If you're looking for a bargain on a 30-year-old piston single with a run out engine, well then, you could be in luck; the prices are down and the inventory's up. It's a classic example of supply and demand.
But assessing the market for used (or if you prefer "pre-owned") piston singles is a lot like the blind men describing an elephant; it depends on what part of the beast you touch.
Essentially, there are two groups of airplanes, those that are BG (before the gap) and those that are AG (after the gap). The delivery gap began shortly after 1979. That year the industry delivered more than 18,000 airplanes. But by 1984, the total deliveries were less than 2,000, and the number continued to decline until 1994 when the General Aviation Revitalization Act (GARA) was passed to offer manufacturers protection from the specter of liability lawsuits. A dubious and minor milestone was reached in 1998 when after almost a decade and a half more new airplanes were delivered than any year since 1984. As a result of the hiatus in single-engine airplane production, the majority of the airplanes in the used market are in their 30s and 40s.
Since the desirability-and prices-are a function, among other factors, of an airplane's relative age, there can be a significant difference in the price of a BG airplane compared to the same model AG.
Vref, a company that tracks aircraft prices, compiled a "Complex Single Index" of the prices of a group of complex single airplanes (1982 Beech Sierra, 1990 A36 Bonanza, 1978 Cessna Cardinal, 1984 Cessna 182, 1984 Cessna 210N, 1990 Mooney M20M, 1990 Piper Arrow and 1990 Piper Saratoga). According to Vref, the peak of the aggregate value of the airplanes occurred in early 2001 when it reached something more than $170,000. Since then, the value has been on a downward slide and was only slightly more than $150,000 by March of 2006.
"The market is flooded and prices have been trending down," said Fletcher Aldredge, publisher of Vref, the aircraft value reference. "That [1999-2000] really was the peak in the prices for complex singles. There was a huge drop early on in 2001, and then there's been a more gradual drop since. Today, those airplanes are back at 1998 prices." Aldredge said that the cause of the downward trend is a combination of the competition from people buying new airplanes and, "at the other end, you could argue that some sales have been lost to the light-sport [aircraft] group."
The attractions of the light-sport aircraft, he explained, despite the fact "that you can't go anywhere in them," is that insurance is less expensive and that they are more efficient, which is a consideration since fuel prices went up after Katrina. "And," he added, "the older airplanes are darned expensive to maintain."
Most people, he said, aren't in a position to legitimately write off their airplane as a business expense. "So a guy who bought a Bonanza thinking he can use it to go from Kansas City to Dallas to do business and come home the same day can probably only do that a couple times a year. Unless he's a seasoned pilot with an instrument rating, most days he'll find he just can't make the trip."
In addition to the question of utility, Aldredge said, "there's the rising cost of ownership. People are deciding they don't have to have an airplane any more. On a 20- to 30-year-old airplane, every part you touch from the spinner to the rudder is going to have maintenance issues, from cracks in the spinner to corrosion in the rudder and everything in between."
You can probably buy a "cheap" Mooney or a Cessna 210 that's at the bottom of the barrel for $50,000, he said. "But it's going to need $25,000-plus in new radios; it's going to be close to TBO and need an overhaul; it'll need paint and a new interior and then there are all the ADs. Pretty soon you have more than $100,000 in it. When you start doing the arithmetic it's scary."
Aldredge said that the change in the market has been occurring over the last year or more but that "people are just now having the guts to talk about it. Many of the dealers are oblivious. For two decades, they could purchase an Archer for $100,000 and sell it for $120,000. You didn't have to be that smart," he said. "But from 2000 on you have to be pretty savvy to make money in the aircraft sales business."
According to Aldredge, "The least worst of the complex singles would be the ones that are cheapest to purchase and to operate. But if you jump up to a six-cylinder, turbocharged, pressurized airplane, that's like strikes one, two and three."
On the other hand, the basic singles are still finding buyers. "The four-cylinder, fixed-gear airplane market is still kind of flooded, and with less demand for training, other older airplanes are finding their way to the market. If a pilot wanted to fly five times a year and only spent $30,000 he wouldn't mind if the airplane sat most of the time, but if he spent $130,000 he'd feel, 'Golly I need to make this thing work.'
"But people with the disposable income," he said, "who show up in an $80,000 BMW, wouldn't even look at a 30-year-old airplane. They'll be looking at a Cirrus or Bonanza, but the question is what are they going to do with it? A 400- to 500-hour private pilot can have a ball on a good VFR day, but put him on a dark and stormy night and he really needs 3,000 hours."
Aldredge said, the problem that pilots-and the industry-are facing is the question, "Do I rent? Do I share? Or do I not do it at all."
Carl Janssens, senior appraiser with the Aircraft Bluebook-Price Digest, agreed that it's a buyer's market. "It's a great time to be buying an aircraft. The market for airplanes in less than excellent shape with more hours on the engine is soft, and those airplanes are selling at more of a discount. But if they're priced right, the older airplanes will eventually sell," he said. On the other hand late model airplanes are holding their own with normal depreciation. "High-performance airplanes that are well-equipped, with low-time engines and in excellent shape are moving," he said.
"Right now, the market [for buyers] is about as good as it gets," Janssens said. "There's more inventory because there are more companies putting out more aircraft than there were 10 years ago." The market's going to go through a cushioning to absorb that inventory, he added.
Janssens admitted that the market got "socked for awhile in April and May last spring and that got scary. I'm not sure what caused that burp but there is a market for everybody." He pointed out there are basically two classes of buyers. "There's the business slash personal-wealth type that can afford a $400,000- to $500,000-airplane but the bigger class of buyers out there aren't able to buy a half-a-million-dollar aircraft."
