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Aircraft Appreciation |  |
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by
Paul Bertorelli
Editor, The Aviation Consumer
How did you do, investment wise, over the past few years? It depends on what you bought, of course. We looked at the appreciation curves on 12 models, eight singles and four twins and arrived at some composite values. The singles include the Piper Warrior, Arrow and Lance, the Cessna 172 and 182, Bonanza V35, the Mooney 201 and for an older classic, the Aeronca Champ. The twins we examined include the Piper Seneca, Cessna 310, Cessna 421 and Piper Aztec.
Some assumptions: With the exception of the Champ, we assumed a 1978 or 1979 model bought 10 years ago at what the Bluebook calls "average retail," meaning in the 5 to 7 range on a scale of 10, no damage history and with engine(s) close to mid-time.
The envelope please: Composite appreciation of those models during the 10 year period from 1988 to 1998 was a respectable 83 percent or an average of 8.3 percent per year. Not breathtaking, but not bad. (That average isn’t consistent year-to-year; there are usually spikes and plateaus due to economic conditions and demand for a particular model.)
Of course, averages are only averages. Some models appreciated in value more than others. The twins as a group, for example, grew in value by 67 percent, while the singles appreciated by 82 percent. (We tossed out the Aeronca in the averaging; it’s too much of an aberration.) Yet some cabin class models, such as the Cessna 421, have easily kept pace with the most sought after singles.
If you bought a 421 in 1988, it’s worth 91 percent more today than when you took title. On the other hand, if you bought a 1978 Aztec F 10 years ago, you’ve beat the inflation curve but that’s about it: For whatever reasons, the Aztec appreciated only 48 percent.
What surprised us was how much the humble Aeronca Champ appreciated. If you bought a decent one in 1988—say a 7AC—you’ve more than doubled your money; the Champ’s value grew by 140 percent. If only you had the prescience to pick up a dozen at $7000 in 1988.
A Dose of Reality
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Now for the harsh light of reality. If you bought a mid-timer 10 years ago and you flew it 125 hours a year, you paid for at least one overhaul. And if the paint was a 6 then, it’s probably a 4 now or it’s still a 6 and you paid for a paint job. You probably replaced a navcom or bought some other avionics geegaw whose value to a potential buyer will be but a fraction of what you paid for it. Let’s use the example of a "nice" low time 1978 Arrow you bought in 1988 for $35,500. Today, the same airplane in similar condition is worth $61,000 or 72 percent more than you paid. Since you majored the engine, you can either figure the $15,000 cost of the engine overhaul as a routine ownership expense and count your money and be happy or knock it off the bottom line and figure your true appreciation at 30 percent or 3 percent a year. If you painted the airplane ($6000) and installed a recent model Stormscope ($5000) but kept the avionics and interior otherwise the same, the airplane might fetch $65,000, less the $11,000 you spent to install that stuff. Bottom line: You break even, more or less. On the overall scale of airplane ownership adventures, that’s not a bad outcome. Think what a thrill it would be to sell your car for what you had in it or to walk away from anything related to aviation dead even. The mere concept brings a tear to our eye. When a whiff of escaping whole wafts on the evening breeze, why foul the air with vulgar discussion of what else you could have done with the money? A wise owner finding himself in this circumstance will keep the
calculator and financial pages away from a spouse who might question
the assertion that airplane values track, say, the Standard and
Poor’s 500. Using that benchmark conservatively, the $35,500 invested
10 years ago would now be worth $155,000 less |
