Selling Prices Continue to Fall, But Rate of Decrease Improves
New Record Low Ask Prices and High Quality Aircraft For Sale Mark Exceptional Values for Buyers at 2016 Close
January 9, 2017 – Asset Insight today published its 2016 Year End issue of the Asset Insight Market Report (AI2 Market Report) covering the pre-owned business jet and turboprop aircraft markets. This report analyzed values for every production year of every modern make/model Business Class aircraft, and the maintenance analytics cover 91 fixed-wing models, and 1,865 aircraft listed "for sale." All data indicated that 2016 was an exceptional year for buyers of pre-owned business jet and turboprop aircraft with ever-falling asking prices coupled with excellent quality of "for sale" aircraft. Additionally:
- • Average selling price fell for the seventeenth consecutive quarter during Q4, while the inventory fleet’s maintenance quality was excellent.
- • While "for sale" aircraft asking price continued to fall during the fourth quarter of 2016, the rate at which it declined slowed.
- • Average selling prices are expected to continue to decline during Q1 2017, but the rate of decline is expected to improve during this period.
- o eTrendTM 90-day forecast indicates that some models are expected to lose over $1M in value, while other models should expect more moderate decreases in value.
- • Average Maintenance Exposure (the accrued or embedded cost of future scheduled maintenance) posted the highest/worst figure of the past 12 months, driven by Large Jets. Small Jets posted the group’s lowest/best 12-month figure.
- • Aircraft whose ETP Ratio (Maintenance Exposure divided by Ask Price) exceeded 40% this past quarter have been listed for sale 49% longer than aircraft whose Ratio was below 40% (223 versus 333 Days on Market).
2016 was a challenging year for aircraft owners hoping to sell at a premium, and for aircraft sales professionals and services. The good news is that the market represents an unprecedented opportunity for those who are ready to buy business jets and turboprops,
said Tony Kioussis, Asset Insight, LLC President.
This first Asset Insight Market Report of 2017 (covering 2016 year-end results) has extensive analytics which are translated into easy-to-read facts for the market as a whole, and includes charts with details covering four aircraft categories. Only available from Asset Insight, the AI2 Market Report – published quarterly – also includes eTrendTM, a 90-day forecast for aircraft value by make and model. This tool is especially helpful to sellers who are evaluating offers on their aircraft while concurrently considering if their prospects are likely to improve. Statistically, Asset Insight’s eTrendTM forecasts are based on some of the most robust data analysis in the industry and have been thoroughly back tested to confirm a significant degree of accuracy.
Asset Insight’s proprietary Asset Grading System ProcessTM (AGSP) analyzed the average maintenance condition of jet and turboprop aircraft listed for sale as of December 30, 2016 (Source: AMSTAT) to generate the AI2 Market Report. The AGSP derives the Asset Insight Index, whose components are the Maintenance Rating, Financial Rating, and Asset Exposure Value. Dividing the Asset Exposure Value by the aircraft’s Ask Price derives the Asset Exposure to Ask Price Ratio (ETP Ratio) – a quantitative view of the aircraft’s current marketability. The AGSP is based on proprietary algorithms that examine current age, flight hours and cycles on an aircraft’s systems and major sectors – airframe, engine(s), propeller(s), APU, paint, and passenger interior – as well as the typical cost to repair or replace parts with no defined life.
Asset Insight, LLC was formed in May 2016, through the merger of SAI Valuations, LLC (www.saivaluations.com) and Asset Insight, Inc. (www.assetinsightinc.com). Since 1991, SAI Valuations has provided a broad spectrum of machinery and equipment valuation services. As one of the world’s largest aviation valuation firms, SAI has been involved in thousands of aircraft appraisals, from light single engine to heavy airline transport aircraft, and has earned a reputation for quality service, responsiveness and innovative use of technology. Launched in 2012, Asset Insight has provided aircraft maintenance evaluation and asset financial optimization services. The company's "Asset Grading System Process" (Patent Pending) and related analyses, provide the ability to translate the asset’s maintenance condition into easy-to-understand, actionable financial information. Asset Insight, LLC is headquartered in Las Vegas, NV, with offices in Chicago, IL, Atlanta, GA, Portsmouth, NH, Melbourne, FL, Washington, DC, London, UK, and Vienna, Austria