When it comes to valuing an aircraft, whether for insurance purposes or for potential resale, you have several options. These can range from free valuation “guidance” to an onsite aircraft inspection, records review, and appraisal. Which option you choose depends on what level of precision you are seeking.
|Valuation Option||Why Select This Option?||Why Consider Another Option?|
|Examine ask prices available in trade publications and online services.||To obtain a rudimentary understanding of competing asset quality, as well as what sellers believe their assets are worth.||Many aircraft are priced as “Make Offer.” Also, ask price is a “value” unlikely to be achieved in the current buyer’s market. Current transaction value figures are more useful.|
|Review aircraft price guides such as Aircraft Bluebook and Vref.||These guides publish historical transaction values, useful for determining market value trends.||Even recently printed historical data can be outdated. Online information is more timely.|
|Adjust ask price and/or price guide value by factoring in “maintenance equity” (total estimated cost of scheduled maintenance minus cost of future required maintenance, plus cost of already completed maintenance).||Maintenance represents an aircraft’s greatest “wild card.” Objectively accounting for maintenance equity ranks aircraft by their maintenance quality; helps justify aircrafts’ ask/offer price.||Maintenance status, while potentially the largest, is but one value determinant. Consider requiring maintenance equity analytics from any broker or appraiser you hire to justify their recommendations.|
|Consult an aircraft broker.||Brokers often specialize in particular aircraft make/models, providing accurate value guidance – and very quickly.||Broker experience and true market knowledge varies greatly. If selecting this option, choose an experienced, trusted firm.|
| Hire a National Aircraft Resale Association
Certified Aircraft Broker (www.naraaircraft.com).
|NARA is comprised of aircraft brokers/dealers who must pass a Certification Process and adhere to a Code of Ethics.||If you are “just looking,” other valuation options are less expensive.|
|Obtain a desktop appraisal.||Desktop appraisals can be obtained quickly and for substantially less cost than an onsite appraisal.||Desktop appraisals often rely only on the aircraft specification information you provide, plus the appraiser’s own recent transaction knowledge.|
| Obtain an onsite aircraft inspection, records review, and appraisal from an Accredited
ASA Appraiser (www.appraisers.org).
|An ASA Appraiser is likely to provide the most comprehensive and standardized/process-based, opinion of an aircraft’s value, based on experience, education, training, standardization, regulatory compliance, and a large support network.||Usually the most expensive, this option likely will be the most beneficial as you select a replacement aircraft.|
Which Valuation Option Is Best For You?
- During the initial analysis phase, use a less expensive option.
- Combine options to increase valuation precision, such as hiring a NARA Certified Broker and requesting a justification of valuation by accounting for each aircraft’s maintenance equity (www.naraaircraft.com).
Using a NARA Certified Broker may reduce your cost for valuation services, as routine valuation estimates are included in his/her aircraft acquisition/sales fee. You also may secure certain ongoing valuation services, free or at a discounted cost, by using the “NARA Value + Program.”
Variations exist for each option to help further your planning. Experienced brokers and appraisers can provide both residual value forecasts and market value trend information.
Before making an offer on a pre-owned aircraft, obtain an onsite aircraft inspection, records review, and appraisal using an accredited ASA appraiser. Ask him/her to account for the aircraft’s anticipated maintenance quality and related maintenance equity at time of delivery to you. While reviewing the aircraft’s records during the pre-purchase inspection is useful, you can obtain the same information more cost effectively by first using one of the other options. Doing so saves time and enables you to decide whether to pursue that aircraft, or to look for another that is more suitable. BAA
Anthony Kioussis is president of Asset Insight, LLC, which offers eValues™, an online service providing Current and Residual aircraft valuations. With 40+ years in aviation, he serves on the National Aircraft Finance Association Board of Directors.