Afavorite pastime is surfing the online used airplane ads. I check the market value of what I already own, I’m interested in what’s available if I wanted to trade up and I’m curious about obvious trends in used airplanes. It’s a non-scientific exercise, but one from which I can draw some conclusions.
One conclusion is that I have a very inflated view of what my airplane is worth. Thankfully, it’s not for sale, but if it was I’d be lucky to get back what I paid for it almost 20 years ago. That’s after adding easily 35 percent of its value in upgrades over the years, and goes against the long-term trend that airplanes with X capabilities were always going to be worth Y money. It wasn’t that long ago, however, that the market reflected the value of those upgrades and would have rewarded me substantially, if not completely. Another conclusion is the market values well-equipped airplanes more than those that aren’t. Nothing new there; just confirmation.
A final conclusion is that the market for “legacy-equipped” airplanes—those that haven’t seen a panel upgrade since the Reagan Administration—is very weak. An airplane sporting a pair of KX-170Bs, an ADF, a Narco transponder and maybe even a Loran simply isn’t worth much today, even if the airframe, engine, paint and interior are in good condition. Autopilots are in demand, too.
“No problem,” you might say. “If I were in the market, I’d look for an old panel but good bones, and take it to the avionics shop.” Over the years, that’s not been a bad strategy—you likely could extract a substantial portion of the cost of a panel makeover when selling the airplane and benefit from its use in the meantime. Except the market these days seems to be telling us an avionics upgrade isn’t valued at anywhere close to a one-to-one ratio. Put otherwise identical airplanes on the market with the only difference being, say, a $40,000 avionics upgrade, and the market tells us the return on that necessary investment is worth a lot less than 100 percent.
Rather than exacting a premium for a modern panel, the market is penalizing legacy panels, depressing the value of such airplanes even further. That’s because an airplane with ADS-B Out today is considered to have typical equipment. It’s normalized now.
And that’s one of the major factors I see in used airplane prices these days: ADS-B Out is a dividing line, separating those used airplanes enjoying depressed demand from those with almost none. Glass and autopilots are a factor, too, but the market is telling us not having ADS-B Out at this date is a deal-breaker.