At the “Business Aviation Growth and Opportunities” session yesterday at ABACE 2014, aircraft broker Jay Mesinger moderated a panel discussion on how best to navigate what can be stormy waters. He opened the discussion with a reminder that business jet values plummeted after the financial meltdown of 2008, with many aircraft losing up to 70 percent of their pre-recession values.
He then outlined how global events can affect aircraft values. “Whether it’s the crisis in Crimea, a U.S. presidential election or the disappearance of Malaysian Airlines Flight MH370, the reactions of potential buyers to world events can directly affect business jet values,” said Mesinger. World events can be labeled as “distractions” and true “game changers,” he noted. According to Mesinger, the U.S. election was a distraction, but the European financial crisis of two years ago was a game changer.
The coming compliance requirements to update avionics to meet mandates for ADS-B Out, Fans 1/A and other new rules represent another game changer, he added. Mesinger said a Falcon 2000 that would have sold for $16 million before 2008 now goes for about $5.5 million, but would require about $1.2 million in avionics upgrades to bring it into compliance with these mandates. As aircraft values slowly climb back, he believes such an airplane could still be well worth the total investment.