Not surprisingly, as the rate of price increases for new airplanes left the rate of inflation in the dust, the business of giving new life to aging airplanes became a growth industry. The last 20 years has shown that there is a demand for general aviation airplanes, however, that demand has also been shown to be price elastic. As prices have shot up, deliveries have fallen.
A new, glass Cessna T206 costs north of $600,000. A good-condition 206, with decent IFR avionics, built a year or two prior to the 1987 production hiatus can be picked up for under $200,000. Market forces being what they are, there are companies that are buying those early 1980s 206s, stripping them to bare aluminum and putting them back together with completely new wiring, a new or overhauled engine, better-than-new interior, new paint and a high-end glass panel and selling them for under $400,000. Is that refurbed 206 a new airplane? No, but for the individual owner or group partnership that puts under 200 hours annually on even an older airframe, it’s the next best thing.
In another positive bit of news, more and more aviation lenders and insurers have figured out that the refurb market is a source of business and are willing to value refurbed airplanes for financing and hull coverage at dollar numbers that reflect the value added rather than just a 30-year-old airframe with some new avionics.
Here at AVweb and in our sister publication, Aviation Consumer, we’ve been watching the growth of the refurb business and the benefit it is bringing to general aviation. We think it is helping to revitalize, and increase the safety level of, an aging fleet, providing demand for new OEM parts from the established manufacturers and allowing pilots to own airplanes of a quality level that they could not otherwise afford-potentially keeping them from leaving aviation and buying a boat.
What’s In It For Me?
For the potential owner the benefit of refurbs is two-fold; on one hand it means being able to shop the market for an airplane that has been refurbished to close-to-new by a reputable shop that specializes in the business at a price that is half to two-thirds the price of new; on the other, it means being able to have an airplane the buyer selects (or approves-some shops will do the search for a suitable airplane) refurbished and upgraded to the buyer’s specs-again for half to two-thirds of the price of new bird.
For example, the glass Piper Seneca V is a six-place piston twin that will comfortably cruise at 180 knots at altitude while the passengers use oxygen-and prices for new ones start a just over a million dollars. The long-out-of-production, six-place, cabin class, pressurized Cessna 340A is faster and the passengers don’t have to use supplemental oxygen. With just a little looking, we found a mostly refurbed (engines have 600 hours), non-glass Cessna 340A offered by a dedicated refurb shop, Pristine Planes (which was reviewed in the January 2014 issue of Aviation Consumer) for $279,900. We admit to soft spots for the wide cabin of the Seneca and Cessna’s multi-engine hot rod; nevertheless, the price delta is noticeable.
There are no cabin-class twins currently in production. We can’t help but think that with refurbed cabin-class Piper, Cessna and Aerostar twins available for under $300,000, a prospective owner can put a lot of fuel into one before bumping up against the price of what’s on the market new, with less capability.
A Refurb For My Airplane?
For the current owner, the odds are that her or his airplane is more than 30 years old. The paint or interior may have been upgraded in some fashion and the engine overhauled at least once. Almost certainly some of the avionics have been replaced, although most of the wiring is going to be original-and electrical glitches (and fire risks) of varying seriousness are an increasing problem as wiring ages. What are the considerations when considering upgrading or refurbishing the airplane? Is it worth having the airplane completely refurbished (engine overhaul or upgrade, wiring replaced, new paint and interior and current avionics) or even partially?
The cost/benefit analysis of upgrades or a full refurb depends on what an owner desires. If the owner wants to upgrade the airplane to sell it, the rules haven’t changed in the new world of refurbs-the only upgrade that may pay for itself prior to a sale is paint, and that depends on how bad the paint was in the before photo. Otherwise, upgrades do not pay off when selling right away. For example, the research Aviation Consumer did recently showed that avionics depreciate 40% the first year and 45% the next.
Then why are companies making money on refurbs? Because they are doing the work themselves-not buying the parts and labor at retail.
The rule of thumb we use for upgrades is that you do an upgrade for your flying, to fit your mission-not for selling the airplane-and you do it because you’re going to keep the airplane for at least five years. That seems to be the crossover between depreciation for the new equipment and increase in value of the airplane. For a full refurb, the time may be a bit shorter-there simply isn’t enough data yet.
The corollary to the upgrade rule of thumb is to look at the used airplane market before you upgrade-there may be something out there that fits your flying and mission for sale. If so, almost invariably (assuming it passes a tough prebuy examination), it will be cheaper to buy that airplane and sell yours than to do the upgrade to your machine.
I Want to Refurb My Bird
If you have the airplane you like and you want to keep it, especially if you’re in a joint ownership or a flying club that wants to maintain an airplane at a high level, a refurb-total, partial or sequential-may make sense. I was a member of a flying club that (still) progressively refurbs its airplanes in a cycle-interior, paint, avionics, engine. Having sharp, clean airplanes attracted prospective members and wound up costing only a few dollars an hour more than the ratty stuff for rent at the local FBO.
The owner (or joint owners) of a Cessna 182RG with its large cabin, hefty useful load and impressive endurance who wants to upgrade will find that prices for new airplanes with at least the same capabilities, such as a Piper Matrix, Beech G36 Bonanza, Cessna 206 or upcoming Diesel 182, start at nearly three-quarters of a million. For at or under $150,000, the 182RG can be taken down to bare aluminum and get a factory new engine, Aspen or Garmin glass, new wiring, new interior and new paint and still cruise at over 150 knots for six hours with three big adults and all their baggage aboard. The new airplane smell is included with the price.
When it’s time to step up, there may not be an appropriate step up on the new airplane market. If you’ve got an airplane that fits who you are and the flying you do, your step up may well be a refurb-and there might be an engine upgrade or speed mod that makes sense to incorporate in the process.
Over the next several months in AVweb, we’re planning to talk more about refurbs, including how to go about getting your airplane refurbed and the individual areas involved, including avionics, paint, interior and engine.
Rick Durden is the Features Editor of AVweb, an aircraft owner and the author of The Thinking Pilot’s Flight Manual or, How to Survive Flying Little Airplanes and Have a Ball Doing It, Vol. 1.