What Should You Pay for That Aircraft?

Buying an aircraft is not like buying a house or an automobile, and establishing a fair price can get rather tricky. For instance, how does damage history affect market value, particularly if it has been properly repaired? What about a recent paint job whose design or color scheme is ugly? Or an interior that, while in excellent condition, looks as dated as a '57 Chevy? AVweb's expert on aircraft appraisal tackles these and other tough questions in this illuminating article.


The real measure of value of anyconsumer product is the price it sells for. Aircraft are no different. The buyer andseller must agree on a price before a sale can take place, and often the seller has hissights set on the high side while the buyer is looking at the low side. If no agreementcan be reached there is no sale.

Aircraft are not a particularly hard product to sell, especially these days when thereis a resurgence of interest in general aviation. The market has been hot for some timenow, and a good aircraft priced fairly sells quickly.

How do you establish the price of a particular aircraft? For the most part, neither thebuyer nor the seller is equipped to know the fair market value of the aircraft they aredealing with. Remember that each aircraft is unique, unlike other consumer products. It’snot fair to either to use the average values that are found in the so called”appraisal books” or on-line services. Some of that information is generatedusing “asking prices” which are not a fair measure of the selling prices ofthose aircraft. Also, each party, the buyer and the seller, has his or her own biases. Theseller is likely to see the aircraft in better light than it is, while the buyer willprobably see it as worse than it is. So, who is right?

Harder than it looks

There’s a lot more to properly evaluating an aircraft than most people imagine. I havetalked to many pilots who think a quick cruise through the logbooks with a”fair” appraisal of the aircraft’s equipment and cosmetics is enough to price itproperly. Beware, there could be many traps along the way.

Not long ago I was looking at a Piper Dakota for a client of mine when I noticed anobscure entry in the Canadian airframe logbook. It said, “Repairs made to aircraft.See AI-101 Form.” (The Canadian AI-101 Form used to be the equivalent of our FAA Form337 until the designation was changed.)

Unlike the FAA, the Canadian Ministry of Transportation does not keep all its aircraftrecords in one central location. It took time to locate the records for this aircraft andfind the form that detailed the type of repairs that were made. It turned out that theairplane had been nearly totaled and repaired. The repair work that was done was verygood, but the perception of extensive damage history to a Dakota buyer means that theaircraft is not worth as much as one without damage history.

So we declined to buy it, and found another aircraft. Why? Because I didn’t want myclient to have problems selling the airplane later on. While the repair work was very goodthere are few Dakotas with that kind of extensive damage history, and most buyers wouldshy away from it, making it a hard airplane to sell later.

If you don’t look at the logbooks hard enough, you could miss a simple entry that mostpeople would ignore, like the owners of that Dakota did when they bought it. That could bean expensive mistake. I can relate many more incidents where what looked like routinerepair entries proved to mean a lot more than the buyer or the seller imagined.

Factors affecting value

How do you factor damage history into the value of an aircraft? The average buyer orseller can’t do that. Only a professional aircraft appraiser can come up with the truededuction for damage history, and he or she would have to see the aircraft, the logbookentry, and FAA Form 337, if one was issued, to make the evaluation.

One publication suggests deducting 5 to 25 percent for damage history, but thosenumbers don’t mean much. How do you apply such a percentage? How much do you apply foreach incident? By reducing the value a set percentage of the entire aircraft you are alsodeducting from the value of avionics, the engine, and other components, all of which (ifundamaged) could be sold without any deductions. Furthermore, as we’ll see, the effect ofdamage history can vary greatly depending on what kind of aircraft we’re looking at.

Paint and interior can also be tough appraisal issues. For instance, I have seenaircraft that were painted in the ugliest colors imaginable (at least to my way ofthinking). The paint might have been fairly new and in excellent shape, but certainly not”mainstream” in its choice of colors or design. Would a paint job like that beworth the same as one that was more pleasing to the eye? I suppose it depends on who’slooking at it.

But remember that paint does two things for an aircraft: it protects the surface, andmakes the aircraft look pretty. A paint job that is sound but ugly (at least to you or me)is still doing half of its job.

Interiors are similar. I once looked at an older Turbo-Commander that still had itsoriginal interior. It was in very good condition, but had a dated look because the fabricsand colors were not what are generally considered stylish today. The fabrics were notripped or stained, and the carpet showed very little wear. But I felt like I was lookingat the interior of a 1957 Chevy.

Airframe time has a direct effect on the value of an aircraft. With the averageairframe times of our fleet creeping up all the time, we have to look harder for the verylow time aircraft, and they are becoming more difficult to find. While average airframetimes increase every year, most buyers don’t want an aircraft with more than 5,000 hourson the airframe. That makes high-time aircraft harder to sell and therefore worth lessmoney. On the other hand, while low-time airframes are worth more money, they arefrequently overvalued by the owners or brokers who have them for sale.

While looking for a Warrior recently I ran across a low time one that was priced about$20,000 higher than others on the market. The seller was going to wait it out, hoping thatsomeone would come along and pay him a large premium for his airplane. Surprisinglyenough, someone probably will…but when they go to sell the airplane in two or threeyears, they will realize their mistake. What’s worse, should the person who pays a premiumfor a low-time aircraft proceed to put a lot of time on it quickly, the value of theaircraft will be reduced even more as it gets closer to the average airframe time ofothers of the same type.

Be careful about well-meaning advice

Be careful how you search for an aircraft. I got a call from a low-time pilot who waslooking for his first airplane. He wanted a Cessna 210, and his flight instructor andanother local pilot steered him toward one in the local area. They told him that this wasthe airplane he should buy, and not knowing anything about the purchase process, he wentto the bank and arranged for a loan. As part of the financing the bank insisted on anappraisal, and that report revealed a $15,000 deduction for major damage history.

With that consideration the airplane was overvalued. The buyer backed out, and helearned an important lesson. First, he would have bought the airplane on the word of hisflight instructor and the other pilot. If it weren’t for the bank insisting on theappraisal before the financing could be completed, he would have bought an airplane thatwould have been difficult to sell later. Like the Dakota I mentioned earlier, there aren’ttoo many Cessna 210s with major damage history. Those that are on the market do not appealto 210 buyers except at a reduced price.

With some types, it is not unusual to find damage history. Trainers, for example, gettheir nose wheels knocked off every so often. As a rule, that does not stop a flightschool from buying an airplane. But when you get into the high-performance category, thereare few aircraft that have been damaged. Those that have face a reduction in value becausethere are fewer buyers for them.

Check six

Be very careful when settling on the price of an aircraft that you want to purchase. Ifyou are new to the purchase process get some professional help. It will cost you somemoney, but chances are you will save more than you spend, especially if something is foundthat reduces the value. It is not unusual that whatever bad news the appraiser finds isnews to the seller, not just the buyer.

Cover your bases and do your homework before you buy. Buying an aircraft is not likebuying a home or a car or anything else. Learn all you can about the purchase process andhow to go about it. Then use common sense. Consider getting professional help in setting avalue on the aircraft. Don’t “wing it” using trade publications as your onlyvaluation guide.

Don’t skip any of the important steps that you should take when purchasing an aircraft,just because someone tells you this is a terrific plane, or suggests that you’ll lose outunless you act immediately. Remember that if you get in a hurry and skip some of thesteps, what looks like an attractive purchase could easily come back to haunt you in thefuture when you decide it is time to sell.