The Pre-Owned Market Today: An Appraiser’s View

Are the premium prices being paid for private jets and turboprops today on the pre-owned market sustainable? Accredited Senior Appraiser of aircraft, Jeremy Cox, shares his thoughts with Matt Harris.

Jeremy Cox, Founder and Owner of JetValuesJeremy, a professional aircraft appraisals company, has spent more than 20 years appraising aircraft. He filed his first appraisal report in 1999, and in the years that ensued, has appraised a vast array of aircraft makes, models and types.

“I really enjoy the challenge of appraising one-off, unique aircraft,” he says, reminiscing about a personal favorite job in 2019 when he was asked to appraise what he identifies as “the world’s rarest business jet” - the McDonnell 119/220.

The Model 119/220 was McDonnell’s candidate for the US Air Force’s ‘Utility Transport, Experimental’ solicitation, issued in 1956. Lockheed won the contract with its JetStar, and competitor North American Aviation’s Sabreliner went on to win the subsequent contract.

McDonnell was left out in the cold, and instead attempted to market the Model 220 as a business jet. “When those efforts failed, McDonnell used the Model 220 for several years as its own executive jet”, he says. Ironically, the Model 220 was eventually replaced by a used Jetstar for McDonnell’s corporate transportation needs.”

Jeremy received his initial accreditation as an appraiser in September of 2014 while working for a leading preowned business aircraft brokerage firm, having joined the National Aircraft Appraiser’s Association and spending a week in classroom-based training.

“In 2018 and 2019, I was accepted into the American Society of Appraisers (ASA) Aircraft Valuation Program,

and in 2019 I started JetValues-Jeremy LLC.”

His line of work exposes him to just about all aspects of aviation and aerospace – and not all of it confined within Earth’s atmosphere. Last year Jeremy won the contract to appraise a spacecraft, travelling to Cape Canaveral to perform an on-site inspection. “Since then, I have been somewhat active in that portion of our aerospace industry,” he shares.

With the specific designation ‘Accredited Senior Appraiser, Machinery & Technical Specialties – Aircraft’, today Jeremy is an instructor for the ASA and teaches portions of the education/certification program.

And despite some of the extra-terrestrial machinery he values nowadays, Jeremy is still very much focused on the Business Aviation industry, regularly appraising jets, turboprops, and helicopters that are commonly used to support the transportation needs of corporations around the world.

AvBuyer found him with a rare window in his busy schedule to discuss his perspectives and insights on the pre-owned market today… AvBuyer: Everyone we speak to tells us this current pre-owned business jet/turboprop market is unique. Inventory has never been so low, the fleet for sale has been thoroughly picked over, and many models are selling at premiums. Speaking as an aircraft appraiser, is there still any value to be found in the business jets and turboprops on the market currently? JC: Since Q3 2020 we’ve seen the development of a “Bull” market, with minimal ‘Days on Market’ (in terms of market exposure and marketing time). And in most cases, premium pricing is occurring at above the asking price.

It’s been a standard since the ‘plunge off the cliff’ that became known as the Global Financial Crisis of 2008/2009, right through the recovery and the Covid pandemic, up until April 2021 that used aircraft have transacted 3% to 8% below their asking prices – depending on age, condition, and model desirability.

Starting in April 2021, I observed in most appraisal engagements that the selling price equaled the asking price – with sporadic examples of premiums being paid. Then, in September, I saw a definite paradigm shift from ‘asking price sales transactions’ to ‘premium price sales transactions’.

In November last year at the CJI event in Miami, I stated that “It’s common to see $300k to $600k-plus premiums being paid over the asking price, today.” That was confirmed by the International Aircraft Dealers Association (IADA) when it published its ‘Third Quarter, 2021 IADA Market Report’, noting, “Our members correctly predicted the rise in the market. Our survey sees a combination of an increase of 2030% in the value of pre-owned aircraft, driven by a lack of inventory. This is coupled with an OEM backlog of one-to-two years for their most desirable models.”

Specific model softness is rare, but not extinct. But it is wrong for someone to think of these high values, driven by the current supply-and-demand situation, as being freak pricing, or way above normality. This mindset is one from the past.

These are the actual prices today. They are ‘now’ values and are unlikely to change anytime soon. Bottom line: If you have the rare opportunity to buy an aircraft, you should jump on it. If you don’t, somebody else will. 

AvBuyer: Given the frenetic marketplace, making an accurate appraisal poses some challenges, right…?

JC: Honestly, there is no real challenge with providing accuracy for my appraisal clients, because the ‘percentage adjustment’ that I have to make to correct the resultant fair market values, is dependent upon both the effective date of the appraisal, and when my ‘comparative sale’ aircraft transacted.

No, my biggest challenge is actually getting ‘real-time’, ‘comparative sale’ aircraft, because many sales are being made ‘off-market.’

AvBuyer: Not long ago, one aircraft broker told us that the premiums we’re seeing on many models are more of a price correction to what aircraft are really worth, following more than a decade of price depreciations in the market. Is that a fair assessment of what we’re seeing?

JC: Yes, that is actually a great perspective to take in today’s marketplace. It must be remembered that values of business jet and turboprop makes/models were all chasing each other downhill in 2008-2009, thanks to the Global Financial Crisis (GFC).

Many settled at 40-60% lower than their preceding two years’ values. Today’s value increases of 20%-plus still don’t bring many of the makes/models back to their preGFC relative values (adjusted for CPI).

AvBuyer: So, once inventory starts to increase – perhaps later this year, or in 2023 – we’re guessing you’re not expecting to see values deteriorate to the same levels they were before the market heated up to fever pitch…?

Covid was good for aircraft sales. “I’m never travelling on the airlines again” is the consistent mantra voiced by the burgeoning mass of buyers out there today. If a slowdown does come, I predict that we shall see the older models becoming ‘soft’, but in no way ‘lost’.

I believe the biggest threat to the values of Business and General Aviation aircraft is not economic – rather it’s the push to move aviation into sustainable fuels and carbon trading. Don’t get me wrong – these are likely necessary, regardless of whether you believe in it or not. But operating costs will increase as a result.

AvBuyer: Tell us about 2022, so far. What are some of the aircraft you’ve appraised (and the reasons)?

JC: We may only be one-third of the way through, but the list of aircraft is extensive, and the reasons varied. For example:

An MD900 Helicopter legal appraisal (stolen aircraft); a Cessna Citation 501 (bank financing); a Hawker 4000 (estate tax payment); a Bell 206 JR (sales transaction); a Cessna Grand Caravan EX (sales transaction); two Beechcraft King Air B200s (one partnership share buy-out, and one bank financing); two 690A Aero Commanders (acquisition); an Antarctica-based Basler BT-67 Survey Aircraft (legal appraisal); a Dassault Falcon 900C (bank inspection); a Cessna Citation Latitude (bank financing); a Beechcraft King Air B200 and King Air 250 (lease rates); four Hawkers (including two 900XPs, an 800XP, and a 750) for higher, fair market hull values to argue with their insurance underwriter, who had based values on preCovid numbers; another Hawker 900XP (partnership share buy-in); a Beechcraft King Air B100 (sales transaction); a Beechcraft King Air B200GT (sales transaction); a Diamond DA-40 NG (bank financing); a Cessna Citation Latitude for Use Tax (lease rates); and a fleet of 60 individual Helicopters. 