All posts tagged 'Sell an aircraft'

Upgrade or Replace Your Aircraft. Now.

At the recent NBAA I was taking a very informal poll. The question was (a) Double-dip recession or (b) Really sluggish recovery. Most folks opted for (b), including me. Even most market analysts and economists agree that we are very slowly climbing into a recovery. The aviation economy is still very sluggish.

The slow activity in business aviation leaves plenty of opportunity for those of you looking to upgrade your current aircraft or acquire a new one. Here are four reasons to consider the move right now.

Reason #1

Prices of used aircraft are still competitive in favor of the buyer. Aircraft values have bottomed out for much of the business aircraft market. There are a number of good aircraft to choose from. If you are considering upgrading to a more capable aircraft, do it now. 

The manufacturers still have aircraft to sell. Not every model is available new for “immediate delivery,” but delivery times are as short a ever. This is true for the mid-size and smaller jets, turboprops and pistons. It looks like the big cabin market is continuing its improvement.  Big cabin jets seem to be a leading indicator of a recovery.

Reason #2

Upcoming aircraft models in development are mostly set for the next four to six years. Look at the lead times for brand new designs, take into account the weak order books for most of the business aircraft industry and there is not much cash left over to finance a complete new design. Today's designs offer a number of outstanding aircraft. Unless you are waiting for the super-long-range-global business jets from Bombardier and Gulfstream, there is “something for everyone” out there right now.

Don’t forget with the end of the year comes the push by all the manufacturers to close out 2011 with strong deliveries. There may be a white-tail or two available!

Reason #3

If your upgrade path is with the aircraft that you currently have, once again, now is the time to act. The Maintenance, Repair and Overhaul (MRO) facilities have had some tough economic times. Their schedules are not as tightly booked as a three years ago. Depending on the upgrade, you may be able to negotiate good pricing and favorable delivery schedules. Paint and interior upgrades, and avionics enhancements to current production model standards are some good bets right now. Performance enhancements that can save fuel are worth looking at, too. Engine upgrades may be worth the expense if you are at or near engine overhaul with your current engines. A lot of MRO's may be offering deals. See what they offer, get references and go with quality upgrades that have value for your operation.

Reason #4 - 100% Bonus Depreciation

Important Note: The following information in not tax advice. Consult with your accountant or certified tax advisor to see if your situation qualifies for the 100% Bonus Depreciation allowance.

From the Economic Stimulus Incentives in 2010 & 2011 Tax Relief Act: Businesses that acquire and place qualified property into service after Sept. 8, 2010 can claim a depreciation allowance of 100 percent of the cost of the property. The property must be placed in service before Jan. 1, 2012 (Jan. 14, 2013 in the case of certain longer-lived and transportation property). 

New aircraft purchases and new equipment purchases for used aircraft can be expensed in the year of purchase through December 31, 2011. To qualify, the property must be new, used primarily for business purposes, and meet other tests necessary to qualify for Modified Accelerated Cost Recovery System depreciation (MACRS) for the entire time the owner has the aircraft. The 100% Bonus Depreciation is not limited in amount. 

Whether upgrading to a newer, more capable aircraft, or upgrading the capability of the one you already have, now is a good time to evaluate your available options. Do your homework and plan to take advantage of today's market conditions.

 

Taking The Emotion Out Of The Aircraft Sale & Pre-buy

Last month I attended the NBAA Maintenance Manager's Conference in San Diego. It was an excellent opportunity to meet some of our industry's maintenance leaders as well as to sit in on many excellent presentations geared toward the maintenance professional.  One of the topics that struck me particularly was in the area of the aircraft sale and pre-buy process. Listening to several folks comments about the good and bad experiences they had it became evident that even among the professionals in attendance, emotion plays a factor in aircraft deals.

We've heard stories about the owner buying a particular aircraft solely because it looks sexy or because their spouse liked the color, not because it was a best fit or a great deal.  Even among we professionals, emotion comes into play. When we are in the process of buying or selling an aircraft we need to pay attention to those emotional cues. The aircraft deal is a business process, not a marriage courtship. 

As a  professional, we take pride in our work. Our aircraft is a reflection of that professionalism, especially to a maintainer. That person works daily on the upkeep and safety of the aircraft. If during a pre-buy the prospect provides a list of squawks or issues, it is very easy to feel our pride being wounded. "How dare they talk about MY airplane that way!" Our defenses come up and we seek to dismiss their issues or to minimize them as meaningless or even as an attempt to screw us out of money. We need to take a deep breath and reflect on each of those pre-buy issues, evaluate them in a neutral manner, and to put ourselves in the buyer's shoes. 

In the 1980s the US was in negotiations with the Soviet Union regarding nuclear arms reductions. Then President Reagan used the term "trust but verify" to describe the negotiation process. It is the same with the  aircraft. Whatever we agree to must be verifiable.  The buyer is seeking to verify the status of the aircraft. The fact that the deal is in pre-buy indicates a level of trust that the aircraft is what they want. The pre-buy inspection is to verify the state of the aircraft so that the deal can be completed with no surprises.

One way to minimize the emotional issues of a pre-buy as a seller is to understand that we no longer own the aircraft. The day you list the aircraft for sale, you have relinquished ownership and are acting as caretaker for the next owner.  Remember when you first took delivery of the aircraft, whether from the factory or a dealer or wherever. You did (or should have done) a pre-buy and acceptance of the aircraft. You trusted the aircraft was as advertised, but you just wanted to check everything over for yourself. At the resale, you need to take a close look at the aircraft as if you were evaluating it for purchase all over again. 

Unchecked emotions have wrecked more deals than they have made. The best deals are made when both parties prosper: the seller gets an amount for the sale that is satisfying and the buyer gets the aircraft that expect. My grandmother's adage of "When you are angry, count to ten before your respond" holds true. The Aircraft sale/purchase process is stressful and needs to be done with a level head. Had a deal go south due to emotions getting out of hand? Click reply and let us know (keeping the names of the guilty anonymous!), we would love to hear about the ridiculous and the serious. 

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