Ok, I'll bite

Chip - you said before and I liked the concept - that the best deal was one problem aircraft. Engines needed overhaul but paint/panel was fine, etc.

Is the new normal making it viable to take 2,3....16 problem aircraft and fix them. Does it make sense to buy an airframe without corrosion and take it down to the studs?

Right. So can it make sense now to buy a basket case?

Right. So can it make sense now to buy a basket case?

Sorry, but zero chance of that. Watch how fast the airplane prices drop when the easy loans and real estate drops. It's already happening in RE, planes are closely tied.

Sorry, but zero chance of that. Watch how fast the airplane prices drop when the easy loans and real estate drops. It's already happening in RE, planes are closely tied.

Yes, lumber and steel prices are dropping by up to 70% the last couple of months. Unfortunately, they have gone up by 400% since last January, the supply chain is still a disaster and there are no signs this is going to change much in the near future. Pretty much everything we are experiencing now that has changed since Covid is the new normal to some degree. We are not going back boys and girls. It is what it is.

As a counterpoint ... there are a lot of tired airframes out there that can easily be rescued with money. No one has spent said money because it isn't profitable to sell $11 widgets for $10. And yes some of these hangar queens are $27 widgets, but when widgets go to $13 ... people WILL start making them for $11.

I am not mad at anyone hereon, but there are lots of opinions being expressed that I simply do not agree with. Arguing is pointless.

I respect Chip, he was even nice enough to help out a friend who was handling a bankruptcy that included a Citation only for my asking and no fee. His advice was spot on. I have read his every word and see much good advice as with others, but this is not a new normal by a long stretch in any market. This is a very unusual set of events brought on by the introduction of a new disease and a very poor response by our government sugar daddies.

Throughout this "crisis", people have pointed to specific areas of the economy and interpreted it to be representative of the whole; real estate being the most prominent. It is not. Making a forecast because there is a rush on real estate in Coeur d 'alene and applying it to Meridien, MS, or Auburn, Al, is just silly. The same applies to airplanes. The majority of models of airplanes have only been affected in one way by this buying frenzy. It has driven up asking prices of airplanes that, just like before, are still just going to sit.

Holding all these "predictions" accountable will be easy. Reread this thread in 18 months. In the meantime, look right here on BT in the "For Sale" thread. Those offerings are mostly over priced and languishing.

In the mean time, be very cautious about buying any airplane at any price that needs work or upgrades. The shops have a backlog of work and, rememberer, if only one item of 15 needed to finish a product upgrade is lacking, the whole process will be on hold.

But please, keep offering those opinions. I assure you that I read them with great respect and figure I learn a lot more from those who disagree with me than those who agree.

Jg

I’m just not seeing the overpriced airplanes sit, I’m seeing them sell. I suspect it is that we’re talking apples and figs.

It sounds arrogant for me to keep saying “jets” or “turbines” but that’s all I’m exposed to. I do have a new client that has hired is to buy a Caravan, he’s upgrading from a Cessna T206H, he says he overpaid when he bought it, now he’ll sell it for a profit after flying it for several years, but that is the extent of my recent piston experience.

It is true that no one is rescuing Westwinds and Hawker 700A’s out of the boneyard, the airplanes are just not feasible.

The most challenging part of my job, next to finding airplanes for our clients, is giving them solid advice. This forum allows me to broaden that to folks I may never talk to. My desire is to help turbine aircraft buyers, no matter if they hire us or not.

I have my fingers on the pulse, I’ve been advising all of our clients and prospective clients to move quickly since August of last year. There’s a lot of really good buys that I could brag about. We may still get lucky, but right now knowing the market and not missing an opportunity is the key.

P.S. don’t pay the stupid price.

Turnkey aircraft of all kinds are selling fast. In some cases, in a matter of hours. That means the market is VERY tight.

Anecdotally speaking, I'm starting to see more "less than turnkey" aircraft being worked on at my field. For example, a Sierra moved into a shade hangar around from me. In my 34 years of flying GA, it is the finest example of a Muskateer that I have ever seen. New paint, new interior, new prop, new avionics. It's better than new. While I love Mice of all varieties, it's hardly the top of your typical buyers list unless they're specifically looking for one.

