AVIATION
Should you purchase new or pre-owned ?
Yes , it ’ s definitely worth considering this option . Pre-owned in most other industries carries negative connotations but that does not apply to private aviation . Many aircraft are meticulously looked after by their owners and , as high-quality refurbishment has become more accessible and cost effective , even out-ofproduction aircraft can feel brand new . We ’ re seeing that previous buyers of new aircraft are now more willing to consider preowned .
What about depreciation and running costs ?
The average period of ownership is five to 10 years , and typical depreciation in aircraft value drops about 10-15 percent in the first year with a further 10 percent each subsequent year . Our latest Market Forecast , the first of its kind to predict both the new and pre-owned business aviation markets , notes the average retirement age of a business aircraft is 32 years old based on historical calculations .
Operating costs will depend on the size of the aircraft and are divided into fixed and variable figures . As an example , the estimated annual operating cost for a Bombardier Challenger 605 aircraft is $ 2.5 million -- including fixed costs like parking , storage , pilots and maintenance and variable costs , notably fuel – assuming the aircraft is flying 400 hours / year .
Are they a sound investment ?
Our clients – including CEOs and UNHWIs – are generally all after the same things ; convenience , flexibility , privacy , comfort , efficiency and , now more than ever , safety and security . In terms of investment , for the frequent flyer airborne for at least 150-200 hours a year , buying a jet can be a smart decision . If it ’ s the right plane and properly managed , it can make more sense than chartering or part ownership .
What are the key trends you ’ re seeing ?
One of the key trends we ’ re seeing is the tremendous growth in pre-owned aircraft over the past decade . Our recent Market Forecast was the first to assign an accurate value and scale to the pre-owned market , digging down into the new economic reality in private aviation . It reveals that pre-owned aircraft transactions will outpace new deliveries by 4 to 1 over the next five years representing a total value of $ 61bn . It also highlights that the pre-owned value proposition is growing , and buyers of a new smaller jet can now buy a pre-owned midsize jet for an equal price or less , due to the increased accessibility and affordability of maintenance and refurbishment options .
Recently , we ’ re seeing more enquiries from first-time buyers who may have had the means to fly private but have chosen to fly commercial until now . We have a lot of confidence in the market and industry right now , and we expect this trend to continue for the foreseeable future .
82 The Art of Luxury Issue 45 2020