A question we get asked often at Guardian Jet is, “Should I enroll my airplane on an engine program?”
What our customers mean when they ask this question is, “How does an engine program affect my airplane’s resale value?”
The answer is, “It depends.” And it depends by aircraft model.
Listen to Doc Dwyer’s explanation in this 3-minute video or read the blog for details:
When we get asked the question, we consider several factors, including:
Current Market Enrollment
What is the rest of the fleet doing? If 90% of the fleet is on an engine program, it’s probably a good idea that you’re on an engine program, too.
Next, we compare current market enrollment with sales in the past 6 months and 24 months.
If the current market enrollment in an aircraft model is 50%, but 75% of the aircraft that have recently sold are on a program, we can quickly see the market’s favoring aircraft on a program.
Aircraft Sales Price
We do a very similar analysis with whether an aircraft is selling at a premium or at a discount. Again, we look at the past 6- and 24-months of aircraft that are both on and off programs. Then we compare their confirmed sales price to our aircraft value calculation at the time of sale.
Days on Market
Another key metric to look at is days on the market and days to sell. Are the aircraft that are currently on the market, that are off programs, taking longer or shorter to sell?
Planned Aircraft Sell Date
When will you be selling your aircraft? Are you going to be close to an overhaul?
Selling an aircraft at or near an overhaul, without a program, is very difficult. Often times the program buy-in at that time is more than the cost of the overhaul so you don’t necessarily what to buy a program.
Thus, if you’re thinking that you’ll be selling near an overhaul, it’s a very good idea to be on an engine program.
Airplane Engine Program Discounts
Lastly, we recommend taking advantage of buy-in discounts if you’re enrolling a large fleet all at once. A special offer may enhance a program’s value.
All things equal, as a broker, I like airplanes on an engine program. Simply put, they’re easier to sell.
We often get told by our buying clients that they want an aircraft on a program. Very rarely do we have buyers come to us, saying they don’t want to buy an aircraft that’s not enrolled on a program.
If you have any questions, or if you’d like assistance looking at a specific market, please give us a call at +1-203-453-0800or send us a note. We’d love to talk about it further.