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New vs. Used

by David Wyndham 1. April 2007 00:00
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If you are in the market for a "new to you" aircraft, you have two big decisions to make:
- which make/model aircraft?
- new or used aircraft?

Which make and model aircraft is a factor of your requirements and fodder for another day. Let's assume that you have made a decision on an aircraft has been in production for about 10 years so there is a fair supply of used models to choose from, as well as new. Obviously the new model costs more to acquire than used.

What do you get for the added cost of buying new?

Warranty. A new aircraft warranty today typically runs for about five years. The new aircraft warranty typically covers any unscheduled maintenance, often both parts and labor. Based on our research, during the warranty period, aircraft can save about 15% on labor costs and 30% on parts costs. Even with a thorough pre-buy inspection, there is still the chance of unforeseen maintenance popping up on a used aircraft - and you incur that cost.

Reduced Maintenance Costs. As an aircraft ages, the costs to maintain it increase. Like all mechanical devices, as aircraft age, parts and accessories wear out, require overhaul, or need some sort of repair. These increased costs occur outside the warranty period. A typical eight-year old business jet can see maintenance costs about 50% higher than that of the new model due to both warranty and the effects of aging.

Increased Availability. In addition to reduced maintenance costs, new aircraft typically spend fewer days in maintenance, leaving more days available for use - especially important to a small operation with one or two aircraft or to a commercial operation that needs the aircraft to generate revenue.

Configuration. When ordering a new aircraft, you get to select the options and configuration that you want. That covers everything to the color of the interior fabrics, to having the latest in safety equipment and avionics. If you want blue carpeting, you can get blue carpeting!

With a used aircraft, reconfiguring not only takes time, it adds additional expenses, and takes time. With a new aircraft, the day you take delivery after completion, it's yours to fly.

Increased capability. In order to keep the new models "new," the manufacturers' add value by increasing the capability or otherwise improving the aircraft. That may mean more fuel/range, greater payload, updated avionics, or a better heating and air conditioning system, etc.

Save time in the search. If you want a new model Z, you negotiate for delivery position, configuration and price, but the supplier is the manufacturer. With a used aircraft, you have as many suppliers and there are aircraft available. With the used aircraft, you need to thoroughly inspect each prospect and try to balance selling price, your offering price, and the value compared to the other offerings. With the new aircraft, you still have to perform a nominal acceptance inspection, but you do it once for your serial number.

What can you save by buying used?

The big advantages of used aircraft are in acquisition cost and (sometimes) availability. A new mid-sized business jet costs about $14 million. An eight-year old used mid-sized business jet today goes for 50% to 60% of that, or $7 to $8.4 million.

If there isn't a significant difference in capabilities between the new and the used, why pay more for new? Or, if you don't need the increased capability of the new aircraft, where is the value to you?

Another advantage of used aircraft is that many can be purchased and put into service in a matter of a few weeks or less. Currently, most new business jets have an 18 - 24 month lead time. If the specific serial number aircraft you are considering has fresh maintenance, a good to excellent paint and interior and you are happy with it as is, then upon closing, you can fly it away.

The new versus used is truly a matter of trade-offs. While used aircraft sell for less, they cost more to maintain and spend more time in for maintenance. Older, out of production aircraft, might not have the needed configuration or avionics needed to operate in today's environment. However, if a used model has all the capabilities you need, the reduced acquisition cost compared to new can pay for a lot of extra maintenance.

There is no clear cut answer to new versus used. Either way it costs money, either up front in the acquisition, or later in maintenance and refurbishment costs. If you look at the total costs of owning and operating the aircraft, many times the dollars spent come out close. You need to consider all the variables and weigh the value of each.

Most of us have gone through this process before and I am sure we have a few opinions floating around.  Give us your input.  There is no right or wrong answer here just a general view.  Your thoughts would be appreciated.


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