There is also a Cherokee and an Arrow that both look like they've seen recent, serious rehabbing.

That means the cost/reward equation of rehabbing old aircraft is changing, at least to some degree.

Best,
Rich

Or the cost of those eddy current inspections on the wing spars are necessitating polishing up the pipers

I’ll add this here, though it could go on JGG’s thread about brokers. I talk to brokers, listing agents and stocking aircraft dealers, all day almost every day. These guys are concerned, some have nothing to sell at all. I’m not referring to a newbie who jumped in over the last few years, many of those guys will go back to selling whatever they sold prior to airplanes. I’m talking about guys who work for big companies, guys who have been in this industry for 30 and 40 years. They have nothing to sell.

I think there’s a perception that the market is hot, or that it is a seller’s market… it’s neither. It’s just a crazy market with lower inventory levels than anyone has ever seen, this causes owners to sell their airplanes without listing them. It means they don’t trade them in on a new airplane. I’m glad to be on the buyer’s side, my friends on the selling side are really starting to feel the pinch.

Chip, can you put a number on the price premium today vs 12 mos ago? Judging by Controller, inventory certainly very tight. Total market supply (new + used) certainly squeezed by both increased demand as well as new supply limited by production cutbacks in 2020, and ramp up issues in 2021. Am guessing that in most instances the premium is only 10%-15% vs 12 mos ago. Bigger difference is limit in supply and velocity of supply, (i.e., fewer Days on Market).

But what is the real premium? Is it 10%, is it 30%?
Does it vary by platform or class of aircraft?

But that is THE question. Look at the sugar that is winding its way through Congress right now. Do you believe that is the end? What if the new normal is perpetual government sugar? Does that change your view? If there is a never-ending flow of freshly printed dollars chasing goods that are being produced at a (much) slower rate than dollars are being printed?

We have had 40 years of deflation. Interest rates have never been this low in recorded history. Many smart people believe that we have turned a corner and are now entering an inflationary regime. This changes the math for nearly everything we do.

Of course, there are many smart people on the other side that see the deflationary forces of aging demographics, improvements in technology, etc that will reassert after the current bout of transitory inflation.

I don't know which way it will break and we could certainly have a bout of deflation in financial assets in the short term and then inflation or vice-versa. But I am slowly moving my assets to bet on the first one, mostly because I have exactly zero faith in government any more. Spending has skyrocketed regardless of the party in power. I don't see that changing any time soon. This path has been walked by every empire in the history of humanity and it always ends the same way. We seem immune to learning from the past.

Great thread and perspectives! Just a couple observations before I go back to the popcorn...

1. Manufacturers do make nice, new starter airplanes ... they are just called "Light Sport Aircraft." They are not certified and only 2 seats. Many are slow and STOL but some (like the Tecnam, CT and Bristell) are roomy and reasonably quick (172 speeds at altitude). Some of them are pretty damn nice - especially in Europe. Once the regs are revised slightly here, you might see some of those speedy 2-seat retracts with nice interiors here in the US that we ogled at OSH as LSAs. Not everyone's cup of tea and they don't fit every mission but if I was looking for a new starter plane and 2 seats worked for me, I'd definitely consider one. And I am not even counting E/AB aircraft (Vans, etc.) in the starter market because that's a bit of a niche IMO.

2. The future will hold what it holds. Congress will do what it does. And the effects of all that will be what they will be. I don't think anyone here knows what the economic cycle will bring except that eventually, all things cycle back down.

3. There are different segments to this market and they are responding differently. Turbines are different than pistons. Used aircraft fall into several categories - late model, last 20 years, older ... you pick. But they are not all equally hot and prices are not moving equally. Someone way up the thread said that 75% of used aircraft are not participating in this surge and that poster may be right.

And Chip, the guys that manage my airplane just bought their third Westwind which they put on charter - we share hangar space with them. They have a 4th which they use for parts they can't otherwise find. They are making that airframe work ... it's been their shtick for a while but it takes some dedication!

Cheers