Skyrocketing Values

It’s important to understand the value of your aircraft especially in today’s environment. I bring an unique perspective because I’ve spent the past 16 years assisting clients with the acquisition and sale of their aircraft.

Over the past 16 years the pre-owned aircraft market has ebbed and flowed as any asset class experiences. As values fluctuate up and down it’s important to understand the most up to date value of your aircraft. Just like the used car market, somehow even with the Fed’s aggressive interest rate hikes and unprecedented inflation (highest in 40 years) aircraft values have skyrocketed rather than plummeted. This is primarily due to low inventory levels combined with a robust group of buyers.

This robust desire for private travel has increased substantially. We have the most wealthiest individuals than ever seen before. The number of people with substantial disposable income is at the highest level in the history of the United States, with more millionaires than assets to go around. The thirst for private airplane travel is bursting at the seams. Historically low inventory levels across all aircraft models combined with aircraft charter operators scrambling for more lift ability has skyrocketed the demand for pre-owned aircraft. Contributing further to this phenomena are the long delivery times for a new aircraft. Major manufacturer’s all report significant backlogs of at least 24 months. The insatiable appetite for private air travel doesn’t seem to be impacted by interest rates or global economic concerns.

Commercial airline travel is general aviation’s biggest competitor. Cancelled flights, lost luggage and the difficulty to book roundtrip same day all contribute to the pressure on general aviation.

We’ve established why values have rapidly increased but let’s talk about how this affects your insurance policy. Each year at renewal, it’s a good idea to have the discussion with your insurance broker to ensure you are properly insured. If the “stated value” of your plane has not changed in several years, you could be under insuring the hull. This becomes problematic if you have a claim. If it’s declared a total loss, your payout will not cover the cost to replace the plane at today’s prices. You’ll be left without a plane and needed to add more cash to purchase a replacement during a time of low inventory levels. Yikes!

It’s a good idea to discuss the current value of your plane with your agent/broker to avoid this pitfall.