Most would-be airplane buyers these days dont even consider buying new, given the wide choice of good used airplanes on the market and the excruciating pain of massive depreciation on a new airframe.
The reality is that most of us have to be flexible-okay cheap-in shopping for just the right airplane to match a limited budget. And that almost always means buying used.
With the exception of houses, just about everything bought new loses value the instant it leaves the factory. Unlike cars, however, airplanes decline in value in a sort of squashed reverse bell curve. After some period of time, the initial depreciation bottoms out and an airplane begins to appreciate, in some cases actually exceeding its original dollar-purchase value.
Adjusted for inflation, even a popular airplane with a hot appreciation curve may not exceed its original value but some come close to doing that. Popular models-high performance singles and a few premimum twins-tend to experience spikes in value. Theres sometimes no rhyme or reason to any of this; all models and types seem to vary significantly in overall value change.
An AD here, a fuel price spike there and the best general advice about value appreciation for a particular airplane goes into the tank. Overall, however, new aircraft tend to lose face value for eight to 12 years, then start back uphill. The more miserly among us hope to catch the value curve on the cusp of the downward trend, thereby minimizing the initial outlay, maximizing the prospect for future appreciation and buying something thats closer to the smell of new than the reek of tapped out.
Obviously, a 10-year-old aircraft flown more than a hundred hours a year is close to needing an engine and maybe a prop overhaul, perhaps with updated avionics and a cosmetic buff up tossed in for good measure. Potential buyers who dont flinch from doing some upgrading should be able to extract a better price from sellers who do.
Once an owner has been forced to shell out for major maintenance or upgrades, the aircraft is probably either no longer for sale or the price is on the way up and the value may not be there when compared to an identical airframe thats a little more needy.
Toward that end, we checked out the depreciation numbers on four models, the F33 Bonanza, Cessna Skyhawk, Piper Archer and an older Citabria. Despite the relatively wide range of target market, each of these models bottomed out fairly close to the decade mark.
The 1979 Citabria, for instance, sold originally for $21,600, according to the Aircraft Bluebook Price Digest. A decade later, it far surpassed its original face value price with average retail ending up at $36,000 in the fall of 2000.
Until Cessna resumed production of the Skyhawk in 1996, the latest model used one you could buy was a 1986 model, which cost about $74,705 when bought new with average equipment. Depreciation for that model wasnt linear, dropping to $70,000 almost immediately and hanging at that value until 1997 when it caught up to its purchase price again and kept going. Between 1998 and 2000, our 1986 Skyhawk jumped a respectable $12,000 in average retail value, topping out at $88,000.
If you bought a good one during that time period and sold out after flying a couple of hundred hours, you got as close to a free ride as is possible in general avation.
This raises a question that may be impossible to answer: Did the resumption of Skyhawk production-with sticker prices in the $140,000 range-actually cause the older ones to appreciate in value? We think its plausible.
Ends of the Spectrum
Even more interesting were the two models holding down either end of our small sample. In 1988, an F33A Bonanza with average equipment (no autopilot) had an average retail price of $135,750, the equivalent of $200,000 in todays dollars.
Average retail of the used F33A declined around $10,000 until about 8 years of age. By the time the airplane was 10 years old, its value had blown by the original purchase price, topping out in the fall of 2000 at $170,000.
So the buyer who bought his F33 new a decade ago can get out from under it for $35,000 more than he paid, not considering inflation, repairs, engine overhauls and the like. Clearly, the buyer will never get ahead economically, but when he unloads the airplane, hell at least have a nice check for a down payment on a huge-new-sailboat.
Tail-end Charlie in our small sampling was the 1988 PA-28-181 Archer II. New in 1988, that Archer cost a purchaser $89,000 with typical equipment. The depreciate hit was immediate, although not huge: It dropped $4000 to $5000 in price and stayed there until resuming a slow rise in average retail value around 1997.
Unlike the other models, the Archer never quite made it back to its full new retail value during the survey period, topping out at $87,000. It may eventually rise to full original value, less inflation adjusted dollars.
In making an economic judgment about a new aircraft, its not just the absolute dollar amount of depreciation, of course. Every quarter the average retail price is declining or staying steady, the cost of living is going up, making the actual cost of new even higher in real dollars.
Even here, our Bo and Archer held down both ends of the scale. In 2000, the 1979 Citabria and 1986 Cessna 172 were valued at 70 and 75 percent of the original purchase price adjusted for inflation. The F33 maintained an impressive 86 percent of that value, however, with the Archer bringing up the rear at 67 percent.
The useful wisdom there is that premium models such as the Bonanza and perhaps some Mooneys depreciate less and appreciate more than mid-range models aimed at the sweat-streaked masses.
Not All Lawyers
As noted in Ken Ibolds saga, many think new is reserved for doctors and lawyers. We can tell you from personal experience that this assumption does not apply to gummint lawyers.
In our case, economic reality meant we could buy only a used airplane and even at that, we would need a partner or two to swing an affordable deal.
Like many owners, we bought a Skylane for exactly the same amount the first owner paid when the airplane was new 16 years earlier.
Eleven years later, time, money and TLC have bestowed an agreed value nearly three times the original purchase price, even if that doesnt mean we could sell it for that dollar figure. And we can also tell you from personal experience that spanking new isnt the only thing that turns heads and produces inquiries on the ramp.
So, summing up: Bottom dead center on aircraft value will vary with the model and equipment but in our sample, 10 years was the average, varying by a couple of years on either side depending on marquee and popularity. If you buy a year or two on either side of that 10-year line, youre almost sure to catch the appreciation wave in a year or two.
If the engine is run out, so much the better, actually. Our research has shown that if you plan on keeping the aircraft until it reaches at least mid-time on the latest overhaul, youre slightly better off buying a run out engine and overhauling it yourself. Why? Because a run out depresses the aircraft value more than a fresh engine increases it.
The same logic, however, doesnt necessarily apply to other upgrades such as paint, avionics or a new interior, improvements which traditionally return only a fraction of their value when the airplane is sold. These upgrades tend to keep an airplanes depreciation curve from flattening, however, when measured against a like model.
Depending on what youre after, your mileage may vary, but considering an experienced aircraft could be a bit like the quiet girl in the corner at the high school dance. She might not be a cheerleader or prom queen, but if you make the effort to get to know her, she might turn out to be the one you count yourself lucky to spend an aviation lifetime with.
-by Jane Garvey
Jane Garvey is not head of the FAA but she is a gummint lawyer in North Carolina. Shes an Aviation Consumer contributing editor and owns a Cessna 182.