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.
My second mistake was that I didn’t hire an independent, Cardinal-knowledgeable mechanic to perform a pre-buy inspection. Instead, I simply spoke with the mechanic who had maintained the airplane for the seller and believed him when he told me everything was fine.
My third mistake was not having had any experience at the time in a Cardinal or even in an airplane with retractable gear or a controllable pitch propeller. I did fly the airplane with the seller’s instructor and made enough landings to learn how important it was to fly it by the numbers, but I wasn’t proficient or competent.
My final mistake was being under pressure to make my decision by the end of the vacation so we could fly the airplane back across the country from California to New York.
In the end, we bought the airplane and did fly it home, but the gear warning horn bleated the whole way, and at the first annual inspection a month after we got home, the mechanic told me I needed a new windshield since the outside air temperature gauge had caused a crack to begin to propagate.
Nevertheless, I was much luckier than I deserved to be. Over the next 24 years the Cardinal proved to have been a very good buy. But I had let my feelings overrule my intellect. “They say that falling in love is wonderful,” but not when it prevents you from doing due diligence and you’re about to fork over substantial funds.
This past spring, when the tables were turned and I was selling the Cardinal, the buyer did it correctly. She got recommendations for an independent mechanic and selected one who owned a Cardinal RG himself so he knew the airplane and what to look for. The inspection he performed took most of a day and was very thorough. Just as it should have been. And then, when she test-flew the airplane, she found what she considered a serious concern and successfully got me to adjust my asking price.
Cosby Stone, publisher of Trade-A-Plane, suggested the biggest mistake buyers make is bypassing a thorough pre-buy inspection. “The other mistake they make,” he said, “is failing to really evaluate what they want and what they need. We’re all a little bit unrealistic. Buying an airplane is the stuff of dreams, and we don’t always make the most practical or optimum choices when we’re in pursuit of a dream. Of course, I wouldn’t want people not to pursue their dream, but it should line up more with their ability, their budget and how they are really going to utilize an airplane.” Summing up the biggest mistakes buyers make, Stone said, “is being impatient, impulsive and unrealistic.”
A pre-purchase inspection helps to satisfy the caveat emptor (let the buyer beware) requirement in any purchase. The Cardinal Flyers Online website (cardinalflyers.com) has a very detailed pre-purchase inspection checklist that includes more than 70 items to review on the ground and another 13 to assess during the first flight. The pre-purchase checklist is available on the website to nonmembers of CFO and includes some good information for people buying other types of airplanes.
The pre-buy inspection, in addition to examining the physical airplane, should also include a careful review of the airframe, engine and propeller logbooks. The review should include searching for reports of repairs or alterations, compliance with airworthiness directives (ADs) and service bulletins and a record of all supplemental type certificates (STCs).
If there is a type club for the airplane you’re considering, it’ll pay to join even before you own the airplane, since it’s a great way to learn about the potential problems you might encounter with any used airplane, such as parts availability and mechanical as well as operational idiosyncrasies.
As a buyer you need to have an idea of what a reasonable price is for an airplane you’re considering. There are several sources of information for buyers about what to offer for an airplane. Trade-A-Plane (both print and online editions at trade-a-plane.com) is a good source of airplanes available for sale and information on what the sellers are asking. Vref (vrefpub.com) and the Aircraft Blue Book (aircraftbluebook.com) provide formulas for determining what airplanes should be selling for.
Trade-A-Plane‘s website, in addition to carrying classified ads of aircraft for sale, hosts data from the National Aircraft Appraisers Association in a section available to subscribers. The site includes aircraft value trends compiled by the NAAA as well as the e-Valu-ator, a calculator said to let users develop an accurate estimate of a particular aircraft’s value.
The aircraft evaluator sites arrive at the relative price of a particular airplane by adding or subtracting from a basic value depending on the time on the airframe, the time on the engine (how close to TBO, time between overhauls), the types of avionics, the condition of the interior furnishings, other equipment (deicing, air conditioning, oxygen, etc.) and the condition of the exterior paint.
The current market for used aircraft means buyers with a set budget will be able to afford more airplane than they would have in a healthier seller’s market. With the depressed prices, you might be able to get an airplane with a glass cockpit that in a “normal” market would have been a budget buster. A higher horsepower version of the type you’re considering may also now be within your range.
It’s true that when you buy an airplane for less than you might have had to pay in the past it puts more money in your pocket that you can then use to do more flying or to upgrade a less-than-modern panel. On the other hand, if you’re tempted by the market morass to buy a bigger airplane than you would normally be able to afford, you need to remember that more airplane will likely mean higher fuel consumption, higher insurance premiums and increased maintenance costs.
A recent Vref newsletter points out that there is some real value in an older airplane, such as “a Neanderthal cockpit in an unbelievably well-engineered, well-made airframe, which describes the typical 20-plus-year-old piston single.” It continues: “Thank you, Walter Beech, Clyde Cessna and William Piper for designing and building airplanes that outlived you all and will probably outlive most of us. True, many are in need of a digital makeover — to say the least. However, these old airplanes (which, if they were cars, could easily get a historical plate) represent some of the best values in the industry. For the price of a dolled up SUV, you can buy a nice Beech Sierra, a Cessna 182, an older 210 or Mooney Ranger, a Piper Archer, an Arrow or half a new LSA. Any of these will easily travel twice as fast as a Cadillac Escalade, and you might be able to avoid that center seat on Continental or United Airlines a little more often.”
However, buyers have to discriminate. Economic difficulties, which may have been the reason for putting an airplane on the market, may have curtailed the owner’s use of the airplane and encouraged the postponement of some maintenance items.
They say that every cloud has a silver lining. Today the silver lining of the cloud of the economic environment that is depressing the used-airplane market for sellers is an improved market for buyers looking for good deals. Winter is a good time to buy because sellers aren’t using their airplanes as much and are looking to get out from under the expense of hangars and other costs. But remember, if it sounds too good to be true, it probably is.
I’m sorry if you’re a seller, but it might help to remember that historically the general aviation market has been cyclical and it will come back. But for now, it’s a great time to be a buyer!
