At Guardian Jet we believe you should begin thinking about how to prepare your aircraft for sale before you purchase it. There are a number of factors that will contribute to the eventual disposition price as well as the efficiency of the sales process. Our goal is always to sell for as much money as possible in the shortest amount of time.
Selling in the least amount of time is critical. Aircraft that go to contract in the first 90 days after listing typically sell for a higher percentage of their calculated value than if they languish on the market. This is especially true in aircraft markets that are rapidly losing value. My brother compares trying to sell in these markets to trying to catch a falling knife.
The easiest way to think about preparing an aircraft for sale is to consider what you would be looking for if you were buying this airplane.
Did we configure the aircraft to attract the largest percentage of buyers?
Is the aircraft on an engine program?
What is the condition of the paint and interior?
Do I move forward on avionics upgrades?
How much elasticity is there on pricing?
The truth is there is no easy answer to any of these questions and the answers vary depending on aircraft model and type. We need to understand the data in the market you are selling in to provide the best answers. Our goal is to eliminate as few buyers from the potential pool of buyers as possible.
In smaller aircraft this is less of an issue but in three interior cabin zone aircraft the configuration can impact your ability to sell. When purchasing the aircraft we should consider what percentage of the fleet has a forward vs aft galley. Whether or not an aircraft has a forward lav. can dictate the markets available to sell into. Typically, European customers want the aft lav. to be for passengers only.
Unusual seating configurations can also create issues down the road. Configuration is expensive to change and unusual configurations can eliminate potential buyers.
For example, in the last 6 months there have been 10 used sales of Gulfstream G550’s. Eight out of the ten aircraft sold were on engine programs. Approximately 62% of the fleet is on an engine program. Both sets of aircraft, on and off a program, sold for approximately the same percentage of our Aircraft Value Calculation (more on that in another blog). Our AVC uses the buy-in cost of the engine program as a hit to the value of the off program airplanes.
What this all means is that the aircraft on the engine programs are more in demand and the pricing impact is essentially neutral. Our position is that if it is neutral put your aircraft on the program. No one ever passed an airplane because it was on an engine program but aircraft have been eliminated from consideration by buyers for not being on a program.
This is just one snapshot in the G550 market. Each aircraft market is different and the data should be analyzed to make the best possible decision.
Paint and Interior
We believe a typical airplane should undergo aesthetic upgrades every 7-8 years. On this schedule your aircraft will never be far away from the upgrade if you sell in the 7-12 year ownership term that many of our customers favor. Buyers of aircraft with worn P&I are always looking for a deal. Fresh, or more appropriately, regularly scheduled refurbishment will not eliminate any buyers.
The alphabet soup of avionics regulatory compliance is upon us. CPDLC, FANS 1A, ADS-B OUT compliance is expensive and therefore a big driver of value. How and where you use your airplane can be a completely different issue than how the buyer of your airplane might use it.
In a newer, larger aircraft the answer is fairly simple, all the aircraft will be compliant. But consider a 5 year old Challenger 300. Bombardier is estimating half the 300 fleet will be upgraded to roughly mimic the new 350. A high percentage of 300’s are primarily flown in U.S. domestic operations. This is a much trickier question. Understanding the particular aircraft model market and the available data on that market will help you make the best decision.
Pricing correctly is the cornerstone of the ability to sell your aircraft for top dollar in less time. Correctly does not mean cheaply, we don’t want to leave money on the table. There is no substitute for data in your pricing discussion. First, we need to understand where the values aircraft are trading at in the marketplace. Then, we need to look at trends to have an idea of where the market is headed in the next 60-120 days. By combining these sets of information you can be comfortable that your aircraft will compete successfully on the market.
My favorite line about aircraft inventory for sale came from Dan Meisinger, Sr., the longtime owner of Executive Beechcraft in Kansas. One day he told me, “Don, we ain’t had one forever yet”. Most everything eventually sells. But with the proper preparation we can maximize the value of our aircraft asset.