Have I Got a Deal for You!

The market for older used piston airplanes is in turmoil.

Prices of pre-owned aircraft are dropping.

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."

According to Janssens, "there's obviously more of a market for the older stuff. There's more inventory available out there." Cirrus building 600 airplanes a year, he said, is going to have an impact on the used market as those moving up from older airplanes buy Cirrus airplanes.

"What I see," Janssens added, "is that everything does sell. We're working on our winter book and all the prices are down but the market's not caving in. We just have to keep up with softer prices." As he explained, the ratio of what's selling to the business that's out there is causing the softening prices. There's more inventory to choose from but the buying market hasn't increased to meet the increase in inventory. The growing number of sales of new airplanes from the three C's (Cessna, Cirrus and Columbia) has increased the used inventory and the glut has an impact on value.

One reason Janssens said the market has been softening has to do with the price of avgas. "If you're on a limited budget, $4-gallon gas compared to $2 means that operating costs have increased significantly."

According to Janssens, "the real core buyer may dream about getting an airplane with a glass cockpit, but they'll settle for one with steam gauges. The older airplanes are reliable. They're just not the newest and greatest." While reliable-as long as everything's working-older aircraft can have lots of squawks. "With an older airplane, it's not like they'll nickel and dime you, but obviously an older airplane is going to cost more to maintain than a late model airplane."

The view of the used-market "elephant" from the point of view of a dealer is still different. The market that John Bartelt, president of Bartelt Aviation, sees is "sporadic, not slow." Bartelt said that his company is busy, "slammed actually." According to Bartelt, his company usually notches between 40 to 50 retail sales a year and "we're on track so this year won't be different from that range."

The market for 20-to 30-year-old airplanes is not going up or down, he said. "It's just sitting there. There is pressure from the late model market causing a 10 percent downward adjustment on the older airplanes because there's now more supply of new airplanes than there is demand."

There is a change in the buyers, though. "The guy who buys a $100,000 airplane and has it to fly to a second home at a lake is affected by $4 fuel prices. Those guys are getting out of the market."

Bartelt said his company is not typical. "We're like a management company that caters to high-end clients. They hire us for consulting, to evaluate what's available, to find an airplane, handle the pre-buy, negotiate the price, fix any discrepancies and arrange for any modifications. We're a one-stop shop and try to give the customer the attention they need to feel that they're our only customer. Our interest is in selling multiple airplanes to the same guy as they move up."

Bartelt feels strongly that individuals with little knowledge who want to buy an airplane should get professional help, "someone ethical and with integrity." A big issue, he said, is buyers not getting thorough mechanical and log book reviews. "We have a 12-page inspection list of things to check when buying a used airplane. After inspecting an airplane for a buyer, we come up with two lists. One is of things that should be addressed and the other is a list of un-airworthy or AD items that must be fixed." The biggest problem for first-time buyers, he said, is knowing how to evaluate an airplane. "They don't know what something's worth. They'll say, 'The Blue Book says this,' but they don't understand the importance of a mechanical evaluation."

Cosby Stone, with Trade-A-Plane, said that the slowness has been at the bottom of the market. "The little four-place Cessna and Piper singles with timed-out engines are hard to sell. But higher performance airplanes in good shape with good equipment are selling as long as the people don't flinch at $4 gas. But for those on a budget, the fuel price is pinching them, and they're thinking of finding another hobby."

The fuel price, Stone said, "is the Rosetta stone for understanding the situation. People with an IFR rating who want to fly and use a high-performance single are less put off by the fuel scenario then the guys flying 172s on weekends. That's where the current weakness is in the market. The last spike in fuel prices had a deleterious effect all across the market, but the top end of the single-engine market has been a lot more resilient than the rest of the market," he reported.

"It's hard to realize what vintage characters you and I are," Stone joked, "let alone realize that the airplanes from the production splurge in the late 1970s are coming up on 30 years. There are a lot of used airplanes of that vintage and the stuff that's out there is getting a little ragged."

If you are considering buying a used piston single, it's a good time. Unless, of course, the airplane is AG, well equipped, low time and well maintained. It's a buyer's market, Vref's Fletcher Aldredge insisted in his "Market Leader" newsletter, "at least in the older airplanes, but most sellers don't realize it yet. Normally, if it's a good low-time airplane with no blemishes, it's a quick sell. However, we are getting reports from dealers and owners that even the good airplanes are lost in a sea of complex singles resulting from small companies and owner pilots reevaluating their needs and trading down."

It seems there's been a shift in the general aviation market. There was a time when pilots appreciated the value of older airplanes despite that they'd been around the pattern. Although an older, but well-maintained airplane is not unreliable and not unsafe, they are perceived-and in most cases realistically-to be an economic liability. There's some question about the future of the piston-single market. As the older airplanes continue to age, maintenance, parts and ADs become an important consideration for buyers. When the cost for an engine overhaul or the price for upgrading the avionics equals a third or even half the value of the airplane, buyers are going to be reluctant to pay the piper.

"Most likely the future will rely on new airplanes and not old ones," Aldredge said. "But the industry will be in real trouble unless it comes up with more affordable aircraft with better performance that are easier to fly. That'll be the future."