The opening line of Charles Dickens' A Tale of Two Cities, "It was the best of times, it was the worst of times," is an apropos description of today's used-airplane market.
For buyers these are great times to be in the hunt for an airplane that's gotten some gentle use and good care. But for sellers, faced with an economic need to relinquish the airplane they've enjoyed and nurtured, often for years, the times aren't so good.
So, if you've been waiting for the right time to plunk down your hard-earned money for the airplane you've always dreamed of owning, this may be it. As a result of the slowdown in the economy, there are a lot of good — and some not so good — airplanes being put on the block.
Fletcher Aldridge, publisher of Vref (Value Reference at vrefpub.com), an aircraft evaluation service, remarked that some of the "nice stuff" in the piston market had had a bit of a bounce in average selling prices earlier this year. "The market was down in the deep dark depths about a year ago, but at the beginning of the year it was looking very hopeful. But now it's back into a very soft market."
To get a reasonable idea of what's happened to the market for a variety of airplanes, I went to vrefonline.com and checked several of the indices available to subscribers. The indices are based on the average selling prices for typically equipped airplanes.
I compared the market prices of three different groups of airplanes at the third quarter of 2006, 2008 and 2010. The first group includes the Grumman Tiger AA5B, the Beechcraft C23 Sundowner, the Cessna 172P and Cardinal 177 and the Piper Warrior and Archer. In 2006, the average retail price for the group was $62,000; by 2008 it had fallen to $52,000, and by the third quarter of 2010 the average price for the group was $47,000.
The second index is a compilation of the average selling prices of the Beechcraft Sierra and A36 Bonanza, the Cessna 177RG, 182 and 210N, the Mooney M20M and the Piper Arrow and Saratoga SP. In 2006 the average price was $151,000; by 2008 it had fallen to $135,000, and this year it is $119,000.
The third group includes the Beechcraft B55 Baron and 58 Baron, the Cessna 310R and the Piper Aztec and Seneca III. In 2006 the average retail price of the group was $222,800; in 2008 it was $198,000, and this year the price has dropped to $173,000.
It's obvious from these indices that if you're deciding whether to start the search for a good used airplane, the times probably won't get much better.
Highlighting some of the specific airplane types provides a graphic indication of the decline in the values of piston airplanes. For example, the value of a 1977 Mooney 201 M20J has dropped from $93,000 in 2001 to $67,000 this year. A Cardinal RG that was valued at $70,000 in 2001 is now at about $54,000. The 1976 Beech Bonanza A36 has dropped from $167,000 in 2001 to $114,000 this fall. A 1999 Cirrus SR20 was valued at $170,000 in 2003 and is now at $100,000. Even the higher performance 2001 Cirrus SR22, which has fallen in value from $260,000 in 2001 to $140,000, is now at a price that makes it a very attractive buy. In the latest Trade-A-Plane there were more than 10 pre-2004 SR22s for sale.
Price declines of the Cessna 182RG and Turbo 182RG are typical of the drop in value for some of the other higher performance singles. The 1978 182RG dropped from $110,000 in 2001 to $75,000 in 2010; the 1979 Turbo 182RG declined from $126,000 to $89,000 in the same time frame.
The numbers are a dramatic illustration of what's happened to the market and why these may be the best of times for buyers. But looking at the graphs, there's been a very slight uptick in the prices during the last three quarters in most of the aircraft types. The uptick is likely due to increased foreign sales activity from the BRIC — Brazil, Russia, India and China. It's hard to know if this is the beginning of a trend, but it could augur well for increasing prices. He who hesitates is lost — or at least may have to pay higher prices.
OK, you've decided it's time to make a long-held dream come true. How do you go about buying an airplane, which, except for your home, is likely the largest purchase you'll ever make?
Your first consideration should be to decide what general type of airplane will fulfill your typical mission. If you'll often fly alone around your local patch or to join flying buddies at a nearby airport for a hamburger, then a two-seat air knocker might well be sufficient. On the other hand, if you're planning long trips with your spouse and four kids, you'll probably want to look for a six-seat single or even a light twin.
As an illustration of how not to go about buying an airplane, let me recount the process through which we acquired our Cardinal RG in 1986. After six years in a Cessna 150 partnership, my partner and I decided it was time to move up, and we narrowed our search to either a Cardinal RG or a fixed-gear Cessna 182. To get an idea of what was available, I started our search with the listings in Trade-A-Plane. One thing I did do that was smart was to talk to my insurance broker to get an idea of whether the retractable gear would mean a higher premium. He assured me, "We wouldn't consider a Cardinal RG much different from a fixed-gear 172."
Talking to the insurance company is important. Depending on the airplane you're considering, the insurance company may require that you have a minimum number of hours in the airplane type or insist that you fly with a mentor pilot for a number of hours. A pilot I know who recently bought a turboprop version of the Cessna 210 was required to fly with a mentor pilot for 80 hours before being insured to fly the airplane solo. In the worst-case scenario, depending on your experience and the airplane type, you might not be able to get insurance at all. So early in your airplane acquisition efforts you should investigate the potential insurance constraints.
Back to how not to buy an airplane. During a two-week vacation in California, my wife, Judith, and I stopped for sushi at a restaurant next to Montgomery Field in San Diego. As we were leaving the restaurant, I noticed a Cardinal RG with a "for sale" banner on its propeller. "Isn't that the kind of airplane you're looking for?" Judith asked. It was. It was also love at first sight. I called the FBO and found out the price was well within our budget.
First mistake: I didn't dicker over the asking price. I should have. Asking prices historically are much higher than the selling price. In the current market climate, it's likely that a reasonable offer below the asking price will be accepted by the seller. The asking price is what the seller is hoping to get, but pressure to sell and problems that might be found during the pre-purchase inspection may reveal bargaining chips that will allow you to successfully get the seller to accept a lower price.