That’s a nice old KA. Problem is folks who can afford to operate it can also afford to spend a lot more on the “admission” ticket. Thus, it’s market is actually shopping a little higher up the food chain.

That’s a nice old KA. Problem is folks who can afford to operate it can also afford to spend a lot more on the “admission” ticket. Thus, it’s market is actually shopping a little higher up the food chain.

Yes, it was a well-sorted B90......but I agree with you......those that can......are going up the chain, even one more generation, to buy a more marketable airframe, if they should need to bail out of ownership later.

This is a 'perception is reality' problem, really. People "not in the aviation know", do not realize that older doesn't necessarily mean bad. For example, we had a long time charter customer that used our 1985 Lear 55 almost exclusively.......but it made a "noise" one flight, and the passengers freaked out. We ended up putting them into their own Lear 45......20+ years "newer", and it didn't make noises. Perception. It's reality.

The perception of that B90, to most, was probably more than the potential buyers reality could stomach.

I'm glad it has found a home!

YMMV

KAs are nothing to joke about Chip!!

(think you meant "gist").

Those of us who invest the time to "know" things can then find really great deals on very capable aircraft as the herd looks elsewhere.

Buying a market disfavored airplane means you invested less money, spent less on sales and property taxes, have less costly insurance, and other benefits. Also, since the type is less favored, you are more likely to find surplus parts for it as airframes get retired from service. This leads to less costly maintenance.

Just about every airplane I have owned changed categories from a market dud to a hot property during my ownership. This was particularly true for the MU2 and now my C560V.

I could probably sell my Citation V right now and get back every penny I ever spent on aviation for the last 35 years. But I won't! I got this far and I'm keeping it!

Mike C.

Those of us who invest the time to "know" things can then find really great deals on very capable aircraft as the herd looks elsewhere.

Buying a market disfavored airplane means you invested less money, spent less on sales and property taxes, have less costly insurance, and other benefits. Also, since the type is less favored, you are more likely to find surplus parts for it as airframes get retired from service. This leads to less costly maintenance.

Just about every airplane I have owned changed categories from a market dud to a hot property during my ownership. This was particularly true for the MU2 and now my C560V.

I could probably sell my Citation V right now and get back every penny I ever spent on aviation for the last 35 years. But I won't! I got this far and I'm keeping it!

Mike C.

Yes.

The key is to analyze the airplane itself to see what it can do. The ones that delivery performance have a chance to rise up.

Another key is to analyze the ecosystem around the airplane. Just because a plane is not a market darling doesn't mean there isn't good support for it.

For my MU2, I bought it when it was under threat of grounding, they were cheap, they were odd. But it was very high performance, and it had really great support. So it came out of the doldrums and now they are sought after and hard to get.

For my C560, I bought it in late 2020 when people were dumping "older" jets. But it has great bones and a super ecosystem. So now I can sell it for 3 times what I paid for it (seriously). The airplane is fantastic, I wouldn't trade it for a CJ3, for example, because the CJ3 can't do what I can do.

If it performs and it is supported, it can be a good investment. Oddball, rare, low performance airplanes won't be.

Mike C.

Yes.

The key is to analyze the airplane itself to see what it can do. The ones that delivery performance have a chance to rise up.

Another key is to analyze the ecosystem around the airplane. Just because a plane is not a market darling doesn't mean there isn't good support for it.

For my MU2, I bought it when it was under threat of grounding, they were cheap, they were odd. But it was very high performance, and it had really great support. So it came out of the doldrums and now they are sought after and hard to get.

For my C560, I bought it in late 2020 when people were dumping "older" jets. But it has great bones and a super ecosystem. So now I can sell it for 3 times what I paid for it (seriously). The airplane is fantastic, I wouldn't trade it for a CJ3, for example, because the CJ3 can't do what I can do.

If it performs and it is supported, it can be a good investment. Oddball, rare, low performance airplanes won't be.

Mike C.

That could not be an further from the truth!!!!!

Seen any Sabre 65's selling lately? How about Jetstream 31's?

The misconception is that there's such a thing as an "aircraft market" when in fact there is not, there are dozens of aircraft markets that work pretty independent of each other, sure there's typically some correlation, but it is not one cohesive market.

The price of a used 172 and a new Gulfstream 650 have nothing to do with each other. One market can be up while the other is down.

When you look at my part of the market, which is business turboprops and jets, there is some cohesiveness, but it is still a bunch of sub-markets that make up the business aircraft market.

Not only will supply chain issues cause the perceived value of one airplane to drop, but that will cause the value of another airplane to rise as operators shift from the issue airpalne to the non-issue airpalne.

It's March 2, 2023 and the market seems to be shifting, or should I say some of the sub-markets seem to be shifting. We are starting to see inventory levels creep up ever so slightly.

We have definitely passed the peak, or at least a peak. The consensus in the industry seems to be that October / November 2022 was the peak. We are seeing less enthusiasm for many models of aircraft, and for the first time in a while, seeing decent airplanes sitting on Controller and not selling.

I think the next 60 - 90 days will present some opportunities for buyers, beyond that I expect we will get into another period of high demand and things will tighten back up. At the end of this year, Bonus Depreciation drops from 80% to 60%, I suspect that will drive buyers more than the drop from 100%, the reality is that 80% is still a lot and many buyers didn't claim more business use than that anyway. BUT... dropping to 60% is going to hurt.

It's important to factor in that as Bonus Deprecation sunsets, the absence will negatively effect available inventory and create another period of what I can only describe as "market constipation" meaning that things just aren't moving. The owners who took 80 or 100% depreciation won't be able to sell because they can't use the deprecation on the replacement aircraft to offset the recapture on the sale of the current, depreciated, aircraft.

I suspect that short of a major financial collapse, we will see inventory levels stay critically low for some time.

I think you're correct that the reduction in bonus depreciation is going to result in low inventory, resulting from the negative cash flow caused by full recapture on the old plane and only 20% (or 40% on double declining balance if that is still available) depreciation on the new plane. That is a pretty big disincentive to changing planes. While we've got plenty of market history without bonus depreciation, we had 1031 exchanges available at that time, but no longer.

Mike C

You are just a good salesman. Any model you buy will become popular and go up in value. LOL

You are an influencer. If I was a plane manufacturer I would give you a plane and have you promote it with your strong logic and engineering perspective. Sales would get great. Haha


Mike

Then buyers should be patient and hold off to see how big a dip this will be.


Why buy at or near the peak? That seems like the worst time if you can wait.


The drop from 100% to 80% is far more painful than it appears.

For example, someone can buy a plane in December. Fly it one hour on business. Now depreciate 100% of the plane as a business asset. As long as they maintain 50% or more business use following this, no recapture occurs. So 100% bonus depreciation allows this simple way to get 100% business use in the depreciation year. This little trick makes a big difference to someone who has mixed use, business and personal, which is fairly common.

If you only get 80% bonus depreciation, you won't likely get 100% business use the following year since you have to scale that year with business use versus personal use. This lowers your depreciation and thus you pay more taxes.

I don't think we will see any year frenzy like we have seen in past years due to this change.

Mike C.

On the piston side, inventories are still very tight, even in the "dead" piston twin arena. I don't see any functional difference between now and 6-12 months ago.

Best,
Rich

I think that's due to my analysis of best value airplanes. That is, I buy on the fundamentals. I don't follow the crowd. But once the value becomes apparent to others, the market price goes up.

I didn't really have anything to do with the Citation V market prices, however. They jumped WAY up before any of my influence could have had any effect. I do expect them to come down to "normal" levels in due time, however.


I wonder if the Pilatus PC-24 is any good? Hint, hint...

Mike C.