The business aviation industry has been put through the wringer lately. The global economic downturn followed by the vilification of executive use of business jets have been a one-two punch to an industry that is vital to the United States economy. The affect of these factors on private jet ownership has also been profound. If you’re an owner, can you place an accurate value on your aircraft with confidence? The economic turmoil has challenged the way owners, potential owners, financiers and brokers think about aircraft value. There is one principle that remains unchanged, however. Every business jet has a fundamental value.
Over the last 3 years, new business jets were selling above list price with a two year backlog. Buyers for used aircraft were paying 15% premiums over the cost new. The overpriced markets eroded the traditional equity base in aircraft. During the economic boon, many involved in the process of procuring an aircraft forgot the basic principle…every business jet has a fundamental value.
Now, fast forward to today. Due to the global downturn in the economy, we have an illiquid business jet market where aircraft can’t be sold quickly due to a lack of willing buyers. What has resulted is an increasing availability of aircraft and a sense of instability for owners, sellers, buyers and banks. But, even in this time of uncertainty, that basic principle still holds…every business jet has a fundamental value.
Whether or not you are considering buying, selling or financing an aircraft, knowing its value is crucial to ensure an accurate balance sheet. Mark-to-market accounting requires that assets, such as business jets, be carried at a realistic, current value rather than at the purchase price or some other value.
At AircraftPost, we have not forgotten the basic principle. Since 1999, AircraftPost has generated ‘real time’ value and provided detailed supporting data for owners, OEMs, and banks enabling better-informed, timely decisions for fiscal accountability.