, which is now required under FAA regulations. Has the Average Retail Value of these pre-2020 aircraft been updated to reflect the cost of ADS-B installations? Likely not. So how can we trust these static valuation figures?
The same applies to engine time, avionics upgrades, and the digital technology improvements that many aircraft have undergone. Using AI tools, we can analyze a large sample of aircraft data, providing a much clearer picture of what a typical aircraft looks like today versus its factory original.
Improving Market Analysis with AI
By analyzing the current configurations of aircraft, AI tools allow PAAO appraisers to offer more accurate valuations that reflect the real-world market. For example, we can track how many aircraft have upgraded avionics or different levels of engine time since overhaul (TSMOH), which provides more relevant and reliable valuation data.
These tools are crucial for understanding the ever-changing aviation marketplace. By handling much of the background analysis, AI frees our appraisers to focus on observations from their field inspections and less on the tedious calculations.
The aircraft market is constantly evolving, with new models and technology arriving every day. PAAO’s commitment to staying on top of these changes ensures that we provide the most accurate and credible aircraft valuations possible.
