After a decade of a used-aircraft market that, at best, can be characterized as wandering from fits to starts and back again, finally it may be time to take in a few breaths of cautiously optimistic air.
Signs point to an upward trajectory in buyer interest and, inevitably, aircraft buying and selling. Most important, an improving economy in the U.S. and in many other countries has stimulated flying activity, and a tailwind pushing aircraft pricing is beginning to stir.
Second, the new U.S. tax reform legislation, which provides for 100 percent depreciation for purchases of both new and used aircraft, should prove to be a significant incentive for buyers. (See “Business Flying and Taxes,” page 8.) “The tax bill is like a fuse that has been lit,” noted Jim Worrell of Eagle Creek Aviation Services in Indianapolis.
Third, a sustained southward flow of aircraft to Latin American countries appears to have slowed and even reversed. “Airplanes start leaving the U.S., but eventually they come back,” observed Raul “RJ” Gomez of Legacy Aviation west of Oklahoma City. Legacy recently imported two Commanders to the U.S., one from Mexico and one from Bolivia. Byerly Aviation recently imported a Model 840 JetProp from Ecuador for a U.S. customer, according to Bruce Byerly.
Available inventory has tightened. The rule of thumb for a healthy market is 10 percent of the fleet available. Significantly more than that means a soft market with downward pressure on prices; significantly fewer is a tight market with commensurate pricing. Worrell estimates that about 10 percent of the U.S. fleet of active Model 695 JetProp Commanders currently is on the market. The same is true for all models of turbine-powered Twin Commanders.
“Activity has picked up,” Byerly said. “In August 2017 there were 50 turbine Commanders for sale. At the end of the year there were 41. That’s about a 20 percent decline in inventory. And that means pricing is up. The trend is there. It’s not overwhelming, but it’s in the right direction.”
Not surprisingly, late-model 695s in excellent condition command the highest prices. Worrell recently sold a low-time Model 1000 with the new Garmin 950 panel for $1.8 million. Eagle Creek has converted nine Commanders to the Garmin 950 cockpit, which adds considerably to the value of the aircraft.
Legacy Aviation’s Gomez said long-time Commander owners also are investing in sophisticated new avionics, which points to continued satisfaction with their aircraft. Commanders fitted with contemporary avionics and in excellent mechanical and aesthetic condition that then go on the market contribute to a robust reputation for the marque, which keeps values high and ensures sustained viability for Commanders, he noted.
The fundamentals that attract buyers to Commanders haven’t changed, according to Worrell: the performance afforded by Dash 10T engines; the rugged, corrosion-proofed, no-life-limit airframe; excellent dispatch reliability; and the fact that Commanders are fully supported with technical expertise and replacement parts from Twin Commander Aircraft LLC and its worldwide network of authorized service centers. Also, the majority of the fleet has complied with all significant service bulletins and airworthiness directives, and no new ones have been issued in the last several years, so buyers do not face those costs.
“People get excited about Commanders all over again,” Gomez said. “We had an owner who used to have a Model 840, but went to jets. Now he’s realized he can have a Commander that will do the job, so he is looking for a Commander.”
